Among the many crises that the UK is battling at the moment, the energy crisis is perhaps one of the most serious.
Over the weekend it became clear that factories in all sectors were coming under extreme pressure due to the spiralling cost of gas and electricity. Industry leaders from steel, glass, paper, ceramics and more have been holding emergency talks with the Government about support. It’s not clear whether UK fenestration would have been included within the glass sector, but it would be difficult to imagine that manufacturers in this sector would escape the pressure brought by rising energy costs.
Energy crisis will affect all
We know that the cost of wholesale gas in the UK has risen dramatically this year, with most of that rise occurring over the past few months. However, it’s not just gas. The price of electricity has shot up as well, with both gas and electricity quadrupling in price.
For homeowners, that means higher prices. Ofgem does have a price cap, but that was lifted recently which lead to a double-digit rise in prices for homeowners. But there remains pressure on that price cap and it is likely it will have to be raised again sooner than the planned rise in April.
For manufacturers, including those in fenestration, these higher prices are going to cause pain. At the start of the year, when prices were stable and much lower, the idea of power prices rising more than four-fold won’t have been budgeted for. This rise comes at a time when all other costs for businesses are rising. Rising energy prices simply adds more fuel to the fire.
It will mean more costs that are passed down the chain to installers and then to homeowners. Over the past year or so we have seen the price of steel, PVC resin, hardware, glass and transport all contribute to higher costs for fabricators and then to installers. Installers have then had to deal with rising labour costs to keep hold of their existing fitters and to try and attract new ones as they try to grow their businesses.
Higher energy costs will inevitably be felt down the supply chain. But over the weekend, the Government has been warned that some factories are weeks away from closure as companies face battles on all fronts, with higher energy costs threatening to close companies.
At this moment I am not aware of any fenestration sector related companies facing such a predicament. But given how interconnected all our supply chains our, it is perfectly conceivable that our industry could be disrupted by events in other parts of the manufacturing economy.
The Government is at war with itself as to how to deal with this new crisis. Over the weekend Business Secretary Kwasi Kwarteng said that they were in talk with the Treasury about how to deal with soaring energy costs for businesses. The Treasury subsequently denied any conversations were ongoing and went on to imply that Kwasi Kwarteng was making things up.
At the moment, there is no sign that there is going to be help for businesses during this increasingly difficult period. Against a backdrop of borrowing that goes beyond £400bn, and a Conservative Party Conference in which the Chancellor made clear that support schemes were going to be ended, it is not clear that there is going to be any help at all for companies.
In light of this, our sector, as well as all others, has to start looking at where they can make running their companies more efficient. We have to start an efficiency drive with the aim of reducing energy usage and therefore costs.
Normally, this would start in switching energy suppliers. But the advice on switching has changed during this turbulent period and people are actually being advised to stay put. Instead, we all have to start looking at the ways we run our business and find where we can reduce power usage. This won’t be easy if you’re running a fabrication business but given the costs of gas and electricity right now this cannot be ignored.
We also have to look at where we can invest in our buildings. It could be replacing the windows and doors in our units to make them more energy-efficient. It could be installing heat pumps and solar panels. It could be fitting battery storage units to store energy produced from renewable sources on site.
Unfortunately, running our businesses more efficiently is going to mean spending money. Not something all that palatable against a backdrop of soaring costs on all fronts. But this has to be seen in the long term and not the short term. Investing in our buildings will serve us better in the future. It will allow us to use less energy to run our companies and will help the fenestration sector’s efforts to reduce carbon emissions.
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