The UK chemicals sector: the strategic engine that can drive reindustrialisation, regional growth and good jobs
Alliance of Chemical Associations
From everyday products to advanced manufacturing, the UK chemicals sector underpins the economy. With the right policy support, it can drive reindustrialisation, strengthen national resilience and unlock growth across the country
The chemicals industry is a silent engine enabling British manufacturing, firing economic growth, and improving people’s lives. All goods – used every day, by everyone, everywhere – rely on chemicals. A healthy chemicals base multiplies value throughout the economy. Without it, there would be no economy.
Overall, the UK chemicals sector generates £82bn in annual turnover, with Gross Value Added of £38bn. It directly employs around 140,000 people, with another half a million employed through its supply chains. Its exports are worth over £66bn, making chemicals the second-largest manufacturing exporter by value of goods exported.
The breadth of the chemicals industry
The UK chemicals sector includes not just primary manufacturers of chemicals, but
thousands of downstream businesses that formulate, apply and convert chemical technologies into goods and products, which are then used in, for example, buildings, vehicles, packaging, healthcare, beauty products, electronics and infrastructure. They can also be end-products themselves: from cleaning, disinfecting, public health pest control and hygiene products to paints, coatings and printing inks; and from lubricants,
plastics, adhesives and sealants to cosmetics, perfumes and aerosols. The logistics and infrastructure businesses used to store, transport and distribute raw materials, chemicals and finished products provide an additional hefty economic boost.
Key to reindustrialisation
The chemicals sector will be vital in delivering the Prime Minister’s reindustrialisation policy. The government’s Modern Industrial Strategy has, rightly, already identified chemicals as a ‘foundational’ sector, without which the ‘IS8/high growth’ sectors – including advanced manufacturing, life sciences, green energy, and defence – cannot succeed. However, it does not go far enough in recognising how chemicals and downstream chemical products are essential in those sectors’ supply chains. For example, you cannot make aircraft, military equipment or green energy infrastructure without adhesives and sealants, lightweight composites and plastics, specialist coatings, or advanced lubricants.
Boosting regional economies and national resilience
The UK chemicals industry is uniquely also structured to help the government achieve its aim of high-productivity, high-wage growth in regions of the country most in need of economic revitalisation.
Traditionally the sector is seen as being heavily distributed across regional clusters in the North and Midlands of England. However, the reality is it has important hubs of employment in all regions of the country. They are built around transport and logistics routes and support regional businesses across the manufacturing spectrum. These factories act as economic anchors, support local communities, draw on local supply chains, generate business for contractors, and contribute to local tax bases. Ensuring the competitiveness of the chemicals sector and treating it as a strategic regional enabler will help the government deliver on its regional policies.
Furthermore, the sector is a pillar of national resilience. Recent global shocks like the covid pandemic and conflicts in Ukraine and the Middle East have demonstrated that countries without domestic production of essential inputs are strategically vulnerable. Maintaining and enhancing this capability is not simply an economic imperative – it is a matter of national security.
Quality jobs
The chemicals industry directly employs over 140,000 people across the UK, while its supply chain supports another half a million jobs. And these are good quality, well-paid jobs. Research has shown that the workforce in the chemicals sector earns, on average, 32 per cent more than the rest of manufacturing and around 41 per cent more than the economy-wide average.
While chemicals manufacturing will always need operational staff working on the factory floor, a wide range of employment opportunities are available. STEM graduates are needed in laboratory environments, conducting R&D, carrying out regulatory roles, and for innovative jobs ensuring companies’ digital, automation, sustainability and AI futures. There are also important jobs in transport and logistics, finance, management, sales, marketing and design, all essential to making any business thrive.
Supporting next generation talent
Like many industries, the chemicals sector has an ageing workforce with a large cohort about to retire. While this represents a challenge, it is also a genuine opportunity for young people to get on the employment ladder.
In addition to the quality STEM graduates coming through schools and universities there are roughly 7,500 to 9,000 apprentices progressing through multi-year training programmes across the chemical manufacturing sectors to sustain its skilled workforce. The industry is keen to increase this number, with an annual target of 4,000 new apprenticeship entries to help address workforce retirement. These range from level 2 and 3 apprenticeships, like Laboratory Technician, right up to level 6 or 7, degree equivalent programmes.
Innovation, investment and sustainability
The country’s future relies on high-value research and development, modern skills training, and the transition to a sustainable, low-carbon economy over time. The UK chemicals sector can help turn those policy aspirations into practical solutions. Indeed, the country’s chemicals and pharmaceuticals sectors combined is a vitally important business investor, making £6.6bn investment each year and responsible for a massive £10.2bn, or 18.4 per cent of all UK business R&D spending.
Of course, innovation and sustainability are two sides of the same coin. Manufacturing processes continue to improve, with investment in new, greener technologies and more efficient production systems. Consumers continue to demand, and the sector supplies through constant R&D, more environmentally friendly formulations of products such as cosmetics or paints, with lower carbon footprints and less waste.
At the same time, green energy infrastructure like wind turbines or car batteries all rely on specialist chemicals and formulations; as does packaging to help keep food fresh for longer and reduce food waste; and chemical products to ensure bridges and cars are protected from the weather, corrosion and decay, enhancing life cycles and reducing the need to replace parts.
The multiplier effect
The chemicals industry is not just another part of the economy it is a strategic enabler of every priority manufacturing sector. Supporting the industry is one of the most powerful policy-levers the UK can pull to deliver prosperity, security and industrial renewal across all parts of the country.
If the government builds policies to support R&D growth and investment, creates the right regulatory environment, and assists with the transition to net-zero, the chemicals industry, in return, will contribute returns many times over to the economy and society. Whether this is in form of more quality jobs all around the country, new technologies, increased trade, or improved sustainability, backing the UK chemicals industry will deliver outsize rewards.
The Alliance of Chemical Associations (ACA) consists of 15 trade associations representing some 2,000 companies, the majority of which are SMEs, operating in many sectors of the chemical industry supply chain, from the manufacture and distribution of chemicals to their use for products such as plastics, paint and cosmetics.
Click on the logos below to learn more about the ACA and its member organisations.
