Tim Doggett, CEO of the Chemical Business Association (CBA), explores why these challenges are driving the need for diversification within the industry, and the initiatives that are helping to put it in place.
Current state of the supply chain
Resilient and robust as it is, the chemical supply chain faces numerous key challenges, some of which have persisted or worsened over several years. While the new government wants to reset the UK’s relationship with the EUi, the legacy of Brexit continues to present obstacles and hamper businesses. The introduction of customs and border controls means strict and often costly formalities along with delays in transit, leading to price increases and supply and productivity problems for businesses on both sides of the border.
Not least among these challenges is UK REACH, a regulation covering the manufacture and importing of chemicals in Great Britain. Prior to Brexit, this was covered by EU REACH and which UK industry spent over £500 million complying with. UK REACH requires the duplication of this process, which has been estimated by DEFRA to be of significant additional cost to British businesses, with projections ranging from around £2 billion, to as much as £3.5 billion.
Furthermore, the impact of UK REACH is not only on the chemical industry supply chain and the wider chemical sector, but also on downstream users who were previously not within the scope of the regulation. The implications of this are wide and far reaching, and which has seen consequences such as manufacturing or trade lanes being moved from the UK to EU states. It has also restricted new business opportunities and resulted in investment being diverted to the EU or Asia. Inevitably, this has increased costs and, in some cases, reduced choices, making some products unavailable or commercially unviable. A series of deadlines stretching out to 2030 could potentially worsen the situation, as each deadline draws nearer. This also inevitably means divergence, adding further complications to trade and unintended consequences.
Geopolitical tensions coupled with conflict around the globe is also having a major impact on the supply chain. Russia and Ukraine are both major industry suppliers or transit routes, and their ongoing war has resulted not just in shortages of vital raw materials and increased fuel prices, but it has also disrupted key supply chains, such as the Black Sea ports, and affected logistics availability. This included many Ukrainian HGV drivers, who made up 40% of some eastern European fleets workforce, who have returned home to serve in the military. Attacks on ships in the Red Sea meanwhile, has forced cargo operators to take the longer route around Africa, lengthening transit times, increasing costs and reducing the productivity of vessels. Combined, the two conflicts have led to global price increases and delays which have major implications for businesses and in turn, consumers.
The need for diversification
If the UK chemical supply chain is to overcome these and future challenges, as well as create and seize the opportunities that arise, it must continuously evolve, adapt and diversify. It must lead and be increasingly inventive and evermore innovative in today’s fast-paced and increasingly hi-tech world.
Diversification can strengthen the supply chain in various ways, for instance, by offering varied perspectives and bringing a number of different skillsets into the sector that lead to smarter solutions to potential future issues. Such talent can help the industry mitigate or avoid disruption, optimising operations and maximising efficiencies, to ensure everyday products are available to the public with minimal shortages or delays. Furthermore, with 97% of all manufactured goods containing a chemical input, diversification can help deliver tangible benefits for the wider society, providing new and better products and innovating sustainability efforts.
One area where diversification is vital is in ensuring a sustainable skills pipeline. Only by attracting a talented, diverse array of people right across the spectrum of roles will the industry be able to find the innovative solutions it needs. While getting more people interested in studying STEM subjects is vital, future success also means recruiting the right people in areas such as sales and marketing, admin, IT, and project and account management.
There are a number of hurdles that stand in the way of achieving this. Firstly, the chemical supply chain must be perceived as both an employer of choice and an industry where people can have long and fulfilling careers. Secondly, it must appeal to people from a wider range of backgrounds and ethnicities, as well as addressing gender imbalances. Finally, it must change its negative perception as an environmentally unfriendly industry to attract the increasing number of young people who will only work for sustainable businesses. Indeed, a more diverse workforce may be the best way to deliver tomorrow’s sustainability solutions and continued innovation across the supply chain.
Initiatives for diversification
Efforts to tackle the issues facing the chemical supply chain have seen industry associations and other stakeholders implement various initiatives, often working in collaboration or through partnerships. One initiative is the CBA’s Generation STEAM, a project which aims to encourage more young people to study for the qualifications and learn the skills that the industry will need going forward. The name STEAM is an expansion of the traditional STEM, with the ‘A’ highlighting the importance that creativity through the arts, and problem-solving attributes, like attitude, ability and ambition, which will develop the industry in the future. This new focus is crucial if the industry is to attract those with the skills to work with creative, cutting-edge technologies, like AI and intelligent automation. Beyond this, Generation STEAM seeks to increase awareness of the various career opportunities the supply chain offers and the different pathways into them, while showcasing the diversity of roles and personnel to challenge misconceptions.
