FORWARD VIEW 


Indeed, more than half believe that the depths of the recession are behind us and the economy is in growth mode. To support this, over half of the


companies said they have not lacked the confidence to invest through the recent downturn. The flipside to this however is


the widespread acknowledgment by 72 per cent of chemical companies that they have in recent times turned away from implementing investment decisions. For such organisations this has translated into an admission that they now have a current and business critical need to invest.


Investment in technology Interestingly, the prime areas of investment that have been undertaken have focused upon building infrastructures, plant equipment, marketing and IT and technology. The spotlight on technology investment is set to continue with increased spend in this area identified as the primary target for the coming 12 months for chemical manufacturers. As a traditionally conservative


industry, the challenge facing the chemical sector to invoke long-term industrial technology investment plans and lifecycle planning to modernise, optimise and maintain what are often ageing manufacturing plants needs to be met head on. When questioned about their


perceptions concerning barriers to growth, chemical companies alluded to a combination of a lack of Government support, workforce skills shortages and constraints in plant capacity. For marketplace observations,


respondents pointed out the marked increase in domestic demand that has driven their business volumes, with 67 per cent stating this was the case - as opposed to just 4 per cent citing an equivalent upsurge in overseas demand.


Fig. 1. A comparison of where investment is going across various sectors.


Lack of confidence Despite the food and beverage sector recording good levels of optimism for the year ahead, some 44 per cent of businesses stated they have lacked the confidence to invest capital budgets through the downturn. This is the highest figure when compared


to the actions of chemical and oil and gas companies. Mirroring the chemical sector, for those


5 ECE


who have shied away from recent capital expenditure investment decisions, a majority (76 per cent) now admit it has led to a business critical need to invest. Such observations are supported by the


fact that nearly half of food and beverage companies (48 per cent) plan to increase their investment in the year ahead. Investment decisions that have been


implemented concentrate upon improvements to IT and technology and focusing on new product development and R&D. These areas will continue to be the primary areas of investment focus for the future, as well


as increased spend on marketing activities. Increasing domestic demand in this


sector out performs the chemical industry, with 71 per cent of food & beverage manufacturers saying this area is driving volume increases. But when it comes to impacting


on growth the issues varied from the chemical sector and covered labour costs, competition from emerging markets and plant capacity. A lack of government support for


manufacturing was also a view expressed.


Oil and gas The oil and gas sector recorded the highest level of optimism of the three industries, with 55 per cent of oil and gas manufacturers feeling positive about performance over the coming 12 months. Lagging slightly behind the food and beverage industry, 41 per cent said they had lacked the confidence to invest all available capital budgets and, in a familiar trend echoed in the other industries, this has led to nearly 70 per cent of oil and gas companies who lacked confidence to invest now admitting to a business critical need to do so. Investment strategies have


concentrated upon building infrastructure, new IT and technology support and new product developments. Going forward oil and gas companies say they will continue to spend on building infrastructure and increase investment in more plant equipment. When asked to assess the impact of


the numerous Government initiatives to support UK manufacturing and whether it had affected morale in their business, the jury seems to be out for oil and gas companies. Respondents were equally split, with


43 per cent saying they had boosted morale in the organisation, while


46 per cent said it hadn’t. It was, however, most favourably viewed by the food and beverage companies.


Barriers to growth Asked to cite barriers to crucial future growth, examples given included access to external finance, energy costs, skills shortages and plant capacity - some of these also clearly resonate with both the chemical and food and beverage industries. As far as demand is concerned, business


volume was predominantly being driven by an increasingly stronger domestic bias, reflecting


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