North East to benefit from onshoring in chemical and pharmaceutical sectors

November 6, 2020 @ 12:09 by Richard Dawson

International trade experts believe the North East is set for a major economic boost from onshoring trends.

Companies within the chemical and pharmaceutical sectors are reportedly seeking to bring supply chains and production back to the UK as a result of increased levels of uncertainty in international trade.

According to OCO Global and Invest North East England, while COVID-19 has been detrimental to many sectors, the awareness it has brought to supply chain risk could benefit the North East.

The region already accounts for the manufacture of 50 per cent of the UK’s foundation chemicals and with the pharmaceutical sector worth more than £1 billion per year to the economy, there is capacity to capitalise on any uptick in onshoring.

Gareth Hagan, commercial director at OCO Global has said the pandemic’s influence has seen a significant rise in management seeking to better control quality and supply chain risks with onshoring expedited by other factors including a closing in the wage gap with emerging economies, volatile international transport costs and Brexit.

More than 75 per cent of all the UK’s chemical imports arrive from the EU and pharmaceutical production in the UK forms part of a highly integrated European supply chain with 73 per cent of imports arriving from the EU.

Gareth said: “Chemical and pharmaceutical sectors by nature are vulnerable to supply chain shocks particularly because of the heavy integration with the EU markets. As companies seek to limit disruption, both sectors are primed to be important for UK onshoring.

“Internalising supply chains will be crucial in ensuring the UK remains globally competitive within these sectors post-Brexit and the shift to onshoring is set to be a key driver of future economic growth and jobs in the North East.”

Guy Currey, director at Invest North East England, added: “Our regional clusters in chemicals and pharmaceuticals are amongst the most significant in the UK and the North East is home to market leading companies.

“The industries have strong links with academia and education in the region which help to drive research and development along with producing talent which supports these companies.”

“The North East’s expertise covers the full value chain in both the chemical and pharmaceutical industries from product formulation to packaging and distribution.

“Our existing infrastructure will certainly be advantageous when attracting companies who are pivoting toward UK supply chains.”

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