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ISBN 1-87565-691-1

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Executive Summary

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EXECUTIVE SUMMARY

The UK chemical industry had an estimated turnover, at manufacturers' prices, of £31bn in 1998. Compared with a turnover in 1994 of £30.4bn, this represents a total increase of less than 2 percent over the whole period. Since the value of UK chemical manufacturers' sales peaked in 1996 at £32.9bn, they have slowly declined as previously fast growth in real gross domestic product (GDP), at over 4 percent per annum, proved to be unsustainable over the long term. High growth rates in the economy were effectively checked by the progressive application of higher base interest rates by the Bank of England to achieve its low inflation targets.
Increases in the cost of borrowing for consumption and investment significantly reduced domestic demand for UK manufactured goods. Exports of the chemical industry were also adversely affected because of the higher value of sterling. Conversely, as chemical imports have become cheaper their penetration of the home market has correspondingly increased.
Apparent UK demand increased slowly over the same period to an estimated £28.3bn in 1998. This relatively weak market growth has been sustained by rising imports of commodity, fine and performance chemicals for converters operating in key processing industries who buy in large quantities.
Although the UK is a long established and major world manufacturer of a wide range of chemicals, there is strong and growing competition from a large number of overseas competitors based in the developed and advanced developing countries. Consequently, most UK chemical groups have made fundamental changes in their long-term strategies, which include megamergers between very large companies, complete reappraisals of their core activities, followed by many acquisitions and disposals. Emphasis is also placed on the production of mainly high-value, low-volume fine and speciality chemicals and avoidance of the production of commodity chemicals unless the company has some unique advantages which can enhance its competitiveness.
Current economic forecasts by various forecasting institutions, including the Treasury, imply that GDP will grow relatively slowly over the next few years and this will obviously affect the strength of local manufacturing demand. Exports of higher value chemicals will be more profitable, and this should provide the incentive to penetrate a wider range of overseas markets. However, many of the potential target areas in advanced developing countries have lost credibility as their currencies have been devalued, and it could take many years before investors recover confidence. Oil-rich countries are no longer as wealthy as they once were because of the current low and anticipated continued low price of oil, which will affect their growth prospects and prosperity. Imports will increase slowly as UK manufacturers leave wider gaps in the local supply of some essential, but low value chemicals which will be sourced from overseas manufacturers.
Key Note expects, after taking these factors into consideration, that UK apparent demand will increase by a total of 15.8 percent at constant prices, from £29.1bn in 1999 to £33.7bn in 2003.

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TABLE OF CONTENTS

Executive Summary

Market Definition

INTRODUCTION

INDUSTRY SECTORS

MARKET POSITION

MARKET TRENDS

Table 1: Leading Chemical Companies in Europe by Turnover ($m), 1997

Market Size

THE TOTAL MARKET

MARKET SECTORS

EXPORTS AND IMPORTS

Table 2: Gross Domestic Product at Market Prices Compared with UK Chemical Manufacturers' Sales (£m), 1993-1998

Table 3: Capital Investment by the Chemical and Man-Made Fibres Industries and Total Manufacturing Investment at Current Prices (£m), 1994-1998

Table 4: Apparent UK Market for the Chemical Industry (£m), 1995-1998

Table 5: Chemical Manufacturers' Sales by Value of Market Sector (£m), 1995-1998

Table 6: Chemical Manufacturers' Sales by percentage of Market Sector ( percent), 1995-1998

Table 7: Exports and Imports (£m), 1995-1998

Industry Background

CHEMICAL MANUFACTURE

DISTRIBUTION

INDUSTRY CONCENTRATION

EMPLOYMENT

TRADE ASSOCIATIONS

Table 8: VAT-Based Chemical Enterprises in the UK by Turnover Size, 1998

Table 9: Employment in the Chemical Industry (000), 1995-1998

Table 10: Number of Local Manufacturing Units by Employment, 1998

Competitor Analysis

INTRODUCTION

MAJOR PLAYERS

Table 11: Leading Companies by Turnover and Pre-Tax Profits (£m), 1996/1998

Strengths, Weaknesses, Opportunities and Threats (SWOT)

STRENGTHS

WEAKNESSES

OPPORTUNITIES

THREATS

Buying Behaviour

INTRODUCTION

CUSTOMER INDUSTRIES

Table 12: Estimated Demand by Value for UK Chemicals by Main Industry Sector ( percent), 1998

Table 13: Volume of Output of Major Production Industries (index 1995=100), 1994-1998

Table 14: Value of Construction Output at Current Prices (£m), 1994-1998

Table 15: Total Agricultural Area of the UK (000 hectares), 1994-1998

Outside Suppliers to the Industry

INTRODUCTION

RAW MATERIALS

PROCESS PLANT

DISTRIBUTION

MARKETING, ADVERTISING AND PUBLIC RELATIONS

Current Issues

MERGERS

LIFE SCIENCES

SPECIALITY AND FINE CHEMICALS

ICI

SHELL CHEMICALS

Forecasts

INTRODUCTION

FORECASTS 1999 TO 2003

Table 16: Forecast of the Apparent UK Market for the Chemical Industry at 1998 Prices (£m), 1999-2003

Company Profiles

INTRODUCTION

DEFINITIONS

FURTHER INFORMATION

Further Sources

ASSOCIATIONS

PERIODICALS

DIRECTORIES

GENERAL SOURCES

HBI UK INFORMATION SOURCES

GOVERNMENT PUBLICATIONS

OTHER SOURCES

Text © 1999 Key Note

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