UK manufacturers in ‘survival’ mode as they endure pain of spiralling energy bills that are already threatening cost of living crisis for consumers
- Spiralling energy bills are hitting manufacturers as well as consumers
- Industries such as chemicals, glass and steel particularly affected
- One chemical firm says its energy bills have quadrupled in two years
- Industry bodies say Government does not ‘appreciate the severity’ of situation
UK manufacturers are in ‘survival’ mode as they endure the pain of spiralling energy bills that are already threatening a cost of living crisis for consumers.
A surge in the cost of power has left energy-intensive firms in industries including ceramics, chemicals, glass and steel battling the prospect of plant closures and job cuts.
Industry groups say a lack of Government support, despite months of discussions with UK Ministers, could mean some manufacturers will soon reach critical levels of financial difficulty.
Fighting for survival: Industry groups say a lack of Government support could mean some manufacturers will soon reach critical levels of financial difficulty
Chemical specialist Solenis, which produces a polymer used in wastewater treatment and paper-making, has seen its energy bills quadruple over the past two years.
David Calder, who runs Solenis’s 550-strong site in Bradford, said he faced £1million a month extra on the firm’s average monthly fuel bill.
Previously, the site’s annual cost of energy was below £10million whereas it is now more than £20million. He said: ‘I have been in the industry for over 35 years and I have never seen anything like this. It’s even worse than I imagined.’
Glass giant Pilkington – once the sponsor of England’s Rugby Football Union – said its energy bill has increased by an additional £10million.
Chief executive Neil Syder told The Mail on Sunday that the cost of Pilkington’s average 4mm glass product has increased by 30 per cent, equivalent to a rise of £4,000 for a 25-ton wholesale order.
But this is not being passed on in full to Pilkington customers, with the company absorbing some of the cost itself.
‘We are not profiteering out of it but we have to pass some of the costs on to customers,’ he said. ‘But we’re not passing on the full cost.’
Syder added that he is hopeful of Government support. But Dave Dalton, chief executive at industry body British Glass, said energy cost hikes have left firms facing ‘death by 1,000 paper cuts’.
He added that the glass industry has projected energy costs of £969million for the coming year, which means many companies are unable to make a profit.
Dalton said a company typically spending £40million a year on energy saw this bill rise to £100million last year. And that is expected to soar to £200million in 2022 on average.
British Glass sent a letter to the UK Government last week which said Ministers are yet to ‘appreciate the severity’ of the situation as companies are being left in an ‘impossible position’.
It added: ‘We are beyond the margins, we are not making money. We can survive but survival is no mechanism for life and business.’
The delay in any Government action is an increasing concern, industry groups said. Stephen Elliot, chief executive of the Chemical Industries Association, said: ‘We don’t want Government to leave it until we have a closure.’
There has already been one shutdown on English soil related to the energy costs crisis, with fertiliser giant CF Industries forced to temporarily close two plants last year.
CF, which produces around 60 per cent of the UK’s commercial CO2 needs, was given a taxpayer-funded subsidy worth tens of millions.
Both Labour and the Liberal Democrats have proposed respective funds worth £600 million and £500million respectively to tackle the energy crisis, which would provide financial support for energy-intensive firms in greatest danger.
A Government spokesman said: ‘Ministers continue to engage constructively with industry to understand and to help mitigate the impacts of high global gas prices, building on the £120million we provide each year to lower electricity costs.’