Energy price hikes hammer materials firms

Soaring gas and electricity prices are forcing materials manufacturers to dramatically slash costs to stay in the game.

Massive utility hikes have forced 197-year-old timber window manufacturer Allan Brothers to cut costs, with up to 60 jobs at risk from a mass redundancy programme.

The Berwick-based firm's financial controller Graeme Mawson said it had experienced a cost surge since coming off a fixed-rate for electricity recently.

He said coupled with rising haulage bills and a drop in demand, the fuel costs had forced a major cost restructuring.

Mawson said: "Because our customers are seeing a downturn in the industry, we can't pass our rising costs on, so we end up stuck between a rock and a hard place."

In the past week, gas and electricity prices have risen almost 40%, with British Gas owner Centrica raising gas prices 35% and electricity 9% after a similar EDF Energy rise.

The Construction Products Association is now quizzing its members on the effect of rising utility bills.

Spokesman Simon Storer said: "We believe electricity prices have risen by 70% in the past 12 months, while on average, electricity prices are 25% higher in the UK than in the rest of Europe.

"This has a significant impact on the ability of UK companies to compete in international markets."

He said the scale of the problem required government intervention and the scaling back of the tax and regulation already biting holes in manufacturers' pockets.

Storer said: "The industry has been saying to the government that there is an anomaly in what manufacturers are paying in the UK and in Europe.

"If the government wants to attract industry to the UK and ensure the UK competes on the world stage, it needs to look at taking pressures off the industry."

Materials firms are feeling the heat of increasing gas and electricity prices.