Rising energy costs ‘pose threat to employment in manufacturing’

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Half of manufacturing companies are preparing to cut jobs in response to an expected rise in energy prices over the coming year, YouGov research for facilities management company Mitie has revealed.

The survey highlights the fragility of the UK’s economic recovery, as the predicted increase in energy prices threatens to undermine business sentiment and hit jobs.

Almost half (48%) of companies expect their energy bills to rise, with one in ten companies expecting an increase of more than 10% this year.

Around half (49%) of companies warn that they are prepared to review their staffing levels in response to a rise in energy costs, compared to an average of 40% across all sectors of the economy.

The research has also revealed hardening business attitudes towards the environment. Just 12% of those surveyed see minimising their environmental impact as most important. Meeting government energy targets is seen as the least important energy issue they face.

Mitie said: “Government energy policy is also thrown into question. Just 1% of companies believe that they see a financial benefit from energy policy. Almost half of businesses believe that the Government’s energy policies have increased the cost of running their business (46%), while affordable energy prices are the number one priority for businesses (57%). Only 4% of respondents say that meeting government targets to reduce greenhouse gasses is of high importance.”

Jo Butlin, director of Mitie Energy, said: “These results highlight the impact the cost of energy has on economic growth and levels of employment in the manufacturing sector.

“Oil prices have fallen, but businesses realise their overall energy costs are only likely to increase from here due to the impact of government policies. Businesses have no influence over price, but they can implement efficiencies and ensure they are getting the best possible deal to negate the expected price increase.”

She added: “Companies also need to have a much better grip on monitoring and analysing their energy use. We helped one organisation save £5m a year on their energy costs, so the opportunities for efficiencies are there.

“Right now the really forward-thinking companies are developing an energy strategy that brings together consumption, business processes and generation to give themselves a long term competitive advantage. That’s the only way to beat the market.”