Yorkshire Manufacturing: Spiralling energy costs impact manufacturers
RISING energy costs are having a major impact on manufacturers according to Yorkshire business leaders.
Manufacturers organisation, EEF, says energy intensive manufacturers in France, Germany and Spain have considerably lower prices, sometimes as much as 50% lower than those in the UK. It says the cost of UK climate change policy, borne by electricity consumers, will by 2020 be 50% higher than any other country in Europe, while in the US, energy policies are reducing energy prices.
Tony Pedder, master cutler of The Company of Cutlers in Hallamshire and chairman of Sheffield Forgemasters, said that he believes there is so much opportunity to innovate, to recruit skills and grow business, yet, energy feels like the one area a manufacturer can do little about.
“I’ve been banging on about energy for the last year,” he said.
“Energy costs are out of line with our international competitors.”
David Grey, group managing director of Sheffield-based OSL Group Holdings, which operates four manufacturing companies, says while industrial pricing is one issue, capacity is another.
“People don’t know that we regularly get to 98% of capacity in this country and the impact that then has on energy intensive users like Forgemasters,” Grey said.
Energy accounts for around 25% of the business’ costs and Vicky Hinchcliffe, group environmental director for Sheffield Forgemasters, says that percentage is going up.
Teresa Hitchcock, partner and head of safety, health and environment at DLA Piper, says that this country needs to exploit a variety of energy sources rather than there being too much focus on any one source, be that nuclear energy or shale gas.
“We need a bottom-up approach and a balanced portfolio to balance economic resources and environmental impacts. Shale gas may have a short to medium-term role in managing the transition to a low-carbon economy. Why not do hydro if in Wales, and if by the sea use wave power. It is the excess of any one thing that causes problems,” she said.
Meanwhile, companies with high energy costs and environmental levies should be continually looking at efficiencies as a means to reduce that burden, leaders also highlighted. Steve Blacker, a director in the tax team at Deloitte says that if a company is faced with spiralling energy costs and wants a programme of new technology to improve its green footprint, any technological advances made to help achieve this could lead to cash savings through the research and development tax regime.
