North East of England Process Industry Cluster

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North East of England Process Industry
Cluster NEPIC www.nepic.co.uk How to Establish
a Successful Chemical Cluster Ian Findley
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Clusters a good definition?
Clusters are groups of inter-related industries
that drive wealth creation in a region. Often
they represent the entire value chain of a
broadly defined industry from suppliers to end
products, and are interconnected by the flow of
goods and services throughout this chain.
European Union
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Clusters addressing competiveness?
Clustering is all about organising for the
development of competitiveness and economic
development of a region with clear benefits in
productivity, innovation and business for the
organisations involved
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Clusters only work with high level engagement
Without engagement and commitment at the highest
level in companies Clusters become talking shops
for industry enthusiasts. In these circumstances
there is little direction no recognition that
there is any value in their work
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Clusters are successful when.
a strong business environment is created to
attract individual companies, supported by a
sustained agglomeration process and engagement
with the top local executives.
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Company Rivalry Can Still Bring Regional Success
1. There must be a context for strategic
intervention. 2. Success is possible even when
rivalry is present. 3. External demands on
businesses can force Rivals to interact. 4.
Involving related and supporting industries
widens the economic and social impact, increasing
importance to a region
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The New Trend - Clusters Competing and
Cooperating at the same time .?
There is Competition to attract business activity
between locations Clusters are developing
specialisations to create strategic
differentiation Cluster linkages used as part of
Global value chains Therefore today Clusters
are competing and cooperating at the same time
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Clusters Succeed When They.
Address performance issues of Member Companies
small medium and large Increase the
sophistication of the supply chain Improve the
business environment in their locality and help
to remove performance bottlenecks Enable
networking at all levels, but high level linkages
are key, enabling mutually reinforcing decisions
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The three key underpinning success factors are ..

• -
• Engagement in the Cluster by the top people in
  each company in the location
• The development of a learning-to-learn-together
  culture
• The building of trust between the companies and
  also with those working in the public sector

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Reflecting on the above issues, has NEPIC
created value for its members and its region?
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Strategic Context Three Pillars Strategy to
Develop the NE Economy
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Regional Context The northeast of Englands
biggest industrial sector
The chemicals and process industries are
absolutely critical to the North East economy
and to its successful development and prosperity
There are over 500 individual Chemical,
Pharmaceutical, Speciality Polymer and
Biotechnology companies operating in the region
producing a total of 10 billion GDP.
Regional Direct Employment in Manufacturing
Regional GDP
Pharmaceutical Speciality Petrochemical
Other Industry
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Geographic Context
All companies in the NEPIC Cluster are within
1 hour drive time of each other
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An economic cluster has context out side of its
region(Porter)- Global, Continental, Regional

• Teesside Petrochemical cluster is the largest
  integrated chemicals
• complex in the UK. 2nd biggest in Europe terms
  of manufacturing capacity
• North East Pharmaceuticals includes the top
  three global pharmaceutical
• manufacturers producing in excess of 33 of the
  UKs pharmaceutical GDP
• UKs second largest port Tees Port - 70
  occupied by Process Industry Goods
• Largest non-military RD Centre in Europe at the
  Wilton Centre
• Region has many top speciality and consumer
  products manufacturers
• The Supply Chain of these combined industry
  sectors has more than 500
• companies based in the North East
• 380 of these companies are already formally
  engaged through membership
• Together the companies in the combined cluster
  employ 34,000 people
• directly with a further 280,000 are
  indirectly impacted

