Energy Costs Threaten UK Chemical Plant Operations
The American owner of one of Britain’s last major chemical plants has announced that he will close the site if energy prices remain at current levels for the next three months.
Peter Huntsman, whose family established Huntsman Corporation as a global chemicals leader, described the fuel price surge driven by the Iran conflict as “another nail in the coffin” for European heavy industry.
If today’s economics were to stay in place for the next three months, I would shut down my [UK] facility and I’d be importing product from China or the United States,
he stated.
The factory, located in Wilton on Teesside, employs approximately 80 people and produces aniline, a chemical used in products ranging from car seats to aircraft components. This facility is among the last remaining plants of the former Imperial Chemical Industries (ICI), which was Britain’s largest manufacturer for much of the 20th century.
Four years ago, my lowest cost aniline in the entire world came from the UK. That’s how recently I was competitive. Right now, this week, it is the most expensive,
Huntsman added.
Background of Huntsman Corporation and Leadership
Huntsman Corporation, based in Texas, was founded by Jon Huntsman Sr., a Mormon from Idaho who passed away in 2018. He initially developed packaging solutions, including the widely used clamshell burger carton sold to McDonald’s for its Big Macs in 1974, before transitioning into chemicals over subsequent decades.
Peter Huntsman became chief executive of the family business in 2000 and led the acquisition of ICI’s industrial chemicals division for £1.7 billion the previous year.
His father, Jon Huntsman Jr., is a Republican politician who served in every US administration from Ronald Reagan through Donald Trump’s first term and was the US ambassador to China under Presidents Obama and Trump.
Energy Price Impact on European Operations
Huntsman Corporation operates plants across the United States, Europe, Southeast Asia, and the Middle East. However, unlike its American operations, its UK and European sites are severely affected by soaring energy prices, which have reached their highest levels since Russia’s invasion of Ukraine.
You’re not seeing this in China, America or the Middle East, surprisingly, where the war is. You’re seeing it in the EU and the UK, and they’re being hit the hardest,
Huntsman explained.
The multinational company had already reduced its global workforce by nearly 10% last year, cutting about 500 jobs primarily in Europe, and closed seven facilities, citing high energy costs as a key factor.
Industry-Wide Challenges and Government Response
Huntsman’s concerns align with those of fellow chemicals magnate Jim Ratcliffe, whose Ineos group secured a government bailout in December to sustain its ethylene cracker at Grangemouth, the last plant of its kind in the UK.
This bailout was an uncommon intervention in a sector that has otherwise been left to manage independently. Production output has declined by 60% since 2021, according to the Chemicals Industries Association, with at least 25 site closures during that period.
Ratcliffe, ranked as the UK’s seventh richest individual, described the situation as “unsurvivable” for chemical plants in Europe due to “rising carbon costs and weak trade defence.”
Huntsman attributed the difficulties to policy decisions, stating that successive governments have not done enough to reduce industrial energy bills.
Failed energy policy has made UK industry less resilient. A crisis like this should not impact the chemical industry like this. They’ve chosen to go down this path, and they’re facing the consequences of it every day, especially at times like now. This [Iran] is just another nail in the coffin,
he said.
He also noted the decline in UK investment by his company:
We used to have more investment in the UK than we did in North America. It was a vital footprint to our company. And today we’re down to one asset left there. I’ve laid off enough people in the UK that it is one of the greatest disappointments of my entire career.
Broader Implications and Future Prospects
Over the last decade, the UK has lost its last domestic producers of ammonia, a core fertiliser, and sulphuric acid, raising concerns about sovereign capability in food production and defence manufacturing.
Huntsman expressed diminishing incentives to invest in Britain, citing stronger growth and opportunities elsewhere.
I’m doing quite well in China, the United States, I’ve got growing operations in the Middle East. Why on earth would I put money in the UK, where there’s neither growth nor a policy to incentivise people like me?
A government spokesperson responded:
We know this is a tough time for our chemicals industry, who are paying the fossil fuel penalty. The best way to tackle this is getting on to clean homegrown power which we control, to bring down bills for good. Ministers regularly meet with the industry and are working with them to understand the impact of the situation in the Middle East and explore potential solutions.
