Energy in manufacturing: Why an energy strategy should be part of your business strategy
More than ever before, manufacturers are now discussing energy at board level – highlighting that it is an increasing concern for business. We wanted to find out why, so we partnered with Manufacturing Management to interview 50 leading UK producers to gain a greater understanding of the concerns within industry.
Currently cost focused:
The primary consideration in the sector – perhaps unsurprisingly – centres around the cost of energy with 68% of respondents agreeing that prices are a bigger issue now than in the past. As a consequence 91% of manufacturers are looking to lower their energy use. Furthermore, more than half (53.5%) of respondents warned these high energy prices are affecting their business’ competitiveness.
As such, it is concerning so see that 13% surveyed have ‘no idea at all’ about how their company buys energy and a further 16% have ‘limited’ knowledge. It also comes as a surprise that only 47% see implementing a formal energy policy as an immediate concern – although 76% say it they are intending to implement one within five years.
Businesses can’t afford to wait. This delay could cause the them to miss out on extensive savings and further compromise their competitiveness in an already challenging market.
So why aren’t those manufacturers moving sooner?
Whilst there is a clear acknowledgement from business leaders that an energy policy will bring wider benefits to their enterprise (77% agreed), our survey suggests that for some there’s simply too much advice. Manufactures don’t know where to begin and who to trust – this may be why the implementation of an effective energy policy is pushed down the pecking order. They’re equally likely to go to their supplier, a known energy company, a facilities management organisation or a public / forth sector trust.
Additionally, others are wary of the upfront investment required within an energy strategy. However, there are short-term fixes that can be put in place and delaying the investment needed often means paying more in the long run.
For businesses, if they can have a one-stop-shop – a partner who they could go to for holistic, impartial energy-related advice, from purchasing to energy efficiency to self-generation – it would be very beneficial. We’re already doing this at E.ON. We have solutions engineers who carry out site surveys to understand production processes and identify how, where and when energy is being used. We then work with our customer’s to develop a strategy that’s just right for them. We take an agnostic approach and look at the whole solution.
Annalisa Bell, strategic account manager at E.ON commented: “It’s important to have a holistic approach to energy management. Being energy efficient is key to helping companies achieve sustainability goals, reducing costs and ultimately making them more competitive, streamlined and resilient. It’s great that 77% believe that energy efficiency will create benefits, but those that don’t need to be shown the benefits it can bring.”
Looking into the crystal ball
It is also important to explore the wider context. After all, the manufacturing industry does not exist in isolation. While cost is more than likely to remain the dominant factor in shaping energy policy, environmental factors will play an increasing role in influencing the industry. Only 6.7% of respondents thought that pressure to be greener was shaping their energy policy, but that number rises to 22% when asked about the picture in five years’ time. We believe that is a conservative estimation.
While the manufacturing industry is more insulated from end-consumer expectations, it is often only a rung or two removed from consumer-focused businesses – which are increasingly putting pressure on their supply chain to prove their social and environmental credentials.
Looking at trends across consumer goods markets, there is plenty of evidence of companies receiving a premium when they produce goods that are environmentally sustainable or help to reduce the environmental burden. From Parley’s sunglasses made from recycled ocean plastic, to Adidas’s new soles that will be made from recycled plastic, increasing the energy efficiency of your manufacturing plant and doesn’t simply offer cost savings on your energy bills – it increases your competitiveness.
In the future this may also be a necessity, rather than an aspiration. The views of consumers are only part of the equation for manufacturers: the pressure to be greener will also be felt from the Government. There seems to be an awareness of this amongst some respondents, with 28.9% of leaders citing the need to reduce emissions, rising to 37.8% in five years. Developments in environmental policy are hard to predict, but if current trends around emissions continue, we reckon it is a safe bet for manufacturers to take proactive steps to future proof their business, by implementing effective energy strategies that will reduce their emissions.
Looking at energy solutions
Each business is unique and the solutions required should be individually tailored to its need. This is why working with solutions engineer to assess the businesses energy requirements and ability to invest is crucial.
Russell Roof Tiles is one business that implemented its own energy strategy and reaped the benefits. Its approach was onsite generation. This is a savvy way to cut costs – after all around 60% of every energy bill is comprised of taxes and levies.
The projected cost savings of 18.6% in the first 12 months should equate to over £1.2 million in savings over the duration of the contract – savings which can then be driven back into the business.
For other manufacturing businesses, ensuring the machines are kept running is an important part of their competitive business strategy, and which is where storage solutions – which ensure a resilient supply as well as keeping their costs down – can come in.
The manufacturing industry is largely aware of the importance of managing its energy policies effectively, to decrease costs and future-proof against both consumer opinion and potential environmental policies instigated by the government.
However, a combination of fear of upfront investment and a lack of understanding on where to get expert advice is pushing the creation of an energy plan down the agenda. Getting good energy advice doesn’t need to be difficult –we can provide a one stop shop and work with you to develop an energy strategy as unique as your business.