Make UK: "High energy bills: challenges and solutions|"
Posted on 31st January 2023
"Many manufacturers are working at pace to find solutions to cope with soaring energy bills. The challenge is huge, especially for firms that are energy intensive in their production.""
Make UK state on their website in their latest article with regards to the latest challenge for manufacturers: "I was impressed to see Make UK research, published in September, showing that – in the face of rising energy costs – securing their own energy supply had become a priority for many manufacturers. Over a quarter (27%) of firms surveyed said they had managed to find the funds and moved to onsite energy generation.
The incentive to do so is clear. The same Make UK research showed that 42% of manufacturers had seen their electricity bills increase by 100% in the past 12 months and 32% said gas prices had increased by over 100% in the same period.
Keeping the lights on
Some manufacturers are having to choose whether to cut production or shut up shop altogether.
We, in the UK Corporate Team at Howden, speak regularly to our manufacturer clients about the challenges they face. And I’m always keen to hear opinions from across the market. So, I spoke to James Brougham and Fhaheen Khan, both senior economists at Make UK, about the scale of the challenge facing manufacturers. Fhaheen said: “It is business-ending. We ran a survey in August 2022, in which six in ten businesses identified the situation as business threatening, meaning they were at risk of shutting down completely.”
Of course, there is now extra government help, in the form of the Energy Price Guarantee. However, there are concerns that the six-month support package will be cut off after March 2023, potentially putting many firms in a very difficult position in Spring.
James said: “This six month of support is borrowed time. Most manufacturers are aware of that. However, certainly for some smaller firms, the pain will be severe if and when that support gets pulled.”
He added that the scheme came too late: “The intervention was needed months before. The UK was late to the party. Some key manufacturing states in Europe, Germany, and others, were some months ahead. This matters as the UK is already at an industrial energy cost disadvantage and this only enhances that”, James said.
Click here to view the full Make UK post.
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