www.halton.gov.uk

European Chemical Regions NetworkThe 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 ProfileUK Chemicals Industry (Nov 2006)

Industry Turnover GVA GVA 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 £7.94bn Average £66,142

WorkforceDistribution

COGENT Estimates (2006)

Number of Employers 3,200

Number of Employees 146,000

Age of Workforce:-

16-24 7%

25-34 20%

35-44 25%

45-54 30%

55+ 18%

Occupation Distribution

COGENT Estimates (2006)

Managers & Senior Staff 25%

Professional Occupations 13%

Associate Professional & Technical 14%

Administrative & Secretarial 8%

Skilled Trades 6%

Sales & Customer Service 2%

Process, Plant, Machine Operatives 21%

Elementary Occupations 11%

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 PositionGovernment

• 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 IssuesSkills 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 andQualifications 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 2020• 38% 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 & IndustryAttraction

• 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

AttractionSupply 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 DemandFor Cogent Workforce 2004 - 2014

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

Email: dave.owen@halton.gov.uk

Mob: 07770 638236

Cogent: www.cogent-ssc.com