Huntsman CEO Warns of U.K. Exit If Brexit Uncertainty Persists
Huntsman CEO Warns of U.K. Exit If Brexit Uncertainty Persists
(Bloomberg) -- Huntsman Corp.’s chief executive officer said U.K. investment decisions could be put on hold in the event of lingering Brexit uncertainty and that any discontent from customers could see the U.S. chemical maker shift production elsewhere.
The tariff-free zone within the European Union enables the $7 billion company to move goods back and forth across the English channel as it manufactures polyurethane foam insulations. U.K. production could easily be transferred to the U.S. or China and if a customer moved to take on a secondary supplier that decision may have to be made, CEO Peter Huntsman said.
“I can do basically the same thing in Geismar, Louisiana, so why put up with all the mess?” he said at a Chemical Industry Association conference on Brexit in London on Thursday. “I am concerned about the short-term issues. If they are handled correctly, there’s all sorts of opportunities if Brexit is done right.”
Huntsman’s note of caution came after an independent industry expert warned that the U.K.’s $50 billion chemical industry is at risk of a gradual decline if the decision to leave the EU isn’t handled responsibly. The U.K. is home to a myriad of small chemical business units owned by international entities that could suffer cutbacks, according to Andreas Gocke, a senior partner and chemicals specialist at Boston Consulting Group.
“My major fear is that non-U.K. companies will be afraid to continue their investments inside the U.K.,” Gocke said in a phone interview. “The chemical assets are smaller and an exit won’t be as obvious and may not be as visible to the public and press.”
In contrast, a foreign-owned company in the aerospace or car industries may have one large U.K. plant and closing it would create an outcry in the public domain and media, he said.
The lack of clarity surrounding the terms of the U.K.’s exit from the EU risks leaving the chemical industry in “disarray,” U.K. lawmaker Mary Creagh said last month. The uncertainty could cost the taxpayer millions of pounds, she said.
The U.K. chemical industry is already a shadow of its past. The nation lost Imperial Chemical Industries in a takeover in 2008 and the oil-and-gas majors have sold off large swathes of their downstream operations. Depending on the final Brexit deal with the EU, chemical companies may reinvest less in state-of-the-art technology, resulting in lower competitiveness of their sites, Gocke said.
“It’s widely known in the European chemical industry that these companies have prepared different investment scenarios already,” he said.
To contact the reporter on this story: Andrew Noël in London at anoel@bloomberg.net.
To contact the editors responsible for this story: Tara Patel at tpatel2@bloomberg.net, John Bowker, Phil Serafino
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