Manufacturing jobs at risk amidst soaring energy prices

As gas prices rocket, energy-intensive factories and manufacturing plants could collapse, putting thousands of jobs at risk. WaveTrackR has already seen higher than average applications in the industry. A government bailout fund could save jobs and prevent an unsustainable flood of Manufacturing candidates from entering the market.

Manufacturing has had a challenging 18 months and, without government support (which at the time of press was being prepared for sign-off), things could get a whole lot worse.

The industry, though not one of the worst-hit by the pandemic, was already facing pandemic-induced supply chain issues and now many energy-intensive factories face closure in the wake of soaring wholesale gas prices. With WaveTrackR data showing that the recent challenges are already affecting jobs and applications, a government-funded loan is clearly needed to support at-risk factories during a spike in energy prices that is set to last the winter.

The fallout from the pandemic (and, in the UK, Brexit) is truly beginning to hit and on a global scale. In the UK we have been experiencing shortages on our shelves, in our lorries and at our fuel pumps. There is a global microchip shortage and now we face the prospect of a winter with far higher energy bills. However, although rates have already risen due to an increased cap, household energy customers are at least protected by a cap on bills. Businesses are not, leaving them at the mercy of unlimited price rises. Whilst some firms had anticipated a price rise and bought gas in advance at lower prices, many of those deals are close to ending, landing them in the same situation as every other energy-intensive industry – facing far higher gas prices.

Without help from the Treasury (help which other European countries in similar situations have already received from their governments), energy-led industries such as steel, paper, chemicals and ceramics could be forced to close factories, with the potential loss of thousands of jobs. Energy bosses have already stated that some businesses are close to collapse as global gas prices have soared by over 250% since January and 70% since August alone. And of course, the closure of factories will have a knock-on effect on a number of supply chains critical to our economy.

Adian Curry, MD of UK-based Encirc, one of the largest glass plants in Europe, told the BBC that companies in the UK pay more for energy than those in other countries as it is, adding that their costs are spiralling. From an average of around £40m per year on energy, Encirc is expecting bills to more than double, rising to around £100m. They are not facing the threat of closure but it is a stark insight into the huge additional costs businesses will be looking at over the next few months. The worst-case scenario is that factories are forced to cease production which, for many energy-intensive firms, will mean closing permanently as the costs to re-start are too high. Thousands of jobs could be at risk. 

This comes as the Manufacturing industry has been hit hard by global supply chain issues. This is partly a result of government-injected stimulus funds boosting consumer spending before supply chains were ready to cope with demand following restrictions and lockdowns. Shipping problems, too, are hampering the movement of goods. The shipping industry is also struggling to cope with sudden consumer demand, with reports of some ports turning away container ships. Throw in the restrictions on trade following Brexit and manufacturers are constantly trying to play catch up.

WaveTrackR’s September data revealed that Manufacturing received amongst the highest applications across all industries, yet didn’t make it into the top five for jobs posted.

The disparity highlights a bucking of the general trend that we’re seeing in the market of high jobs and low candidate availability. Jobs are growing but not at the same rate as other industries and applications remain high. Manufacturing jobs are generally seen as safe, the industry stable, a significant contributor to the UK economy. The Manufacturing industry will continue to attract candidates. What is needed now is to ensure that the jobs are there.

The good news is that presuming the Treasury steps in and shores up at-risk, energy-intensive businesses, these plants and factories that directly manufacture and play a crucial part in the supply chain for manufacturers should survive the winter. Make it to the spring and thousands of jobs will be saved. Given many manufacturing plants and factories are huge local employers, that also means helping to keep the economies of entire regional areas going.

Share this article: