Peter Jones: An industry that merits our pride – and a bit of love

Published on Thursday 4 June 2009 21:24

WILL we ever grow to love the chemicals industry? I must confess that after a day being uplifted by the clean air and scenery of the Highlands, my heart sinks more than a little when, heading home along the M9, the flares, plumes and snaking pipework of the Grangemouth oil refinery come into view.

Yet I should love the sight of it because it is at the core of one of Scotland's most important industries.

Without Grangemouth, we would not have much of a chemicals industry, if any at all. Landscape-loving readers might quietly say to themselves that if it wasn't there, it might be a big improvement. Actually, it would be a pretty sterile and impoverished environment.

These thoughts were provoked when I read this week some stirring statements from First Minister Alex Salmond, instructing us that we should all be proud of the Scottish chemicals industry. He declared: "Over the past three years, it is an industry which has grown in the region of 9 per cent per annum. After whisky, the chemicals industry is Scotland's second highest export earner, generating around 1.9 billion of manufactured exports."

With statistics like that, mere pride seems inadequate. After all, if every industry had grown at that rate, Scotland would be challenging China for the title of fastest-growing country on earth. And in times when virtually every industry seems to be contracting in recession, the fact Ineos, the British private chemical company that owns Grangemouth, is prepared to invest in the place to increase its output is something for which we should be deeply grateful.

Salmond's reason for his chemical paeans of praise was that he was in Grangemouth to hand over a cheque for 7.6 million to support an Ineos investment of 65m in an ethylene plant there. With previous recent spending by the company, it brings the firm's total investment to 110m.

Grangemouth, and the surrounding cluster of chemicals firms that feed off the refinery's products, is not the sole centre of the industry in Scotland. There are other groupings in Ayrshire, Renfrewshire, Fife and near Dumfries. But the Forth Valley is the most significant part, so the fact Ineos appears committed to playing its part in sustaining it is important.

But it isn't all good news. The industry is not going to produce a surge of jobs. It employed 15,000 people in 1995, which has dropped to 14,000 now, although there are an estimated 70,000 jobs which depend on it. That large dependency number occurs because the industry is highly productive – the value added per employee is reckoned to be an impressive 76,000, 44 per cent higher than for general manufacturing. But the cheque Salmond handed over was not to create any new jobs, it was to safeguard some 550 existing ones.

This is not being sniffy about the industry. Rather, it is to stress that an awful lot of work has to be done if the Scottish economy is to gain the maximum value from it, for a further issue is that not many companies in the sector are headquartered here. This means that, while some research is done here (research spending by the sector is about half of the amount spent by Scottish manufacturing), it is still a small part of overall research activity by the British chemical industry.

And it was noted as far back as 1998 at a Royal Society of Edinburgh Foresight conference that although the chemistry departments of Scottish universities are pretty top-notch (four of Britain's top ten chemistry departments are in Scotland), the contact between them and local industry was poor. This results in vital revenue-earning commercialisation of discoveries happening elsewhere.

It has taken a while, but things are now happening to remedy this. The Scottish Government and Scottish Enterprise have become involved. SE has invested about 7m of public money in research and development, leveraging in 70m of private funding in the past 18 months.

The industry has organised itself into Chemical Sciences Scotland, a body that is championing the business and getting some collaboration going with the universities. It has also worked up a strategic plan aimed at ensuring "a vibrant and competitive chemicals industry exists in Scotland in 20 years time."

This is more significant than it sounds, for a large part of the Forth Valley industry depends on the chemical raw materials it gets from Grangemouth, which depends on oil continuing to gush out of the North Sea. And that, as we know, is a finite resource, the production of which has been heading downhill since 1999.

So the opportunity – indeed, the necessity – of building for future has been recognised, not just here in Scotland, but internationally, for the organisers of a couple of major annual chemicals industry conferences have been persuaded to stage their events in Scotland later this year. But for this to really work, somehow or other, we need to love the industry a little bit more.

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