The North East has lost jobs in the recession but a big investment push promises to secure new industries for the future. Lee Hibbert reports
Later this month steel giant Corus will mothball a large part of its Teesside facility, bringing down the axe on 1,700 jobs. Aside from the trauma caused to individuals, the mothballing will have a ripple effect in the local supply chain, with an impact on many other companies throughout the North East.
But, despite this severe blow, it’s not entirely doom and gloom in the region’s manufacturing sector. While traditional industries such as steelmaking have been ravaged by the recession, other areas have survived relatively unscathed. For instance, the North East still remains a hotbed of process industry innovation, being home to more than 500 chemical, petrochemical, pharmaceutical, biotechnology and polymer and rubber companies. And, while many of these firms have undoubtedly felt the pinch, they have in the main managed to buck the economic trend.
“I would say that around 1,000 direct jobs were lost in our industry over the course of 2009, so there has been some level of discomfort,” admits Stan Higgins, chief executive of the North East Process Industry Cluster, which represents local companies. “But as a sector in this region we have an on-going investment programme in varying stages of development, comprising 55 projects worth more than £5 billion. So, rather than looking back, we are trying to look forward with a good degree of optimism.”
Job losses in the process sector have been mostly confined to firms making commodity chemicals. The recession hit big purchases hardest – so chemicals used in the manufacture of housing equipment, cars and white goods suffered the most.
Invista Textiles shut its nylon production facility at the Wilton industrial complex in Cleveland, and Dow is to close its ethylene oxide and glycol plant on the same site.
But many other firms making specialised chemicals for less cyclical products in the food, cosmetics and household goods sectors have seen revenues hold steady. “Process companies supplying these industries have on the whole performed well over the past year,” says Higgins. “Indeed, there has been substantial investment in new plant and equipment at some of them, and there are other big projects planned in areas such as waste-to-biofuels. We are also still hopeful that there will be a big announcement regarding a heavy-oil upgrade facility which could potentially bring a lot of jobs.”
One project that is definitely going ahead is Sembcorp’s £20 million investment in a new steam turbine generator at its Wilton power station on Teesside which will enable it to generate 52MW of additional electricity using steam from the station’s two main coal boilers. Following the completion of preparatory works in the power station, the unit will be delivered to the plant at the end of 2010. It will be installed by engineering firm Siemens and is expected to be fully operational by mid-2011.
The process sector in the North East has been further boosted by a £60 million investment by the government which came in the wake of the Corus announcement.
The financial package will be structured in two parts – the first part will address immediate issues arising from the mothballing, including providing £10 million for apprenticeships and support for people to start businesses, and up to £20 million investment in the Wilton site. The support will be targeted primarily at redundant workers and could create up to 300 jobs. Another £30 million will be used to equip Teesside to move beyond traditional heavy industry. This includes investment in the redevelopment of brownfield industrial land and infrastructure. It also includes investment to establish production of bio-based materials, to reduce the energy use of local industry, and for initiatives on carbon capture and storage.
Higgins says that the package of support is evidence of an overdue realisation among government ministers that Britain has to invest if it is to retain a flourishing manufacturing base. “There has been a 180-degree turnaround in their attitude to manufacturing – and that’s great news,” he says. “The chemical sector is one of the last large-scale exporting industries that we have left in this country. We don’t need government intervention, but we do need government leadership. We want to see politicians fighting our corner and acting as an honest broker to help people make the sorts of large-scale infrastructure decisions that are required in the process sector.”
Higgins is particularly pleased that a large chunk of the £60 million will be used to support carbon capture and storage technologies. “The process industry is a big emitter of CO2 but we want to play our part in the fight against climate change,” he says. “If we are to move forward with carbon capture and storage, then we need support to help us fully understand the development costs and the engineering and manufacturing that will be required. This money shows that the government is prepared to put money into new industries rather than propping up old ones, and that is to be applauded.”
© PE Publishing, 15 January 2010
