UK plastics manufacturers hit by energy costs

13 February 2006
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13 February 2006 | Anusha Bradley

The high cost of energy is expected to lead to 7,000 job losses in the UK's £12.4 billion-a-year plastics manufacturing industry, according to the British Plastics Federation (BPF).

A survey of members published this month found 44 per cent of firms are not passing the extra energy costs onto customers. As a result, more than a quarter are reducing production and more than half are decreasing investment.

The BPF said manufacturers are "struggling to pay" their rising energy bills, with many facing 100 per cent increases.

And more than 10 per cent of respondents said they are now actively looking to relocate manufacturing to European countries where gas and electricity prices are cheaper.

Peter Davis, chief executive of the BPF, said in a statement: "Last October member firms incurred average increases of 58 per cent for gas, and 56 per cent for electricity. Many were faced with a staggering 100 per cent rise."

The sector has also experienced high material cost increases on the back of high oil prices, he added.

"The energy price hike has certainly been responsible for job cuts. We estimate that some 7,000 jobs will go in the UK plastics industry as a direct result of these increases," a spokeswoman told supplymanagement.com.

That represents around 3 per cent of the 230,000-strong industry workforce.

The BPF is calling for the government to conduct a "full scale investigation" into the causes of energy price increases and disparity between costs in the UK and Europe.

SMfeb2006

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