YORKSHIRE chemical firms have been urged to adopt “family values” to survive the credit crunch.
And a leading industry figure also admitted that some young managers in the industry were feeling “shell-shocked” by current economic conditions – as they had never seen anything like it.
Spiralling oil prices have had a major impact on the chemical industry – and it could last up to five years.
Paul Hodges, chairman of chemical sector consultancy International eChem and adviser to the world’s major chemical companies, was speaking to delegates at the Your Chemical Future conference in Huddersfield.
The event, staged at the Cedar Court Hotel, Ainley Top, was attended by senior representatives of the chemical sector, including manufacturers, suppliers and customers.
Mr Hodges told them: “The last time we had a major downturn in the chemical sector was in the early to mid 1990s. I think it’s fair to say that some of our younger managers are feeling shell-shocked. They have just never seen this happen.”
He added: “The recent rise in oil prices has had disastrous effects on the chemical sector. While demand from end-users has been falling away in key sectors such as housing and cars, many customersŠwere busy stockpiling oil-based chemicals to try and beat expected price rises.
“As a result, these companies have effectively been living in a parallel universe, whereby they were building stock at a time when demand was falling and the ‘real economy’ was going into recession.”
Mr Hodges told delegates he expected the downturn to last three to five years and advised them to “focus on survival” and “pull together as a family”.
He said: “The Yorkshire chemical industry is inter-dependent. Every company is in a value chain between raw material suppliers and the eventual end-user.
“If any part of that chain collapses, companies on either side will probably lose money and then have to compete for new business outside the region.
“Companies must focus on survival by making themselves viable at the lowest level of demand they can imagine and they must pull together like a family at a time of crisis.”
The exhibition and conference was organised by Huddersfield-based Yorkshire Chemical Focus, the industry-led body backed by regional development agency Yorkshire Forward to promote and support Yorkshire’s £2.2bn chemical sector.
The day-long event included seminars and an exhibition for all sectors of the industry to showcase their products and services. Delegates included Michele Smale, of the Children Challenging Industry scheme.
Jim Farmery, assistant director of business for Yorkshire Forward, said: “Your Chemical Future has never been more important as an industry event – as the challenges of the current marketplace puts pressure on companies to become more competitive, efficient and forward looking in their business plans.”