The latest Close Brothers Business Barometer suggests that, with government policies on climate change predicted to add as much as 50% to the electricity prices paid by the manufacturing industry by 2020*, businesses are being forced to consider alternative sources of energy.
Steve Gee, managing director of the manufacturing division at Close Brothers Asset Finance said that almost three-quarters of the 400 manufacturers his firm surveyed admitted they were already concerned about the impact of current energy costs to their business, “and that’s before you factor in any future rises,” he added.
“Our research shows that 55% of manufacturers polled plan to expand operations in 2014, but the concern is that these ambitions may not be achieved if rising energy prices put pressure on cash flow.”
In response to the proposed rises, two in five companies polled said they would adopt leaner manufacturing processes, 16% said they would have to lay off staff, while 18% hadn’t yet considered how to deal with the impact.
When asked if they would consider renewable sources of energy, 54% said yes, 21% said no and a further 21% were undecided.
“It can be difficult for manufacturers to cut back on energy consumption as they are by nature energy intensive businesses,” explained Mr Gee. “It is clear, however, that current sources are increasingly unsustainable so many have no choice but to seriously start looking at how their energy is supplied.”
Copyright Ken Hurst 2014