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Soaring energy bills are putting many thousands of businesses at risk of failure. Energy intensive industries are already cutting production while skyrocketing energy prices, rising costs and rapidly declining consumer purchasing power means small businesses across the U.K. are struggling to make ends meet.
The UK’s cost-of-living crisis is being exacerbated by rising food and energy costs, pushing the rate of inflation to the highest it`s been in 40 years. Businesses of all types and size throughout the UK and Europe are facing tough times, and a particularly bleak imminent winter, given the reality of not only high energy costs, but also likely supply restrictions.
Nicola Headlam, Chief Economist and Head of Public Sector at Red Flag Alert, has warned that many businesses will face a stark choice between paying wages and paying energy bills. She said:
"Businesses can`t absorb these costs and they`re going to be forced very quickly into a decision about headcount or being able to pay energy bills,"
"That`s going to be the reality and it`s coming down the track very quickly."
To help both domestic and business energy users, UK Prime Minister Liz Truss declared the new energy price guarantee will be set for both domestic and business users from the 1st of October 2022. For domestic users the price cap will apply for 2 years. But for businesses, the price cap has currently only been applied for six months, with a review after 3 months, although possible extra support for certain business sectors, including schools and charities, is expected.
While previously, businesses had no price cap protection, making them highly susceptible to massive and instant energy price hikes, they have welcomed the price cap announcement. However, many have criticised the lack of detail, clarity and certainty and without an urgent and immediate clarification of what support will be available post the 6 month cap, it will be impossible for them to plan effectively for their future.
It will also be important to find out how the planned support for energy costs will be funded. While EU energy ministers have backed a windfall tax on the incredible profits gained by energy producers, this approach has been firmly rejected by PM Truss who claims increasing the existing levy would stifle investment.
While all UK businesses are currently facing tough times, Insight Security has, over recent months and years, been building resilience into our business to ensure our ongoing ability to deliver the best possible service to our customers, which is why we were able to continue our uninterrupted supply of goods to customers throughout the difficulties caused by the Covid pandemic.
Future business challenges include: energy supply, the availability of raw materials & components, product manufacture and storage capability along with sharply rising costs , including shipping expenses. Let’s have a look at how we are tackling these challenges moving forward.
As part of our environmental initiatives, Insight installed energy efficient LED lighting throughout the offices, resulting in a significant drop in energy usage and therefore costs. Some of our specialist products, manufactured exclusively for us to our design specifications, are energy intensive in production. However, since these products are manufactured for us off-site we are able to keep our internal energy use to a minimum.
Wherever possible, product design and manufacture have been optimised to minimise energy use. This enables us to maintain high quality standards while reducing costs. We also endeavour to work with manufacturers who have robust energy continuity measures in place to ensure production continuity, such as the harnessing and storage of renewable, solar derived energy, multi-sourcing external electricity supplies and other practical energy saving initiatives.
The price and availability of many of the materials and components used in our products, has escalated sharply over recent months. Unable to absorb rising costs, suppliers are forced to pass on significant price increases to us and with the price of some raw materials rising weekly there is currently no sign of any early price drops.
The price and availability of raw materials such as steel and aluminium is heavily influenced by a number of factors including geopolitical issues such as the war in Ukraine, energy related mining and production costs and shipping costs. As these materials form the basis of many security products, they are a major factor contributing to the increase in component prices.
To hedge against ongoing significant price rises, wherever feasible, Insight Security has adopted a 3 pronged strategy. While we are keen to maintain a trusted and long term relationship with our suppliers, sourcing some components from dual suppliers ensures competitive pricing. This enables us to minimise any onward price increases to our customers, as far as possible.
Use of dual suppliers not only helps on the cost front, but as demonstrated over the last couple of difficult years, has ensured continuity of supply in the face of local or worldwide shortages.
In addition to dual supplier protection, we have also invested in placing larger quantity orders to secure the best possible prices. This has required further investment in our on-site and off-site storage facilities.
Many factors have led to challenges with the transport of goods, both locally and worldwide.
Courier services within the UK operate on slim profit margins, so increases in staffing costs, energy costs related to their depot and hub operations along with fuel costs, can be a major concern.
It has always been a very competitive industry and over the last 30 years, we have seen many of the courier companies we have used fall into insolvency and fold. Experience tells us that some couriers are better suited to handling certain types of load, while others may have an advantage in delivering to certain locations.
This is why we use multiple, trusted, reliable courier services to ensure an optimum delivery service to our customers.
International shipping to our worldwide customers has seen a massive increase in costs over the last couple of years, thanks to a variety of issues. Restrictions arising from the COVID pandemic caused delays in shipping schedules, resulting in ships being diverted to different destinations due to the loss of scheduled berths. And reduced demand for some goods, has had a knock-on impact by delaying transportation until full loads became available.
Availability of shipping containers has also proven to be a problem due to ships unloading full containers and departing before empty containers could be re-loaded. This has resulted in a shortage of containers at some international manufacturing locations.
Providing the very best customer service is at the heart of everything we do at Insight Security. Although we are all facing difficult times, our customers are assured of the best possible service, high quality products and freely available advice from experienced security experts.
If you have any questions about property security or if you have any special requirements remember we are here to help. Give us a call on 01273 475500 and we’ll provide you with free, expert advice.
This message was added on Thursday 15th September 2022
Need Help or Advice?
Call the Insight team
01273 475 500