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Chemicals: deal with the crisis, but keep an eye on the future

28th Apr 2020 4 min read

This is the latest weekly update from Santander’s chemicals team on how the coronavirus pandemic is affecting our clients and the sector as a whole.

Quality control worker analyzing machine part on a manufacturing machine.

Santander continues to work extremely closely with partners and customers from across the chemicals sector as they focus on the challenges posed by the coronavirus pandemic.

In particular, it is important, amid the crisis, not to lose sight of potential opportunities. Susan Brench, Santander’s chemical sector adviser, this week shared her thoughts on medium- to long-term opportunities potentially emerging from the pandemic (read her insights here).

If so, this type of manufacturing requires a smaller physical footprint, increased flexibility and enhanced process safety to drive up standards and satisfy regulators’ stringent requirements. This technology may suit a servitization model and could attract support such as R&D tax credits and the patent box.

More broadly, we agree with the Chemical Industries Association’s focus on collaboration as a route through the crisis for the sector. Its weekly coronavirus webinars are therefore an excellent opportunity to share information and best practice, with thoughts on the best ways to provide tangible support.

 

The evolving environment for manufacturing

While the UK government has confirmed that its lockdown will continue, at the very least, for several further weeks, there are now signs that original equipment manufacturers (OEMs) across Europe are planning to resume production. Hakan Samuelsson, the CEO of Volvo Cars, has in recent days talked about the need for the manufacturing sector as a whole to get going once again, even if coronavirus has not been entirely defeated. Samuelsson argues that even if restarts have to be phased, resuming production is crucial to supporting the global economy and kick-starting the recovery. This will be welcome news to the chemical sector as a crucial supplier to automotive OEMs and the wider industry

That message will resonate in the UK, where the supply chain remains focused on cash and liquidity issues. Business secretary, Alok Sharma, has in recent days published an open letter to those working in manufacturing and industry, paying tribute to the sector’s efforts to keep the economy going during the crisis. You can see his letter here

This acknowledgement of manufacturers’ hard work is welcome. Earlier this month, Santander hosted a webinar with Stephen Phipson, the CEO of Make UK, to discuss the impacts of coronavirus; we’re now hosting weekly catch-ups with Phipson whose message is that the sector is rising to the challenge of maintaining complex supply changes. In the latest of these sessions (you can listen here), Phipson talks about manufacturers’ response to the pandemic, including on ventilators, testing kits and protective personal equipment, but also about future opportunities for the sector as we emerge from the crisis.

To discuss how Santander can help your business during the coronavirus pandemic, please contact: ccbsectorinsights@santander.co.uk