From industrial powerhouse to uncertain future: lessons from Britain’s chemical industry

Source: The Conversation – UK

In 1989 a young Janet Godsell, one of the authors of this article, spent a week on night shifts in the powerhouse at ICI’s Huddersfield works in west Yorkshire. She was starting her career at the biggest chemicals company in the UK, but it would be broken up and sold off a few years later as part of Britain’s drive to focus on only making the most lucrative products. This is the story of what happened to ICI and why its break-up looks less inspired now than it did at the time.

The name “powerhouse” was literal. The building produced the steam and electricity needed across the site, while the works also had its own water and effluent treatment facilities.

At the Huddersfield works, the name “powerhouse” was literal. The building produced the steam and electricity needed across the site, while the works also had its own water and effluent treatment facilities.

The site made everything from fine chemicals to dyes to synthetic polymers used in making nylon. Engineers, laboratory staff, maintenance teams and apprentices were all based inside the gates. As Janet remembers it, about the only routine job done by an outside company was painting the miles of pipework.

Janet was 18, on a pre-university year before starting an engineering degree that was being sponsored by ICI – or Imperial Chemical Industries as it was originally known. At that age, she wasn’t trying to analyse the company or think about its place in British industrial policy. She simply saw it as enormous, self-contained and slightly otherworldly. On later placements at ICI’s Castner-Kellner works in Runcorn, near Liverpool, the lights, towers and steam seemed to stretch for miles. At night, it looked like a moon base.

The memory that has lasted longest, though, is less dramatic. On her first day at Huddersfield, Janet was with a group of recruits. Some were also bound for university while others were local 16-year-olds starting apprenticeships.

One of the ICI people leading the session brought out a large piece of cardboard with a career path drawn across it – this being the days before PowerPoint. The lines took different routes through practical training, technical college and degrees, then met again when the recruits reached their mid-20s. The message was simple: people might enter the company by different doors, but they could reach the same professional level.

That hand-drawn chart said a great deal about ICI. It not only made chemicals. It connected raw materials, energy, research, factories, skills and communities. It could invest in a teenager and wait years for the return. It could also develop a molecule in a laboratory, work out how to manufacture it safely at scale, and sell it around the world.

Thirty years after ICI was broken up, Britain still has outstanding chemical businesses. The value of its chemical exports kept increasing after inflation until only a few years ago.

Now, however, that has started to change.

The usual account is that the nation lost an old, dirty industry and moved towards a more attractive future based on science and high-value products. It moved away from high-volume, low-margin products like fertilisers, PVC, soda ash and chlorine to focus on areas like pharmaceuticals, agrochemicals and advanced polymers.

Sure enough, modern plants are cleaner, safer and more tightly regulated than the works Janet entered in 1989. But the supporting infrastructure is much thinner. A large company like ICI was vertically integrated, meaning all stages involved in making a product were controlled in-house. Now these activities have been sold to different owners, contracted out, moved overseas or closed.

In other words, Britain did not just shed the less sophisticated parts of chemicals. It also weakened some of the foundations on which the sophisticated parts depended. In an era of protectionism, resource wars and tighter credit, that has become a barrier to growth.

A company, a network and a community

ICI was formed in 1926 from four British chemical businesses that made things like dyes, explosives and bulk chemicals such as acids and halogen gases. Over the following decades the company grew into many other products including fertilisers, plastics, fibres, paints, pharmaceuticals and agrochemicals. Its sites ran through Britain’s chemical heartlands: Cheshire, Lancashire, Yorkshire, Teesside and the Scottish central belt.

The company’s great chemical works were designed as systems rather than collections of stand-alone factories. At Wilton on Teesside, north-east England, large plants made the basic chemicals used by smaller operations on the same site to make products ranging from polythene to perspex (these large and small plants are known respectively as upstream and downstream operations).

The different plants on the site shared everything from steam and power to laboratories, pipelines and treatment facilities. A process that would have been uneconomic on its own might make sense because it supplied several other parts of the site.

This created an early form of what would now be called a circular economy: an output that appeared to be waste on one plant’s financial accounts might be transferred to be used as an input at another site, meaning there was no need to buy it from a third party. Single ownership reduced the contractual and financial barriers to making those loops work.

ICI was unusually serious about developing people, and expected its young engineers to look well beyond Britain. It paid sponsored students to work for their first summer placement at a non-ICI company in a non-English-speaking country. Janet chose to work for Sumitomo Heavy Industries in the outskirts of Tokyo, Japan.

