Customers to feel the pain as manufacturers tackle surging power costs

Concreters, brick makers, steel fabricators and other energy-dependent local manufacturers are cutting staff bonuses, freezing pay rises and bumping up prices as soaring energy bills eat into earnings.

Businesses across the country say they will have to pass the surging power costs on to consumers, as they take measures to keep themselves afloat following Treasurer Jim Chalmers downbeat assessment this week that household energy bills will rise on average 20 per cent this financial year. The costs are forecast to surge 56 per cent over the next two years.

Belinda Gambrill, who runs Western Sydney metal fabricator BLV Engineering, said her firm is considering price increases, so it can pay wages and bills on time.

“We’ve got these increases, so we need to maybe try and save money somewhere else or put our prices up. That involves charging them [customers] more for our hourly rates or putting our prices up on materials.”

Local manufacturers, like BLV, have the added worry that if they raise their prices customers will seek cheaper alternatives in China. Gambrill added the business was battening down its hatches to cope with energy bills potentially doubling in the near future.

“If that doubles, that is a fair increase to our yearly expenditure. However, I don’t see it being something that would tip us over the edge,” she said.

Energy, oil, gas and coal prices have shot to new highs since the start of the conflict in Ukraine, squeezing businesses across the board.

Mining giant Fortescue said on Thursday the cost of extracting iron ore – a key ingredient for steelmaking – from its mines in the Pilbara has jumped 16 per cent over the year because of rising diesel prices and tight labour conditions.

“Our biggest cost driver is fossil fuel, diesel in particular,” chairman Andrew ‘Twiggy’ Forrest said.