Scotland’s Chemical Sciences Warm Up for World Class Performance on Global Stage

The Scottish chemical sciences sector is leading the UK process industries on innovation and investment in R&D according to the results of a new pilot study revealed today (29 October).  The first ever benchmarking report undertaken by the industry also highlights its value to the Scottish economy and is being used as a key tool to improve the sector’s competitiveness in the global marketplace as it cements its position as the country’s second biggest exporter.

Commissioned by Chemical Sciences Scotland and the Scottish Manufacturing Advisory Service (SMAS) on behalf of the sector, the Scottish Chemical Industry Competitiveness Benchmark Report provides a valuable snapshot of the industry which contributes 25% of Scotland’s manufacturing output.  The pilot study compared the performance of the six participating Scottish chemical companies to fifty other UK process companies across seven categories - financial performance, customer service, innovation, HSE/people, cost, operational excellence and supply performance.

Value added per employee for participating companies was, on average, in the 73^rd percentile and the sample also performed strongly across all measures within the innovation category, reflecting the industry’s longstanding reputation for developing innovative solutions.  Averaging in the 70th percentile for “% new income”, the companies were found to be growing new business through new products, markets and customers.  The latter, new customers, was particularly strong reflecting the chemical science sector’s continued growth into international markets. High levels of R&D funding in some companies provide a strong platform for developing the new products and technologies that will give Scottish companies the competitive advantage they need to exploit new markets and expand globally.

While the participating companies demonstrated robust performance throughout, the report also highlighted potential areas for further growth and value addition.   Underscoring the industry’s value to the economy, the report advises that just a 1% rise in profitability would generate over £4million pre-tax profit for the Scottish economy. Key areas of focus for further improving the bottom line were identified as operational and supply chain performance and the effective use of working capital.  The current level of investment in new capital equipment was also seen by the report to reflect positively on the industry as it strives to attain ‘world class’ performance.

Sandy Dobbie, Chairman of Chemical Sciences Scotland, is confident that the benchmarking report is a significant step towards achieving such performance:

“Some of the results of the report confirmed what we already knew in terms of the industry’s key strengths; for example, we have long had a reputation for innovation and providing solutions, but what this report does is give us a clear idea of what we need to focus on to meet Chemical Sciences Scotland’s overarching objective of ensuring that there is a vibrant, competitive chemicals industry in Scotland in 20 years time – profitability, operational excellence and continued investment in innovation.

“The fact that this is an industry-led exercise also highlights its commitment to competitiveness and collaborating to implement sector wide change and improvement.  One

of the main outcomes from this work is that is being used to share best practice across the sector and encourage all companies to appreciate the value of external benchmarking.  While the initial sample size was small we hope that it will encourage more companies to undertake benchmarking exercises enabling us to build an accurate picture of the industry as a whole.”

Caroline Strain, head of Scottish Enterprise’s Chemical Sciences Team agrees:

“Chemical sciences is one of Scottish Enterprise’s growth sectors, recognising the contribution it makes to the Scottish economy.  Given its prominence in manufacturing, producing around a quarter of all Scottish output, it is crucial that this is retained, ever more so during the current economic situation.  This report is a valuable first step in stimulating the benchmarking process within the sector to ensure that companies are continuously monitoring and improving their competitiveness.

“By building on our already strong manufacturing base we can attract higher value activity and also synergistic users who can exploit the expertise of companies in the sector to drive further inward investment and get goods to market.”

Steven Graham, Director of the Scottish Manufacturing Advisory Service, commented:

“We are committed to working with manufacturing companies in the chemical sciences sector to build on the results of this report and continue to increase their productivity and growth, both in the UK and overseas.  The chemicals sector accounts for 25% of Scottish manufacturing by turnover and 6% of Scottish manufacturing employment. There are approximately 150 chemical companies in Scotland and we look forward to working with many of them over the coming months to advise on how they can implement the improvements identified in this report”.

Six significant chemicals companies from the pharmaceutical, fine, speciality and commodity chemicals sectors took part in the study.  These six companies account for 15% of the Scottish chemical sector’s exports and 3.8% of its total output, generating £166 million GVA and employing 1650 people.  They were compared to a group of 50 UK process industry companies with a turnover in excess of £10 million and staff of greater than 50 the majority of which were chemical, pharmaceutical and polymer manufacturing companies.


Ends.

For further information please contact:

Katrine Pearson or Fergus Reid of Smarts
Tel:  0141 222 2040
Email:  firstname.lastname@smarts.co.uk