A couple of years later, she returned to Japan for a year as part of her degree to study Japanese. During the final three months, she worked at ICI-Teijin Fluorochemicals, a joint venture between ICI and Japanese chemicals group Teijin that had been established to manufacture a new generation of refrigerants for Japanese carmakers. Few of her colleagues had met a female engineer before.

It’s an example of how ICI’s influence did not stop at the factory fence. It also supported technical colleges, apprenticeships, contractors, sports clubs and social clubs. In some places it provided housing. A large works didn’t just give a town jobs; it helped to forge a sense of identity. When a site closed, much more could vanish than the number of posts on the payroll.

None of this makes ICI a golden age. Janet remembers steaming drains and pollution that would be unacceptable now. Some plants were inefficient or had become commercially unviable. Large companies can also be bureaucratic. But ICI’s big strength was being able to see connections across a whole industrial system. Those connections became easier to overlook when the system was broken into separate businesses.

The attraction of the ‘clever’ end

By the late 20th century, the economics of European bulk chemicals were becoming harder. The manufacturing plants for these products consumed huge amounts of energy and raw material. Newer facilities in the Middle East and Asia often had cheaper feedstocks, greater scale and growing markets close by. To a company like ICI, this was fierce price competition for products whose margins were already thin.

It looked more promising to focus on high-value chemicals. Their value came from patents, specialist science, regulation and close knowledge of customers. In an era where the knowledge economy had become the buzz response to the rise of eastern manufacturing, a small quantity of a successful medicine could be worth more than thousands of tonnes of a basic chemical.

ICI’s 1993 demerger captured the mood. Its pharmaceutical, agrochemical and bioscience businesses became Zeneca, which then merged with Sweden’s Astra in 1999 to form AstraZeneca. A year later, the agribusinesses of AstraZeneca and Swiss pharma giant Novartis were combined to create Syngenta.

Meanwhile a “new” ICI also came out of the demerger that was focused on paints, plastics and bulk chemicals. Four years later, the company borrowed heavily to buy Unilever’s speciality chemicals division. To pay this off, it sold off most of its businesses over the next decade to various buyers. Left mostly with just Dulux paints, the ICI name finally disappeared in 2008 after it was bought for £8 billion by Dutch group AkzoNobel. You can see the whole dismantling of the old conglomerate in the diagram below, along with the status of the different parts of the business today (click to make it bigger).

The break-up of ICI

Hiving off the high-value business was not a foolish strategy. AstraZeneca became one of the world’s leading pharmaceutical companies. Syngenta became a major crop-science business. Britain was right to back science, innovation and higher-value products.

Yet, Janet saw the downsides from the inside. When she finished her degree in 1995, she returned to Macclesfield near Manchester to work for the newly independent Zeneca Pharmaceuticals. The new company was plainly worried about losing the manufacturing excellence it had inherited from ICI. It worked with Warwick Manufacturing Group, an industrial research unit at the University of Warwick, to capture that knowledge and turn it into a more explicit staff training programme.

Britain’s changing chemical export mix, 1997-2023

What began as manufacturing excellence developed into supply chain excellence and helped shape Janet’s own career. Yet this episode gives an insight into what’s at stake when you break up an ecosystem like ICI.

A business can be separated legally and financially in a matter of months. The capabilities that make it work have usually taken years to build. These include experienced people, trusted relationships and routines that are rarely written down in full. The same goes for all the shared equipment and business interdependencies that were taken apart at the same time.

Chemical exports by category (£bn 2023)

The chemicals nobody notices until they are gone

When you hear speeches from politicians about the economy, they rarely talk about ammonia, ethylene, chlorine and industrial solvents. Yet these chemicals that were seen as strategically unimportant to the UK a generation ago are industrial infrastructure in molecular form. Medicines, fertiliser, insulation, packaging, electronics, cars and defence equipment all depend on chains of these basic and intermediate chemicals that most consumers never see.

Billingham on Teesside shows how a chain can narrow while the product at the end still appears to survive. CF Fertilisers, a former ICI business which is today part of US-based CF Industries, permanently closed the site’s ammonia plant in 2023. This was the last ammonia synthesis plant in the UK, following a series of other closures in recent decades. CF now makes nitric acid and ammonium nitrate for its fertilisers from imported ammonia. In other words, fertiliser production remained, but the first stage beneath did not.

CF Fertilisers is now more dependent on overseas ammonia plants, ports, shipping and international prices. Britain has also lost the operating knowledge needed to run a large ammonia synthesis plant. It shows how a capability can disappear even while the factory gate remains open and a familiar product continues to leave the site.

The change is visible in the trade data. As domestic ammonia production has been withdrawn, there’s been a sharp rise in the value of UK anhydrous ammonia imports (meaning ammonia not diluted by water).

