“I have never seen anything like it.”
That’s how Briody Beds Director David Briody summarizes the current situation he and thousands of other businesses across the country are currently facing.
Based in Oldcastle, Co Meath, the company manufactures a wide range of beds and bedroom furniture in four factories in the region, which are sold domestically and exported to Portugal.
To do this, it operates a large number of specialized power-hungry machines and also relies on means of transportation to move raw materials and finished products.
It has been in operation for nearly 50 years and, like most businesses of that era, has seen many changes and challenges, but none like this.
“We are really being hit from all angles,” said David Briody, referring to rising costs in many areas.
“Our energy bills have probably more than doubled in the last four to five months.”
The business, which employs over 100 people, had energy contracts at reasonable rates.
But when it expired, it was difficult to find another supplier willing to amend the tariffs.
In the end, the company found a contract that would give it a one-year contract, but could be terminated by the provider if the cost of wholesale energy was too high.
It is also affected by the continued and severely rising costs of other inputs and raw materials.
Like most companies, Briody Beds has had to pass some of this burden onto its customers in recent months.
“You can only absorb so much,” says David Briody.
“We’ve added price increases to our products, but you come to a point…you’re going to be too expensive and you won’t sell anything. So it’s a balancing act.
“I’m not really sure what they can do within the budget. Giving one-time payments and stuff like this is just putting a Band-Aid on things. It doesn’t help moving forward. “
This is just one company’s story, but it’s being replicated in companies across the country.
No wonder the employers group Ibec warned when it started submitting pre-budgets last Monday that energy costs now pose a serious threat to the viability of many businesses in Ireland.
Some members predict that energy bills will rise four or five times this year compared to 12 months ago.
The result is an energy affordability crisis for the business sector that could be far more widespread than a pandemic.
That’s because there is no business in the country that does not rely on energy in some way.
The impact is wide-ranging, from cash-poor small businesses to large, low-margin mass-produced energy users.
There is also the question of how long this will last, with some experts predicting that high energy costs will continue in the medium to long term.
“Businesses are in shock,” said Shane Connery, head of policy at Chambers Ireland.
“As these things increase, it’s very difficult to predict what the costs will be for businesses.”
Ensuring a reduced unit price is almost impossible at the moment, so businesses should consider other options to save energy.
Chambers Ireland has advocated for members to conduct energy audits through Ireland’s Sustainable Energy Agency to see where they can reduce costs in the short term and increase energy efficiency in the long term.
“This can save a lot of energy used, often 10 to 20 percent less energy used, which is probably the best way to save money right now,” Conneely says. says.
Others are looking at options to make themselves more energy self-sufficient, he said, which is what David Briody is currently doing.
“At the moment, the business that really feels like it’s a relatively low-margin business.”
He is installing solar panels on one of his company’s manufacturing sites. He estimates that this will reduce energy costs by 55-70% when running.
However, he is critical of the lack of support from the state, and subsidies are only available when solar power is installed alongside other efficiency measures.
David is also frustrated by his inability to return surplus electricity to the grid in exchange for credits on days when his power plant is not running.
“We work five days a week, so when this system is running, it will generate 15-25 kWh of electricity on a boring day in November, and that electricity is going nowhere.” he said, referring to Saturday and Sunday.
Shane Connery said other companies are considering introducing on-site generation and storage.
Some sectors feel it more than others
Everyone is affected, but the severity of the impact varies by sector.
“The businesses that I really feel at the moment are those that have relatively small margins, so in areas like hospitality that have really struggled over the past few years and have struggled to find members of staff in many situations, they We’re looking for peak energy prices, in a situation where dinnertime prices are going up significantly,” said Shane Connery.
“And these are the kind of companies whose survival is at stake that really have to rethink.”
The pharmaceutical and medical technology sectors are also very concerned as they operate 24/7, he added.
Therefore, proposals by energy regulators to impose tolls to force large users to reduce energy use during peak hours are a concern.
Those working in the restructuring sector say that while inquiries for their services have increased, they have yet to see many companies with energy-specific problems, as they have already witnessed in the UK. I’m here.
Instead, the energy is exacerbating problems that were already there.
Declan Tayte, managing director of Kroll in Ireland, said: “There are many challenges facing businesses, especially in the SME sector.
These include higher interest rates, cuts in consumer discretionary spending and higher energy prices, requiring businesses to start paying down warehoused debt into earnings early next year.
“There are a lot of challenges out there, and when you add them all up, I think it’s going to be a very tough situation for a lot of companies,” Taite said.
“I think companies in the retail and hospitality sectors are likely to suffer the most on the back of declining discretionary spending.”
The new “inspection light” process, known as SCARP, is likely to be used more and more over the next few months as companies face existential crises and attempt to restructure.
“My sense is that by the end of the year there will be an uptick in formal bankruptcies and next year will definitely be in the first quarter,” he added.
So we all agree that we need help from the government and we need it quickly.
And we need to focus on the companies that need it most, and provide it in ways that are simple for businesses.
Otherwise, for many people, there is a great risk that the lights will go out.