UK Chemical Producers Reject Brexit

21.04.2016 -

British chemical producers organized in the national Chemical Industries Association (CIA) have come out clearly in favor of the country remaining in the European Union. In a survey in which 93 member companies – representing 70% of total UK chemical and pharmaceutical sales – participated, 62% of respondents said they were in favor of remaining in the EU, while 38% declined to comment. None believed that leaving, popularly known as Brexit, would be in the best interests of their business.

“For an internationally-exposed industry such as chemicals, the free movement of goods, services, capital and people as well as proportionate regulation are critical success factors in terms of global competitiveness,” the CIA said in a statement.

“Irrespective of the outcome of the 23 June referendum, these success factors remain constant,” said the association’s chief executive, Steve Elliot. At the same time, he stressed that the feedback from the survey “underlines the criticality of the European Union market place for UK chemical and pharmaceutical jobs, investment and growth.”

The industry is the UK manufacturing’s largest net export earner, the CIA chief said, noting that these “impressive credentials” would be brought into immediate question if the country withdrew from the EU.

Germany is the largest export market for the British chemicals sector, which following the sell-off of all or parts of former national conglomerates such as ICI over the past decades is made up largely of small and medium-sized companies and subsidiaries of companies headquartered abroad. If a foreign company withdrew investment from the UK chemicals sector it would be critical, Elliot told the news agency Bloomberg, here receiving backing from executives of several EU companies with a major presence in Britain.

The political uncertainty of a UK exit or renegotiation of membership terms has the potential to cause volatility in markets and add cost to trade and investment, said Richard John Carter, managing director of BASF UK & Ireland.

Additionally, Carter remarked, “ it takes up time that could be better spent completing the single market or improving international trade deals that create jobs and growth in Britain.”

Melvin Dawes, managing director Solvay UK, which has a major presence at Runcorn, commented that “the European market is fundamental to our UK operations.” The best way to secure future employment, investment and growth, he said, is to remain in the EU.

Even if the voters decide against Brexit, Elliot told the news portal ICIS News the EU needs to do more to enhance the industry’s global competitiveness. Energy intensive industrial sectors such as chemicals are disadvantaged by higher costs compared to the US and to some extent China, he said, adding that the EU’s “very ambitious” CO2 reduction targets are another burden.  

To help level the playing field, the association CEO said he favors “testing and further exploitation of shale gas in the UK.”

Britain’s largest trade union, Unite, which gained international attention in a widely publicized dispute with Ineos at Grangemouth in autumn 2013, has also come out in favor of remaining in the EU, making its position clear after wavering earlier.

Unite’s national officer for the chemicals and pharmaceuticals sector, Tony Devlin, said the union welcomes the results of the CIA survey. “Not only would a Brexit put tens of thousands of jobs at risk, due to the impact on future investment decisions and possible trade barriers, but massively important workers’ rights that come from the EU would also be thrown away,” he said.