Restructuring UK Perspective

1
Restructuring UK Perspective

• European Social Dialogue
• Mark Roper
• September 2007

2
The UK Chemical Industry

• Local manufacture worth almost 60 bn
• Just under 190,000 employees
• Solid trade surplus (8 bn)
• 11.4 of manufacturing value added 1.6 total
  economy GVA
• Annual capital expenditure about 3 bn RD 6 bn
• Growth rates respectable over last 10 yrs 2.5
  pa (but excl pharma, only 1 pa)

3
Ownership

• Long running restructuring in industry continues
• Recent sales by ICI, Huntsman (and of ICI)
• Most of UK industry now owned by overseas
  headquartered companies approx 75
• Very few stock market listed UK companies
  Croda, Elementis, ICI, Johnson M, Victrex, Yule
  Catto plus AstraZeneca, GlaxoSmithKline and some
  emerging technology based pharma cos.

4
Restructuring, Managing Change, Competitiveness
and Employment - Overview

• UK approach has traditionally been laissez
  faire
• Legally if an employer wants to restructure their
  organization it is an easy option
• Formulaic approach employer reaches a view,
  consults with representatives (may not be trade
  unions), implements
• The UK legal over-rider is fairness however
  this is subjective i.e What is fair?

5
Restructuring

• Massive restructuring in the UK chemical industry
  typified by the break-up of ICI
• Splits into ICI and Zeneca (1993)
• Streamlining of ICI (1993-97)
• Acquisition of Unilever specific chemical sale
  of polyester, fertilisers, explosives (1997)
• Sale of olefins, TiO2, acrylics (1999)
• Sale of chlor-alkali (2001)
• Sale of Quest, Uniqema (2006)
• Acquisition by Akzo/Henkel subject to contract
  (2007)

6
Managing Change

• Both social partners have become very experienced
  and are very good at managing change
• If anything change is now the normal state
• The positive agenda such as investment and growth
  presents the bigger challenge for management
• A company and its workforce become nervous when
  change isnt happening!

7
Competitiveness

• Raw materials and intermediates
• Utilities liberalised markets
• Access to markets
• Labour
• quality
• availability
• costs
• Services
• Political stability

8
Employment

• 1996 248,000
• 2006 188,000
• A fall of 2.5 pa which has quickened to 4 pa
  over the last 5 years
• Labour productivity has improved steadily by 5.5
  pa
• Since 2000, earnings have risen on average by
  3.5 pa

9
The Employment Relationship

• Despite all of this, relations remains largely
  positive
• The trade unions in the UK are excellent
  ambassadors for the industry
• Many proposals for change come from the unions

10
A Specific Example .

• John Edwards