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Creating Engagement - NEPIC Leadership Team Bob
Coxon (Carlyle Group) NEPIC Chairman Paul
Booth SABIC Steve Bagshaw (Avecia) Deputy
Chairs
Martin Inskip Merck Sharp and Dohme Peter
Snaith - Dickinson Dees Martin Grady ABB
Engineering James Robson Exwold
Tchnologies Aidan Walker NPIL George Ritchie
- SembCorp Neil Whitely - Johnson Matthey John
Shipman - Huntsman Mike Huggan - BOC Stan
Higgins NEPIC CEO Sheena Murray - Company
Secretary
Philip J Bailey - Lucite Paul Bartlett -
Artenius Jean Pheneauf- Ineos Subhash Chaudhary
- Avecia Paul Gavens SembCorp Ashraf Malik -
GrowHow Ian Stark Dow Felix OHare
Croda Roger Conner GSK Nick Lee Conoco
Phillips Dermott Roddy - NE Biofuels
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NEPIC Achieves Deeper Industrial Leadership and
Engagement Through Its Strategic Sub Teams More
than 120 Process Industry Executives are involved
in various Team Activities
NEPIC Leadership Team Bob Coxon NEPIC
Chairman Paul Londesborough Wayne Barnacal
Deputy Chairmen Dermott Roddy Philip J
Bailey Paul Bartlett Jean Pheneuf Subhash
Chaudhary Paul Gavens Felix OHare Ashraf
Malik Martin Inskip Peter Snaith Martin
Grady Paul Booth James Robson George
Ritchie Aiden Walker Neil Whitely Mike
Huggan Ian Stark Dr Stan Higgins CEO heena
Murray Company Secretary Nick lee
Networking Marketing Communications Ian Stark
(Co-Chair) Peter Snaith (Co-Chair) Dave
Lockyer Jane Goult Phil Eadon Phil Brown Alan
Chambers Craig Flemming Alex Shiel Richard
Howes Alex Shiel Bob Moodie 1.Secretariat Ian
Mains (NEPIC)
International Trade James Robson (Chair) Albie
Pattison Celia Mathews Jenny Readman Emily
Humphrys Bob Redfern Haider Imam Martin Grady
Jane Riseborough Allan Stewart Finn
Willingham Kath Birkin 1.Secretariat Keith
Stockdale (UKTI)
GDP Gap Closure Investment Paul Booth
(Chair) Ian Williams Paul Gavens Ian Shott
Brad Andersen Jaques Brom Martin Inskip Mike
Huggan Subhash Chaudhary Paul Bartlett Wayne
Barnacal Nigel Perry Neil Kennley Steve Duncan
(ONE) 1.Secretariat Stan Higgins (NEPIC)
Innovation Colin Harrison (Chair) Andy
Whiting Paul Frith David Wall Bob Humphreys John
Errington Bob Valentine Brian Jolly Martin
Davis Ian McKinnon David Parker (
Sanofi-Aventis) 1.Secretariat Nigel Perry (CPI)
Manufacturing Productivity Felix OHare
(Chair) Peter Trickett John Shanahan Carl
Hutchinson Brian Dickinson Paul Colemnan Chris
Lakin Jay Brooks Dave Young Melanie Jury Keith
Duckett Martyn Bainbridge Ian Potts John
Wiper Colin Herron (ONE) 1.Secretariat Mark Lewis
(PICME)
Skills Education George Ritchie
(Chair) Kevin Thrower Martin Inskip Graham
Cleland Sarah OBrien Angela Hughes Dave
Ryder Michelle Woodland Philip Bailey Steve
Coplin Ian Mains Gillian Collinson Simon
Wiggington Kath Gardiner Sam Pearson 1.Secretariat
Mark Chapman (COGENT
Teesside Integrated manufacturers Steering Wayne
Barnacle (Chair) Paul Bartlett Bernd Brian Jay
Brooks David Varey Martyn Bainbridge Dave
OHalloran Mark Williams Doug Annan Phil
Bailey Dave Archbold Jim Carlin George
Ritchie Felix OHare Shaun Sutcliffe Mark
Clarkson Mike Thompson Ian Clifford Neil Moody 1.
Secretariat Paul Gotts Mark Lewis (NEPIC)
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NEPIC Industrialists Focus on Strategic Themes
Marketing, Communication Networking Growing the
activity to achieve regional spread, UK and
Global recognition and the involvement of all
sectors Skills and Education Expanding targeted
activities in the adult skills and science
education to deliver a better trained workforce
across all sectors. GDP Growth and
Investment Focusing regional resources to
increase investment opportunities and indigenous
growth Trade Growth Establishing a greater
understanding of region, industry and company
capability enabling companies to find and fulfill
new business opportunities Innovation, Research
and Development Creating Collaborative mechanisms
to build projects between industrial and academic
partners Manufacturing Productivity Leveraging
regional providers to drive performance and take
up improvement programs
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Remits of the NEPIC Sub Teams

