Plastics manufacturers fail to pass on the cost push.

‘Last October member firms incurred average increases of 58% for gas and 56% for electricity. Many firms were faced with a staggering 100% rise.' said Peter Davis, Chief Executive of the British Plastics Federation, which represents the whole plastics supply chain.

‘Companies will go to the wall if they cannot secure any relief from this. Meanwhile our competitors in Europe, with unliberalised energy markets are paying less and are rubbing their hands at our loss of competitive advantage'.

The UK's Plastic Industry, a strategic sector for the UK economy, supplying all branches of business ranging from automotive and construction to the retail sectors is a reliable indicator for the performance of British business as a whole. ‘This is a £20 billion turnover sector whose products help customer industries become more efficient,' said Davis, ‘yet recent energy increases with more in the pipeline are pushing it to the edge of a precipice'.

Plastics is not an energy-intensive industry: Energy typically makes up three per cent of the cost of plastics. Also, PVC-U has a lower oil content than most other plastics.

Nevertheless, window businesses have felt a significant cost push in the past year. ‘We issued a warning to members in March 2005 and regrettably we have been proved right.' Mr Davis told Glass Age.

‘We think the UK is at a particular disadvantage because we are switching from being a net energy exporter to a net importer, and our infrastructure is not ready.' he explained.

The BPF's survey also reveals a loss of jobs on a large scale directly attributable to sharp energy cost rises. 48% of respondents to the survey said that they were being forced into making redundancies by an average of 6.5% of their workforce. Davis said ‘This is an industry largely of small and medium sized firms. Any one company making redundancies on such a scale will not make headline news but the cumulative force of the losses is remarkable. We are looking at over 7,000 job losses nationwide in the plastics industry.

We issued a warning to members in March 2005 and regrettably we have been proved right

Cutting costs

Investment in the future has also been hit hard. The survey revealed that 54% of companies have scaled down their investment plans by an average value of 31% as they struggle to pay their energy bills. Davis commented that investment in the industry had already declined to historically low levels and that many companies were cutting costs to the bone just in order to survive.

The survey indicates that international firms, and firms with some flexibility might relocate their manufacturing to other parts of the world. Some 10.5% of firms were in this category.

But Davis's outlook for the window market is not quite as serious: ‘Medium to long term, the prospects for PVC-U windows are really good indeed.'