Steps manufacturers can take to accelerate growth and boost productivity amid rising energy costs

Make UK’s most recent survey revealed almost 40% of manufacturing leaders think the Energy Bill Support Scheme would not reduce their energy bills to a reasonable amount. So there remains significant pressure to implement strategic changes that will both reduce the cost of doing business, and maintain competitiveness in this uncertain market.

Leaders in the sector have been proactive—with more than half (54%) adjusting business practices to try and reduce energy costs—yet 13% of manufacturers are considering closing their doors for good. Now, with 70% of industrial businesses expecting their energy costs to increase in 2023, the time to act is now.

Take action now on your energy costs

It makes sense that improving energy efficiency is the most effective way to reduce energy costs. Almost half (43%) of manufacturers are already on board with the quick win energy efficiency measures like LED lighting and reducing out of hours consumption.

But since certain equipment can’t easily be switched on and off, manufacturers will benefit from exploring more options. In our 10-point plan we set out several routes businesses can take to reduce energy bills. And by taking steps such as reviewing your day to day operations with energy efficiency in mind, you can uncover any obvious pitfalls. For example, you can check how much voltage is needed for motors and different machines within your factories and make reductions. Equally, reassessing the use of office space could minimise the need for heating and cooling in some areas.

Longer-term solutions include investing in onsite generation such as solar PV systems, something which 39% of manufacturers are already considering. Although this option is subject to the suitability of your site and supply chain disruption, renewable assets amongst other solutions can help create resilience against the risk of persistent high prices.

Look beyond energy to reduce spend

Beyond the more clear-cut energy saving measures, your entire value chain is full of unlocked revenue potential. For example, reviewing your portfolio margin to identify your highest operating costs can uncover opportunities to offset spending. More than half (53%) of businesses are increasing their product pricing as a result – an attractive option for industrial firms.

As well as this, you can reduce operating costs by reassessing your working capital and cash allocation. Around 38% of manufacturers are considering expanding their exporting capabilities to bring in new revenue, helping them to reduce per-unit costs while meeting increased demand.

In some cases, you may need to secure funding for certain initiatives, such as transitioning your vehicle fleets from petrol or hybrid to fully electric. Financial institutions are looking to reduce their exposure to carbon-intensive industries, which means that those who choose to invest in greener initiatives gain access to preferential rates.

Leverage the Cloud and other technology to accelerate productivity

As the cost of IT infrastructure continues to rise, industrial businesses are expected to take a sharp turn towards the Cloud over the next few years. In fact, we found that businesses can save up to 75% on emissions if they move their data to the Cloud.

Gaining access to better, higher quality data is key, which can be done through the likes of sensor technology to show you where you’re using the most energy across the business. Around 38% are seeking to make investments in data analytics and digital technology to empower better decision making, secure bigger savings and boost workplace productivity.

A high proportion of respondents in PwC’s CEO Survey (86%) are already investing in automation technology, specifically in regards to processes and systems. A move that will help reduce the workloads of people within the business, at a time when the demand for higher wages is climbing.

What next?

Around 64% of manufacturers feel that the increased cost of energy has not only impacted profitability, but also their ability to remain competitive in the market.

Although these are challenging times for industrial businesses, the need to reduce energy consumption extends beyond simply rising energy costs. Now, following customer demand and growing pressure from investors, reducing energy consumption and exploring greener business initiatives isn’t just good for the environment — it’s good for business too.

By looking at your business through a net zero, carbon-out lens, you’ll find that there are many opportunities to accelerate growth and boost productivity. Finding ways to reduce your energy spend is just the first step in your journey to long-term sustainability.

Download the Make UK Executive Survey

Steps manufacturers can take to accelerate growth and boost productivity amid rising energy costs

Take action now on your energy costs

Look beyond energy to reduce spend

Leverage the Cloud and other technology to accelerate productivity

What next?

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