• The Chairman of each programme will be a member
  of the NEPIC
• Leadership Team.
• The Leadership Team and NEPICs Chief Executive
  will ensure that
• the programmes are integrated and appropriately
  resourced.
• Team members role
• To set regional and industry priorities
• Give direction to the team and NEPIC executives
• Become advocates for the programs
• Own and broadcast the outcomes

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Capturing additional 7.5 billion of GDP for the
North East Process Industries
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• NEPIC Partners Currently working on 7.5b of
  active projects out of 9b potential identified
• 1. NEPIC and ONE are already working on new
  projects totalling 4.5 billion
• 2. The NEPIC GDP team independently identified
  another 2.5 billion of other investment projects
• 3. Further analysis of one of the key feedstock
  projects that NEPIC and ONE are already working
  on, could deliver further 1.5 - 2.5 Billion of
  GDP to the NE by
• Replacing over 1 million tonnes per annum of
  imported feedstocks
• Savings from importation logistics (of
  diesel/heavy fuel oil)
• Regional Water Company landfill avoidance
  savings
• Spin off for existing HYDROGEN infrastructure
  (e.g. Pygas processing)
• Syngas output spin off (e.g. methanol)
• Steam for Power Generation/Potential for Private
  Network Generation
• Rationalisation and modernisation of tank farm
  logistics
• Aromatics Complex (Heavy Naphtha)
• Hydrogen Surplus (for Cyclohexane production)
• Asset Regeneration
• Refinery Grade Propylene

A 9 Billion Project Portfolio
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NEPIC GDP Growth Team Achievements
In total there are 44 live projects with a total
estimated value of 6.1bn. The adjusted value,
taking into account the probability of success,
is 4.6bn.
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NEPIC GDP Growth Team Achievements
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NEPIC GDP Growth Team Achievements
Since Q1 2005 NEPIC are aware of 27 projects
being completed total value of 709m This should
be added to 1.5 B between 2002 2005 Totalling
2.3 Billion for the period Note Also This
total does not include the small capital projects
performed to upgrade or maintain facilities.
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Developing Innovation Projects through
understanding regional industrial and academic
capabilities
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If we succeed . . . .

• Open access facilities
• Networking and academic initiatives
• 1. Polymer electronics
• 2. National Centre for Particulates
• 3. Bioprocessing facility
• 4. Advanced Processing Demonstrator
• 5. Fuel cell application facility
• Measurement science
• 7. Northern Way Chemical Innovation Network
• 8. CPI Professor in Chemical Engineering at
  Newcastle University
• 9. Molecular engineering initiative at
  Newcastle University

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Cluster Recognising How Companies Stay in the
Global through improved productivity
1. Get lucky
2. Cut costs
3. Move somewhere cheaper
4. Be the best
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Practical Programmes for Members

• Productivity
• Resource Efficiency
• Energy
• Special Interests
• e.g. Engineering
• Purchasing
• Logistics

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Companies Gaining Significant Benefits from
NEPIC productivity Interventions
Merck Sharp Dohme sanofi-aventis Sabic
Petrochemicals Lucite International BASF/Ineos Joh
nson Matthey Baker Petrolite Oxford
Chemicals Hydro Polymers Chemson Fine
Organics SSL International Cordell GlaxoSmithKline

International Paints SCA Paper Alcan Piramal
Healthcare Banner Chemicals Elementis Rohm
Haas Hertel Akzo Nobel Powder Coatings GrowHow Ess
chem Shasun Pharma Solutions Hammerite
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Future Success Through Clusters

• Porters Group at Harvard Business School have
  recently concluded
• 1. Companies must overcome the tendency to view
  productivity improvements coming from internal
  innovation
• 2. Clusters need to broaden their perspective and
  agenda to the upgrading of all relevant parts of
  their business environments
• 3. Collaboration between companies needs a new
  model to become outward facing to remove
  bottlenecks.
• 4. A cluster organisation can be the platform to
  engage private and public organisations to
  address the needs of an industrial sector

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NEPIC www.nepic.co.uk Success Created
Through Company Engagement and Leadership
Thank You