(Bloomberg) — Britain’s iconic ceramics industry are slashing production and cutting jobs as surging energy bills push the sector in a key English town to the brink of collapse.
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Some companies have seen a 10-fold surge in energy bills, crippling a major UK industry that produces goods from sought-after teacups to bricks, aerospace parts and artificial hip joints. The crisis is hitting British businesses from hospitality to entertainment, leaving Prime Minister Rishi Sunak in a tricky political position in industrial heartlands ahead of the next general election that’s due latest by January 2025.
The ceramic industry, with annual sales of around £1.6 billion, has been operating mostly out of the city of Stoke-on-Trent for about 300 years. Its failure could make it difficult for Sunak to retain the parliamentary seats that the ruling Conservatives wrestled control of in 2019 from the Labour Party which had held them since their creation in 1950. Bloomberg’s leveling up scorecard shows a widening gulf between many regions and London.
Even before the energy crunch, many pottery companies were struggling with competition from cheaper Chinese goods and lower labor costs overseas. The industry, once a hub that sent English pottery all over the world, is now being pushed close to the edge of collapse by the current crisis.
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H&E Smith Ltd., a tile supplier to the London Underground which this year won the largest order in its century-old history from the Sydney Metro, saw a 53% surge in its energy bill for October compared with last year, even though it says it used less. That’s because of a big hike in some of the fixed costs charged to businesses, with the company’s monthly standing charge increasing a whopping 700%.
Like others, the company is being forced to raise prices and has asked some staff to take a week off on reduced holiday pay after Christmas, Managing Director Fred Smith said.
10-Fold Surge
Some companies have seen their six-month energy costs rise to nearly £12 million from £1.1 million, the British Ceramics Confederation said in a statement this month. “The energy crisis has delivered a body blow to our sector,” it said.
One of Stoke’s most well-established pottery makers Wade Ceramics collapsed into administration this month citing soaring energy costs, which left over 100 workers redundant. Fiskars Group is cutting output by about 80% at the factory that makes the popular Wedgwood pottery brand and reducing hours for its employees through to Jan. 9.
About 20% of the pottery sector’s roughly 7,000 jobs could be at risk in the next 12 to 18 months unless they get more more financial support for their energy bills, GMB Union senior organizer Colin Griffiths predicted in an interview.
The government has given some financial support to energy-intensive industries with a package that has artificially capped the price of gas and electricity at lower than wholesale rates. That lifeline is due for changes in April. Without extra help, there are no guarantees the industry will be around in the future, according to the British Ceramics Confederation.
Emma Bridgewater, owner of the self-titled pottery brand, says government help is urgently needed.
“One thing intelligent government might know is, where you see failures and businesses closing doors, anticipating that there will be real need there for extra support,” she said. “Living in a community where everything is falling down around you is incredibly testing and traumatizing, and we should be doing everything we can.”
Heron Cross Pottery, established in 1876, closed its factory on Fridays during the Covid pandemic. Energy costs have prevented it from opening on that day again. Its gas contract increased tenfold when it was renewed this month, according to Tracie Shaw, the sales director.
“We will have to increase our prices which will reduce sales and there’s a big chance that we will cease manufacturing very soon as it will just cost too much to fire the kiln,” she said. “It’s a very worrying time for everyone.”
–With assistance from Todd Gillespie.
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