European Chemical Regions Network The Future of Bulk Chemicals in Europe Skills Context Dave Owen Head of Business Development Halton Borough Council, NW England, UK

Introduction Health Warning - All the statistics/forecasts etc in this presentation, unless indicated otherwise, have been sourced from COGENT COGENT – The UK Sector Skills Council for Chemicals, Pharmaceuticals, Nuclear, Oil & Gas, Petroleum and Polymers Licensed by UK Government to provide employers in these sectors with the opportunity for coherent leadership and strategic action to meet their skill needs

Economic Profile UK Chemicals Industry (Nov 2006) IndustryTurnoverGVAGVA per employee Basic Chemicals£19.20bn£4.06bn£72,554 Pesticides/agro chemicals£0.83bn£0.27bn£90,667 Soaps and detergents£5.82bn£1.86bn£54,618 Other chemical products£5.21bn£1.75bn£64,630 TOTALS£31.06bn£7.94bnAverage £66,142

Workforce Distribution COGENT Estimates (2006) Number of Employers3,200 Number of Employees146,000 Age of Workforce: % % % % 55+18%

Occupation Distribution COGENT Estimates (2006) Managers & Senior Staff25% Professional Occupations13% Associate Professional & Technical14% Administrative & Secretarial8% Skilled Trades6% Sales & Customer Service2% Process, Plant, Machine Operatives21% Elementary Occupations11%

Competitive Position Markets Chemicals is one of the most globalised manufacturing industries in the world Both bulk and speciality producers find cost advantages in basing operations overseas Overall UK chemical manufacturing been in decline since 1998 Confidence is lower in Cogent sector employers than across UK industry as a whole Many companies moving away from bulk/commodity chemicals to higher added value chemicals

Competitive Position Government Environmental, health and safety regulations – key driver for chemicals industry 2001 White Paper – ‘Strategy For a Future Chemicals Policy’ Climate change levy came into force in April 2001 UK forecast to remain self sufficient in oil until 2009 Increasingly dependant, however, on importing oil and gas High energy costs an ongoing concern

Emerging Issues Skills Needs Assessment Productivity & sustainability dependant on availability of skilled workforce Industry needs highly skilled and innovative people that can rise to the challenge of the global marketplace Cogent’s research into skill needs identified four key themes: Innovation Management & Leadership The Skills Gap Workforce Demand and Industry Action

Innovation Innovation is fundamental to sustainability of the industry Competing on cost alone will not guarantee future For commodity manufacturing to remain viable – continued attention needed to product and process improvement Further research and development to develop domestic strengths into commercial opportunities Products will require greater integration of chemistry, science and engineering disciplines Increased focus on university spin-outs

Management & Leadership Skills gaps at managerial levels being reported in: People management Change management Personal development Step change in management and leadership is critical if the industry’s objectives are to be turned into practical reality Leadership needed at every level Companies higher up the value chain more reliant on the skills and contribution people make to the business Cogent assessment indicates a total requirement of 24,000 people over the next 10 years

The Skills and Qualifications Gap Performance improvement is immediate challenge for industry Process and plant operatives are more of an issue than actual skill shortages – hard to fill vacancies Up-skilling is a particularly pressing issue 75% of today’s employees will still be employed in % of employers reported that their existing workforce only partly posses, or did not have the skills and knowledge to move to value added Over 30% of process and plant operatives are doing jobs that require a level 3 qualification, but less than 20% possess such a qualification

Workforce Demand & Industry Attraction Cogent sector workforce expected to reduce by approximately 18,000 over the next 10 years – replacement demand, however, will outstrip the reduction in overall demand Need to recruit both new starters and mature entrants Graduates in chemical engineering, process engineering and chemistry needed Graduate recruitment remains a challenge Recruitment across the main occupations set to continue Aging workforce – 23% of process operators over 50 Need to encourage young people to study sciences, engineering and technical subjects at school

Workforce Demand & Industry Attraction Supply Chain Industry relies heavily upon a contractor workforce – skill shortages being reported by contractors Big demand on contractor companies – evidence of co- operation within industries to accommodate equal access Evidence that some employers are having to access contractor personnel who lack the appropriate skills Leads to delays in essential work programmes

Replacement Demand For Cogent Workforce

Issues Reported by Employers

NW England Profile & Issues NW England chemicals cluster comprises 800 firms (2006) 167 are considered to be core (basic and commodity chemicals production) – as opposed to downstream Core employs 16,500 people – turnover £3.8bn The downsizing of bulk production could lead to:- Skilled workers being released who would then be available to other companies – short lived boost though as many will be older workers Loss of large companies to train people people/fund skills academies/sponsor apprenticeships etc Existing shortages of skilled trades (electricians, engineers etc would be exacerbated further

Summary of Key Themes Innovation Management & Leadership The Skills & Qualifications Gap Workforce Demand and Attraction Supply Chain Crystal Balls …

Contact Details … Dave Owen - Head of Business Development, Halton Borough Council, The Heath Business & Technical Park, Runcorn, Cheshire, WA7 4QX, England, UK Mob: Cogent: