As the energy crisis escalates, British manufacturers have warned that 6 in 10 of companies surveyed now say that “increased energy costs are business threatening”.
Make UK, an organisation which represents and “celebrates” British manufacturing, says that more than 1 in 10 of the companies who took part in the survey had already made job cuts as a result of increased energy bills – a development described as “worrying”.
They said that manufacturers were now “in survival mode” as the energy crisis showed no signs of abating.
42% of manufacturers surveyed by Make UK said their electricity bills have increased by 100% in the past 12 months – while 32% said that gas prices have increased by over 100% in the past year.
Companies said that energy costs had “spiralled out of control” and that over half (52%) of companies expect their electricity costs to further increase by over 100% in the next 12 months and 42% expect to see their gas prices increase by over 100%.
Almost six in ten said that increased energy costs are now business threatening.
13% are now reducing their hours of operation or avoiding production during peak periods and 7% are stopping production for longer periods.
12% of the manufacturing companies surveyed said they had already made job cuts as a result of the energy crisis.
Manufacturers warn that if bills continue to increase and prices rise by over 50% (which they expect in the next 12 months) more drastic action such as shutdowns and redundancies will become inevitable.
“The current crisis is leaving businesses facing a stark choice – cut production or shut up shop altogether if help does not come soon. A worrying 12% of manufacturers have already made job cuts as a direct result of increased energy bills, but admit that more drastic action such as full shutdowns and wider redundancies will be needed if the expected price hikes of over 50% materialise in the next 12 months,” Make UK said.
They said that the impact of high energy prices were being felt “across manufacturers of all sectors and sizes”.
The representative group called on the British government to intervene to help manufacturers.
“As energy bills spiral out of control, manufacturers are working tirelessly to find ways to reduce consumption, putting in place as much as they can afford in terms of building improvements and installing renewable sources of energy. Government must step in to help struggling businesses, cashflow is already stretched to the limit, to pay what are now exorbitant energy bills by supporting sustainable factories and move further away from National Grid reliance,” Stephen Phipson, CEO of Make UK said.
“With an increasing number of manufacturers now in survival mode and taking drastic action such as cutting jobs, emergency action is needed by the new Government as soon as they are inside Number 10. This must see the immediate removal of Carbon Price Support which would at once bring down electricity prices for businesses and the introduction of an Industry Price Cap which could be funded in a variety of ways. We are already lagging behind our global competitors, and the prolonged lack of action by the UK Government making this worse. UK Manufacturing needs help now if it is to thrive and maintain the millions of well-paid jobs around the whole of the UK and to keep its place as one of the world’s great manufacturing nations,” he said.
Meanwhile, the Financial Times reports that German manufacturers “are halting production in response to the surge in energy prices caused by Russia’s squeeze on gas supplies” – a trend the German government described as “alarming”.