Generation Logistics is another initiative seeking to address skill shortages, in this case, specifically within the logistics industry. Like Generation STEAM, it too aims to encourage the recruitment of new talent by raising awareness of the sector’s broad range of career opportunities and their pathways, including roles from warehousing, engineering and HGV driving to HR, IT and marketing. A major collaboration, the project involves over 40 leading industry associations, organisations and stakeholders, all while being supported by the Department for Transport.
The CBA’s Future Council is an initiative that takes a slightly different approach and has a dual function. Since its launch in 2022, its primary aim has been to nurture aspiring talent already working in the industry. It achieves this by bringing together a group of young people from across the Association’s membership who, between them, have a wide range of career experiences and skills. By working together on a variety of projects and outreach events, the Future Council’s members can learn from each other, acquiring knowledge and skills beyond their everyday roles. This helps them develop a greater understanding of the industry as a whole and enables them to contribute to wider industry projects and policies. Such experience is not only essential for driving innovation and progress within the industry; it also gives participants more opportunities to develop their careers and skills within the sector, which is vital to improving employee retention and preventing talent from leaving.
The Future Council also organises events at schools and universities where it builds upon the work of Generation STEAM by promoting the importance of STEM education, highlighting the valuable work of the supply chain and changing perceptions of the industry. Crucially, as the Future Council is made up of young talent, the members are excellent role models for the students they meet with. At the other end of the career journey, the CBA 5050 Vision is an initiative that seeks to provide workforce stability by retaining and actively engaging with these experienced individuals, who can offer a wealth of knowledge, expertise, and institutional insight, whilst driving innovation, enhancing safety protocols, and mentoring the next generation of talent. At the same time, it is encouraging those over 50 who are looking for a career change to bring their much-needed skills and experience into the chemical supply chain.
These initiatives, whilst vital in helping individuals on their career journey and organisations in addressing the pressing skills gap, also stand to serve a wider purpose for companies by providing opportunities to collaborate on a more fundamental level, ultimately easing some of the wider manufacturing delays.
Danish Azri, Sustainability Lead at the CBA, explains: “As the global economy has expanded, so to have the needs of consumers. A single solution, product or source can expose businesses to significant risks, whether that’s because of climate change causing extreme weather or due to political unrest.
“Through diversification of our supply chains, we can make our industry stronger and more resilient to potential challenges. One way of doing this is to have a wide variety of suppliers and partners. This can help companies to respond quickly to any potential market changes, creating more sustainable supply chains.”
Creating a sustainable industry
While addressing environmental concerns is the chief reason why the chemical supply chain needs to be more sustainable, its green credentials are an important factor in recruiting the next generation of talent. Young people don’t just want to buy greener products, they are becoming increasingly conscious of their environmental impact through all facets of their life, and thus want to work for greener companies. As the largest industrial consumer of energy and the third largest subsector for CO2 emissionsii, the global chemical sector has a lot of work to do to make it more appealing to these job seekers. To address this, there is an increased focus on sustainable action through initiatives like the Carbon Literacy Project and Responsible Care.
The Carbon Literacy Project provides a certified training programme, which empowers individuals to make informed decisions to reduce their Greenhouse Gas Emissions and to make positive contributions towards this goal. The Responsible Care programme, meanwhile is the chemical industry’s commitment to go beyond regulatory requirements and continuously improve in areas such as health, safety, security and the environment.
To address the skills gap, deliver the innovation needed to overcome challenges and tackle sustainability, diversification is essential. The chemical supply chain needs to attract people from a wider range of backgrounds and with a more diverse range of skills to ensure it has the talent required for all the various roles, current and future. To help bring this about, industry associations, like the CBA, together with businesses and other stakeholders, are working tirelessly to implement initiatives, training and support that will ensure the supply chain, including businesses in logistics, environmental services, fuel refining and fuel distribution, has a sustainable, talented workforce.
i https://www.bbc.co.uk/news/articles/cvg3pxz4334o
ii World Economic Forum’s Nature Positive: Role of the Chemical Sector
Image credit: The CBA
