From Regulation to Recruitment: Overcoming UK Chemical Supply Chain Challenges

The chemical supply chain is the backbone of countless industries. Yet, despite its strategic importance, it continues to face disruptions, many of which have intensified in recent years. Tim Doggett, CEO of the Chemical Business Association (CBA) explains the value of collaboration in navigating ongoing challenges.

The UK chemical supply chain is a global market leader and a cornerstone of British industry, underpinning the production of more than 97% of all manufactured goods. Its significance extends far beyond business, playing a crucial role in sustaining essential services and maintaining economic stability.

As the voice of the UK’s chemical supply chain the CBA conducts regular surveys with its wide-ranging membership, including a quarterly business trends survey, the latest of which offers a snapshot of the issues currently affecting the sector.

Q1 2025 Business Trends: A Slow Start for the Sector

The survey results for the first quarter of 2025 show that the sector had a slow start to the year. Just 23% of respondents reported an improvement in order books; although better than the final quarter of 2024, it is a notable drop from the 31% reported in Q1 last year.

Sales data reveals a similar story. While 32% of companies reported improved sales in the first three months of the year – a 12% rise on the previous quarter – this figure still lags behind last year’s 35%. Looking ahead, only 25% anticipate sales growth, down from 34% in Q1 2024.

Margin pressures are another cause for concern – only 14% of respondents said their margins have improved, compared to 21% in the same period last year. Worse still, nearly 40% expected margins to decline in Q2.

“Progress on UK REACH has been frustratingly and painfully slow, with the consequences of delayed action not only disrupting long-established supply chains but also rippling across the wider industry and impacting the UK economy.”

Regulatory Uncertainty: The Unresolved Burden of UK REACH

One of the most significant and ongoing challenges facing the chemical supply chain is uncertainty and lack of clarity on UK REACH, with investment, innovation and trade being stifled as the industry awaits progress on an Alternative Transitional Registration model (ATRm), which was first proposed back in December 2021.

Since its implementation following Brexit, the CBA has warned about the significant impact of UK REACH, not only on the chemical supply chain and the wider chemical sector, but also on downstream users who were previously not in scope of the regulation.

Progress on UK REACH has been frustratingly and painfully slow, with the consequences of delayed action not only disrupting long-established supply chains but also rippling across the wider industry and impacting the UK economy.

Geopolitical Pressures Affecting Chemical Trade and Logisticss

Beyond regulation, shifting geopolitical dynamics are also affecting trade. While the survey highlights a drop in disruptions related to the Red Sea and Suez Canal – 36% of businesses are still experiencing delays, down from 68% in Q1 2024 – other logistics issues remain.

Notably, disruptions in UK road haulage capacity have surged, with 16% of respondents citing this as an issue in Q1. This is more than double compared to the same period last year. Among the contributing factors is the ongoing Russia-Ukraine conflict, which has removed thousands of Ukrainian HGV drivers from the European logistics workforce.

Trade tariffs also pose a significant threat. A blanket 10% tariff on UK exports to America will directly affect the UK supply chain, particularly considering the UK exported £10.8 billion in chemical goods to the US in 2024, accounting for nearly 20% of the country’s chemical exports. While the UK-US trade deal may improve market access for US exporters, the failure to address these tariffs increases competition for UK suppliers.

“These employment trends reflect the many pressures businesses across the chemical supply chain are currently navigating and underscores the necessity for strategic support to safeguard jobs within the sector.”

Workforce Concerns: Recruitment and Retention Challenges

Recruitment and retention in the chemical sector have long been a challenge. The industry requires a diverse and highly skilled workforce, but a shortage of qualified candidates and a lack of awareness around career opportunities continue to constrain growth.

The survey reflects growing apprehension around employment. While 11% of companies expect to increase headcount – up from 4% in the previous quarter – a concerning 25% expect staffing levels to decline, more than quadrupling from 6% in Q1 2024. These figures point to deep structural challenges.

These employment trends reflect the many pressures businesses across the chemical supply chain are currently navigating and underscores the necessity for strategic support to safeguard jobs within the sector.

Industry Initiatives Supporting Workforce Development

Over the past few years, trade associations like the CBA and other stakeholders have collaborated on several initiatives to promote the scope of opportunities available within the industry and improve the perception that people have of it.

One of these is Generation Logistics, a Department for Transport backed initiative involving over 40 leading organisations aimed at improving perceptions and raising awareness of logistics careers and improving recruitment across the sector.

The CBA itself has made workforce development a priority, working to position the sector as an employer of choice. Its initiatives to broaden knowledge of industry careers and attract and retain a skilled workforce across the chemical supply chain include 5050Vision, Generation STEAM and the Future Council.

“As the UK chemical supply chain looks to the future, its ability to remain competitive will require strategic support, meaningful government engagement, and targeted interventions.”

Building Resilience Through Collaboration

Despite ongoing challenges, the chemical supply chain remains remarkably resilient. Businesses continue to adapt and innovate, even in the face of rising costs, global instability and regulatory change. But as the latest data shows, resilience alone is not enough.

As the UK chemical supply chain looks to the future, its ability to remain competitive will require strategic support, meaningful government engagement, and targeted interventions. That means aligning policy with industry reality, investing in people, and ensuring that the UK remains a hub of innovation and trade.

Trade organisations like the CBA play a crucial role in facilitating this. By equipping businesses with strategic insights, advocating for supportive policies, and actively encouraging industry-wide dialogue, it helps build a more connected and resilient supply chain.

For more information, visit  www.chemical.org.uk

FAQs

What are the main challenges facing the UK chemical supply chain
The sector is dealing with regulatory uncertainty around UK REACH, declining margins, logistics disruptions and workforce shortages

How is UK REACH impacting the chemical industry
Progress on the Alternative Transitional Registration model has been slow, creating uncertainty that stifles investment, innovation and trade

What geopolitical factors affect the chemical supply chain
Disruptions include Red Sea delays, reduced UK haulage capacity due to the Ukraine conflict, and trade tariffs on chemical exports to the US

Why is recruitment a challenge in the chemical sector
The industry faces a shortage of skilled candidates and a lack of awareness about career opportunities, leading to structural employment concerns

What initiatives are being used to attract talent to the sector
Projects like Generation Logistics, 5050Vision, Generation STEAM and the Future Council aim to raise awareness and position the industry as an employer of choice

How is the chemical supply chain showing resilience
Businesses continue to adapt and innovate, but long-term competitiveness requires stronger government engagement, policy alignment and collaboration across the industry