Manufacturing NI Calls For Action On Energy Costs
Manufacturing NI, which represents almost500 businesses in the manufacturing sector across Northern Ireland brought its case to the DETI Committee today, asking for the establishment of a ‘Forum of expertise’ to help address a crisis which threatens to stifle the economy. The organisation, which was represented by Harland and Wolff, Bombardier, Michelin and Irwin’s Bakery, told the committee that the lack of a strategy to deal with rising costs is no longer acceptable, and that the disparity in costs with other regions is growing, rather than easing. Bryan Gray of Manufacturing Northern Ireland said that the group had repeatedly raised the issue with government and the Utility Regulator and would continue to do so forcibly in the hope that a group with sufficient expertise in the market could be brought together to find a way forward.
“High energy costs are stifling recovery from the recession and damaging growth, taking away a key tool in the attraction of FDIs. The Regulators research quantifies this definitively – power for the manufacturing here costs 20% more than the South or in GB. Northern Ireland’s manufacturers are currently paying the 2nd highest costs in Europe behind Italy and this just cant be allowed to go on. The executive and DETI Minister have done a lot for business and we recognise that, but this issue is more important than Corporation Tax with 20% of an industrial energy bill often amounting to more than any proposed tax reduction. We fear that in the future this will only get worse, with high energy costs making it almost impossible to rebalance the economy. We call on DETI and the Executive to convene a ’Forum of expertise’ to come up with a strategy to get power costs down and give manufacturing a real boost.”
Nial Irwin of Irwin’s Bakery said that high costs are forcing companies like his to consider new plants which are closer to their customers in Britain, while Wilton Crawford, Managing Director of Michelin said there was a clear connection between high energy costs and job retention and creation. Cecil McBurney, Plant Engineering Director at Bombardier said energy costs are critical to Bombardier’s overall competitiveness in an ever-challenging global market and affect their ability to retain existing work and win new contracts. In March the Regulator published the first element of new research conducted into comparative electricity costs in Europe for industrial and commercial users (I&C).Although the research shows that some 71% of I&C users enjoy competitive electricity costs, these customers are largely small shops, offices and micro businesses who purchase electricity on a domestic tariff. This is evidenced by the fact that they consume only 9.7% of I&C electricity. The remaining 29% of I&C users, who consume over 90% of I&C electricity are paying well above the European median. Bryan Gray said that MNI would work constructively with government on the issue, but needed to see more urgency, and the development of a strategy to resolve the matter.
“Despite the bad news contained in this report we welcome the increased transparency that the Regulators research brings to the marketplace for large energy users. This research confirms what we have been highlighting to the Department of Enterprise, Trade and Investment for some time. Electricity costs for manufacturers in NI are almost double those of our competitors in countries such as France and Sweden, and significantly higher than both GB and the Republic of Ireland. These latest figures provide indisputable evidence of exactly where Northern Ireland sits in terms of manufacturing costs. MNI also believe that such costs have a major negative impact on efforts to attract new Foreign Direct Investment to Northern Ireland, not only from manufacturing companies, but from energy intensive companies providing facilities such as data storage in the service sector. Bryan Gray concluded that forthcoming changes regarding renewable energy would only increase costs, “The Utility Regulator now estimates that Northern Ireland’s target of 40% electricity from renewable sources by 2020 will add 113% to network costs with an overall impact of 25% on bills. If this prediction is right, it will seriously compound the situation set out above and further degrade Northern Irelands competitive position.DETI anticipate that the Executive is likely to review the progress of the Strategic Energy Framework in 2015. Given the time frame likely for the conduct of such a review, and the lengthy period of time required to initiate any policy changes derived as a result, we believe that this scenario will be a case of closing the stable door after the horse has bolted. Irreversible damage will have been done to Northern Ireland’s industrial base and private sector employment. Members can listen to the full presentation to the Committee here:- http://www.niassembly.gov.uk/Documents/Audio/ETI/Part5-06-06-2013.mp3