UK imports of anhydrous ammonia, 2015-24 (US$ million)

The Wilton works on Teesside shows the same process unfolding across a wider cluster. ICI built the complex in the 1940s so that large upstream plants and smaller downstream operations could feed one another.

In the years since ICI’s demise, individual businesses at Wilton have acquired different owners and some plants have closed. In 2025 the Saudi chemicals firm Sabic confirmed the permanent closure of its Olefins 6 cracker, commissioned by ICI in 1979 to make ethylene gas, among other chemicals. Sabic also owns a nearby polyethylene plant which converted this ethylene into plastic pellets. Now, it’s having to source its feedstock elsewhere.

That can look like a neat move on paper, replacing local ethylene with imported ethylene. In practice, closing a plant also removes a supplier, a contributor to shared costs, and part of the local pool of operators, contractors and engineers. The economics of the remaining plants change, which can make the next closure more likely.

The UK government’s decision in December 2025 to support Ineos’s ethylene operations at Grangemouth in Scotland – this time a former BP business – made the same point from the opposite direction. By then, this was Britain’s last ethylene plant, producing a chemical used across healthcare, food packaging, automotive and aerospace manufacturing.

Ministers rightly described the plant in terms of jobs and critical supply chains, not simply as a private asset. Why does a plant so often become “strategic” only when it is the last one left?

The problem was not Britain’s wish to move up the value chain. It was the belief that the high-value end could be detached from the rest without losing anything important. A single ammonia plant, ethylene cracker or solvent-recovery unit might look poor on its own balance sheet. But that calculation could miss the factories it supplied, the utilities it helped pay for, the skills it sustained and the choices it preserved when imports were disrupted.

What a British chemical works looks like now

A visitor returning after 40 years to one of the old ICI works would recognise the physical outline of a chemical site: tanks, pipe racks, distillation columns, cooling towers, steam and operators in control rooms. The chemistry has not been reinvented because data now travels through digital networks rather than hardwired cables.

Now, however, these are industrial campuses occupied by several businesses. They may still share power, steam, laboratories and so on, but those services are provided through contracts rather than a common corporate hierarchy.

Huddersfield, where Janet’s story began, offers a useful example of how such businesses can make the most of these arrangements. Syngenta, which has been Chinese-controlled since 2017, owns the site and continues to make active ingredients for protecting crops there.

The site’s specialist energy and wastewater infrastructure would be expensive for every new business to reproduce, so Syngenta is opening parts of the estate to companies that can make use of those assets and add something to the local system. Indaver, a Belgian company, is exploring a solvent-recycling facility on the site. The proposal would take industrial waste, recover the solvent acetonitrile, which is used in pharmaceuticals and other complex manufacturing, and return it to Syngenta.

The principle would certainly have been familiar to ICI, albeit now two separate companies must make the relationship work over time.

Northwich in Cheshire, north-west England, provides another glimpse of what modern integration can achieve. Tata Chemicals Europe, the owner of what used to be ICI’s alkalis division, operates a combined heat and power plant that supplies steam and electricity to its own operations and other local businesses. Its carbon-capture-and-use facility takes carbon dioxide from the power plant’s flue gases, purifies it and uses it to make high-grade sodium bicarbonate, which can be used in pharmaceuticals and food production.

The arrangement does not make a gas-fired industrial system impact-free, but it’s an example of an emission from one process becoming a raw material for another – again something very familiar to ICI. The challenge across the British chemicals industry is to recover that instinct while meeting far higher standards on safety, pollution and carbon.

This is vital for today’s focus on circular manufacturing, which is about designing products to be continually reused, repaired, remanufactured or recycled to eliminate waste. Yet the ICI era tells us it must be engineered into sites in ways that make commercial sense.

Indeed, this may be one of the conditions for keeping chemical manufacturing viable in a high-cost economy. European plants cannot always compete with newer overseas facilities on energy or feedstock prices alone. Their advantage may instead come from using less virgin material, recovering expensive solvents, sharing low-carbon utilities and turning residual streams into saleable products.

Those benefits can’t be bought from the other side of the world because they depend on proximity and coordination. A by-product has little value if the potential user is hundreds of miles away, if transport costs exceed its worth, or if the two businesses cannot agree a long-term contract.

The global bargain is fraying

ICI was dismantled because the prevailing supply chain logic was to place each activity where it could be done most cheaply, keep inventories low and use reliable transport to connect the pieces.

This view of business endured for several decades, but the cheapest price at the factory gate was never the whole cost. The real bill also includes transport, tariffs, inventory, finance, regulation, carbon, exposure to energy prices and the risk that a shipment does not arrive when needed. These costs were easy to underplay while energy was reasonably predictable and global logistics worked smoothly.

The 2008 financial crisis began to change the calculation as tighter credit made it more difficult to fund long supply chains and hold inventory. Brexit added friction between UK and European operations.

COVID exposed the risks of concentrated production and lean inventories as lockdowns in China disrupted manufacturing and exports – the UK industry needs China’s yellow phosphorus for agrochemicals, for instance, and pharmaceutical key starting-materials like 6-aminopenicillanic acid (6-APA) for making medicines. Although trade recovered, the concentration of Chinese production leaves manufacturers exposed to future disruption.

Russia’s invasion of Ukraine then turned energy and feedstock dependence into an immediate threat to European industry. Russia is a major supplier of palladium, for instance, which is essential for UK pharmaceuticals. Again, the war has exposed the risks of depending on supplies vulnerable to geopolitical tensions.

The 2026 war centred on Iran has provided another sharp reminder. Iran’s closure of the Strait of Hormuz restricted a route used by oil, gas, fertiliser and petrochemical cargoes. For chemical producers, gas is both fuel and a raw material, so a disruption can raise both the cost of running a plant and the cost of what goes into it at the same time.

This shock has arrived when Europe’s position is already weak. Cefic, the European chemical industry body, says Europe’s share of global chemical sales has fallen to 13%, while China accounts for 46%. As recently as 2004, Europe’s share was 28%. The size of the world market has almost quadrupled over that period, but China has taken the lion’s share. Its newer plants, large domestic market and continued investment have put intense pressure on European producers already struggling with high energy costs and weak demand.

In the UK, total UK chemical exports near-doubled between 1997 and the start of this decade after adjusting for inflation. Yet as you can see in the chart below, official production data show a steep fall in chemical manufacturing output after its 2020-21 peak. The Chemical Industries Association estimates that output fell by 60% between 2021 and 2025 and reports at least 25 site closures.

UK chemical manufacturing output 1997-2026

When it comes to chemical capacity within a country, it’s difficult to have a single strategy that will always work best. Spare capacity can look wasteful in normal times and invaluable during a disruption. Keeping every old UK plant open as an insurance policy would have been impossibly expensive over the past couple of decades. Nor is “reshoring” an easy answer. A factory that closed 20 years ago cannot simply be switched back on. Rebuilding needs capital, skills, permits, customers, energy and a network of suppliers.

One argument sometimes used in favour of closing UK chemicals plants is to reduce carbon emissions. But if the same chemical is then imported, the carbon has moved rather than vanished. This is very visible in the UK’s consumption-based greenhouse gas footprint, which measures the carbon emissions from everything a country consumes or buys, regardless of where it’s made. In 2023, the most recent year with reliable data, it was estimated at 699 million tonnes of carbon dioxide equivalent, compared with emissions of 384 million tonnes within UK territory.

Chemicals account for only part of that gap, but clearly a national emissions total cannot describe the whole environmental effect of what a country consumes. This doesn’t mean an imported chemical is automatically dirtier. The question is where and how a product is made, what happens if the supply is interrupted, and what else is lost when domestic production ends.

The best way forward

Britain does not need another ICI. The company belonged to a different era. A sensible strategy for the UK today would be selective. It would first identify a limited number of chemicals and capabilities whose loss would expose many other industries.

Examples might include fertilisers, industrial gases, water-treatment chemicals, battery-related materials, or key intermediates used in medicines and advanced manufacturing. This isn’t meant to be a definitive list, but to show the kind of dependency question policymakers need to ask.

The authorities should then support clusters where companies in these fields can share low-carbon power, steam, water, treatment facilities and logistics. They would make more use of solvent recovery, recycling and by-products. And before a major plant closed, those in charge of industrial policy would examine the effect on neighbouring businesses, not just the finances of the owner.

This is harder than choosing between free trade and national self-sufficiency. The work lies in understanding the network well enough to know where a modest intervention could preserve several linked capabilities, and where public money would merely postpone an unavoidable closure.

The people question is just as important. Today’s chemical plants need operators and engineers who can combine deep process knowledge with digital systems, automation and decarbonisation. Once a plant closes and a workforce disperses, they are difficult to recreate.

Britain was right to believe in the clever end of chemicals. The mistake was to imagine that cleverness could thrive forever without somewhere to make things, people who knew how to make them, and an industrial system underneath.

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The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.

Original source: https://analysis1.mil-osi.com/2026/11/03/from-industrial-powerhouse-to-uncertain-future-lessons-from-britains-chemical-industry/