UK manufacturers in ‘survival mode’ as they endure the pain of soaring energy bills which are already threatening consumers with a cost-of-living crisis
British manufacturers are in “survival mode” as they endure the pain of rising energy bills which are already threatening consumers with a cost-of-living crisis.
A rise in electricity costs has left energy-intensive companies in sectors such as ceramics, chemicals, glass and steel grappling with the prospect of plant closures and job cuts.
Industry groups say a lack of government support, despite months of talks with UK ministers, could mean some manufacturers are about to reach critical levels of financial distress.
Fight for Survival: Industry groups say a lack of government support could mean some manufacturers will soon reach critical financial difficulties
Chemical specialist Solenis, which makes a polymer used in wastewater treatment and papermaking, has quadrupled its energy costs in the last two years.
David Calder, who runs Solenis’ 550-strong Bradford site, said he was faced with £1million a month on top of the company’s average monthly fuel bill. The site’s annual energy costs used to be under £10m, now it’s over £20m. He said: “I’ve been in the industry for over 35 years and I’ve never seen anything like it. It’s even worse than I imagined.”
Glass giant Pilkington – once a sponsor of England’s Rugby Football Union – said its energy bill has risen by a further £10million. Chief Executive Neil Syder told The Mail on Sunday that the cost of Pilkington’s average 4mm glass product has risen by 30 per cent, an increase of £4,000 for a 25 tonne wholesale order. However, this is not fully passed on to Pilkington customers as the company covers some of the cost itself.
“We don’t benefit from it, but we have to pass on some of the costs to customers,” he said. “But we don’t pass on the full costs.”
Syder added that he was hoping for government support. But Dave Dalton, chief executive of industry association British Glass, said rising energy costs have left companies facing “death by 1,000 papercuts”. He added that the glass industry has forecast energy costs of £969m for the coming year, meaning many companies are unable to turn a profit.
Dalton said a company that normally spends £40million a year on energy saw that bill rise to £100million last year. And that’s expected to rise to an average of £200m in 2022. British Glass sent a letter to the UK government last week saying ministers had yet to “assess the gravity” of the situation as companies were left in an “impossible position”. It added: “We’re beyond margins, we’re not making any money. We can survive, but survival is not a mechanism for life and business.’
The delay in any government action is a growing concern, industry groups said. Stephen Elliot, chief executive of the Chemical Industries Association, said: “We don’t want the government to leave it until we have a closure.”
There has already been a deadlock on English soil amid the energy cost crisis, with fertilizer giant CF Industries forced to temporarily close two plants last year.
CF, which produces around 60 per cent of the UK’s commercial carbon needs, received a tens of millions of taxpayer funded subsidy.
Both Labor and the Liberal Democrats have proposed £600m and £500m respectively to deal with the energy crisis, which would provide financial support to energy-intensive companies at greatest risk.
A Government spokesman said: “Ministers continue to work constructively with industry to understand and mitigate the impact of high global gas prices, building on the £120m we allocate each year to reduce electricity bills.”