No improvement in chemicals spending

CIA survey predicts a gloomy outlook for chemical industry

By Anthony Gould

Investment in the UK chemical industry, which has remained low for the past four years, is not expected to show any significant improvement over the next three years, warned Elliot Finer, director-general of the Chemical Industries Association yesterday. He said it could fall even further if the UK fails to join a single European currency from the start.

Finer was speaking at the CIA’s Investment Intentions conference in London. The association’s annual survey shows that last year’s expected increase in capital spending by the chemical industry did not happen and, in fact, fell slightly.

Over the next three years spending will also be directed away from new product development and research and development into extending existing production. Figures published yesterday by the CIA in its Investment Intentions survey show capital investment fell 0.6% to £2,153m compared to 1995. This time last year the CIA predicted a 14% rise in spending.

The shortfall is being blamed on delays to programmes due to weak chemicals performance in Western Europe.

The outlook for this year is slightly better, with a predicted rise in spending of 5% in real terms. Scotland is expected to benefit most. However, chemical companies are uncertain about the future and have revised downwards plans for 1998 and 1999.

A failure to join the single European currency would also lead to a reduction in investment, says the survey, and ultimately place production in jeopardy.

Finer called for a delay in the introduction of the single European currency, but with the UK participating from the start.

`It seems that some of the people who are opposed to Emu have a wider agenda, which is withdrawal from the EU itself,’ he said. `That would be disastrous for our industry. We must not frighten investors away. There is too much to lose. That is our message to all political parties,’ he said.

According to the survey spending on speciality chemicals and pharmaceuticals is set to rise and basic chemicals expected to fall.

The survey of CIA member companies also highlighted continued shortages of chemical engineering graduates and project engineers.

The industry is also concerned over the pricing strategies of the privatised utilities, which have failed to pass the benefits of UK competition on to industrial consumers.