Manufacturing 2015: Energy costs too high says industry
ENERGY costs in the UK are too high and are inhibiting growth within the vital manufacturing sector, business leaders in the region have said.
TheBusinessDesk.com and international law firm Squire Patton Boggs have collaborated on a new report gauging levels of confidence within the manufacturing sector and what businesses in the region want to see happen over the course of the next 12 months.
To download a copy of the new report click here
One of the inhibiting factors to growth identified in the report is the high cost of energy.
While firms are having to grapple with fluctuating demand, skills shortages and uncertainty over the UK’s future within the EU, having to resolve energy issues is a burden they could go without.
Richard Halstead, Regional Director – West Midlands, EEF said that cost and capacity were the two major issues affecting manufacturers.
“Energy costs in this country are too expensive,” he said.
“The UK, on average, is about 35% more expensive than the rest of Europe at a net level when you take into account carbon taxes, carbon reduction commitments, carbon price law. In mainland Europe, there are incentives and rebates off the kilowatt hour rate. This remains a major issue on our price competitiveness.
“The second important point concerns capacity – I think that as we head into winter, there’s serious concerns that we could start to see the usage of energy limited. In Europe, they insist that the energy companies keep reserves of energy and that simply isn’t the case here.”
He said one solution might be to implement “reserve policies” to ensure continuity of supply. In addition, he suggested that manufacturers should be encouraged to “innovate” at every opportunity in order to do more while using less energy.
Professor Jon King, Manager, Applications and Engineering, Research and Development, Tata Steel said he also shared concerns about the high cost of energy and said the issue should be considered as part of a Europe-wide initiative.
“It would be good to see moves to see something done about that. Carbon pricing is also a major one for us,” he said.
Simon Garbett, Partner, Squire Patton Boggs in Birmingham said: “The high cost of energy and the need to consider green alternatives was certainly one of the major issues to be highlighted by respondents completing the survey.
“What is good to see is that 57% of firms have green manufacturing on their agenda – we would like to see this rise.
“Of the 57%, implementing an energy reduction programme and improving on waste management were the priority strategies.”
What is the situation like in other areas?
