DEBATE RISING COSTS
IN ASSOCIATION WITH:
PRESENT: Richard Slater
Lancashire Business View (chair) Shelley Audis-Riddell
Breakthrough Behavioural Products
Professor Simon Bolton Edge Hill University
Luke Wilkinson Equestrian Surfaces
Zak Khan Euro Energy
Alan Reid Boost Business Lancashire Purves Ali Boost Business Lancashire
Nadeem Memon Panaz
Jane Parry PM+M
Annette Weekes PDS Engineering
FEELING THE PRESSURE
The cost of doing business continues to rise with soaring prices on all fronts, from raw materials to staffing. With the support of our event sponsor Boost Business Lancashire, we brought our expert panel to PM+M’s Blackburn headquarters to look at the issue of rising costs and what business can do to ease the pain
What is the background to the increased costs businesses are facing and what are causing the most pain?
JP: There’s a whole range of factors. We’ve shortages of resources, people being a huge one, some raw materials as well. We’ve got the ongoing impact of Brexit disrupting supply chains and making imports more expensive, we’ve got the war in Ukraine, we’ve got the National Insurance increase.
A whole series of factors have combined to create some real blockages in the supply chain, genuine shortages of some things and a lot of bidding wars for resources.
PA: For the past three or four months, everywhere we’ve gone, every company we have spoken to, the first things they have talked about are rising costs and delays in material. Recruitment has been a big issue. Retaining staff as well. It’s across the board, in every sector.
Everybody is concerned about the war in Ukraine. There’s also the delay in products coming from China and materials from plastic to metals, as well as machinery. These are delays that are causing pressures.
AW: We’re precision engineers, we manufacture parts for aerospace, oil and gas, motor sports and a whole range of end applications. The biggest issue for us at the moment is the Ukraine situation which has stopped the trade of nickel, sending stainless steel prices through the roof. For a period stockists wouldn’t even quote to supply. We’ve seen 200-400 per cent price increase in some cases.
It’s a bit of cliché but, with the impact of Brexit and now Ukraine, it is that perfect storm. We’re heavily into aerospace and the industry isn’t picking up as fast as we need it to. There’s something like a 77 per cent increase in the price of jet fuel.
SB: What we are seeing is that many organisations don’t actually know the actual true cost of their product or service.
We’re working with them to firstly understand those costs and secondly to understand the segmentation – the customers that add value and those we call legacy clients.
How do you change the situation? Firstly analyse: Where’s the money coming from?
What’s it costing us to deliver? Are we actually pricing at the true price?
Because material costs are going up, you’ve got a genuine reason to talk to customers and say, ‘Prices are going up’.
AW: We’ve also got an escalation in energy costs – gas and electricity. If you look at what is happening with fuel just over the last month, if you are a business delivering stuff, your delivery costs have gone up exponentially. It’s everything all at the same time and that’s where it becomes difficult for businesses to manage.
SAR: We’ve seen an increase in raw material costs We have had two price increases from our manufacturers so far this year. It’s how you pass that onto the customer. We have held back some of those costs, though we have also passed some onto the customer.
Wheat is one of the key ingredients for lower grade foods and the main supply is from Ukraine, so there’s going to be a big stress at some point. This is not over yet, and we predict that October is going to be another challenging time for price increases.
Continued on page 50
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