Chemicals magnate Sir Jim Ratcliffe has urged politicians to urgently intervene to save the industry, saying it is at a "tipping point". The Ineos owner has warned that about half of Europe's ethylene production capacity will close in the next five years, pointing to 21 major European chemical sites - which represent 11 million tonnes of capacity - already shutting.
Earlier this year Saudi Arabian firm Sabic announced the closure of the longstanding Olefins 6 "cracker" plant on Teesside, and in recent days Ineos itself has confirmed it will cut about 20% of its workforce at its Acetyls plant near Hull. Ineos has argued that inexpensive carbon-intensive imports from China are flooding the market.
Last month, coatings specialist - which has various sites in the North East including its Ƶ head office at Wynyard - collapsed into administration after several years of heavy losses. Venator's Ƶ trading operations are continuing as insolvency experts seek a buyer.
Sir Jim said eight of the world’s 10 largest chemical companies were scaling back or withdrawing from Europe, while all of the US’s top 10 producers were investing and expanding. He warned that the consequences for Europe could be “devastating”, adding: “We’re at the 11th hour and there are three things that need to happen urgently.
"First, remove the green taxes and levies from energy costs. Second, scrap the carbon taxes. And third, give us some tariff protection. We need actions, not sympathetic words or there won’t be a much of a European chemical industry left to save."
Ƶ chemicals underpin a significant amount of the country's manufacturing capabilities, along with another beleaguered industry, steel. The sector has consistently talked of the pressure from high energy costs and overseas competition.
This summer, the Chemical Industries Association found in a quarterly survey of the industry that about a third of the country's chemical companies experienced falls in sales, production levels and capacity utilisation - linked directly to the cost of energy and international economic uncertainty. Companies gave a downbeat assessment of the next 12 months, reporting that employee numbers are still expected to fall – which the group said could create potential long term market share losses.
Steve Elliott, chief executive of the Chemical Industries Association, said: "Our members have noted significant price erosion in key markets due to Chinese overcapacity. This fierce international competition, coupled with internationally uncompetitive industrial policies and input costs, is threatening the future of our domestic manufacturing sector.
"Numerous companies have announced closures, restructuring, strategic reviews or profit warnings over the past two years because investment is being re-directed to more competitive locations."
