Cracks widen in Britain’s pottery industry as energy costs surge
Sector waits anxiously to discover what further support will be provided, writes Hannah Boland
Almost every day, Jason Simms receives an email or a letter from a supplier telling him prices are going up. “They’re non-negotiable increases,” says Simms, from Stoke-on-trent bone-china maker Duchess China 1888. “We’re lucky because we deal with luxury brands and so we’ve managed to pass that increase on a bit.”
Still, everything from plastic and packaging to its English clay has gone up in price over the past year.
“And then on top of that, there’s energy,” Simms says. “To be frank, on energy, someone has got to intervene before it becomes too much for the ceramics sector.”
Concerns over energy bills have been weighing heavily on potters in Britain’s industrial heartland of Stoke-on-trent, as well as in nearby Derbyshire.
For months, the sector has been held back from what industry chiefs deem a “cliff edge” by government support. Now, as ministers prepare to unveil the next stage of energy support for businesses – expected to be a downgraded version of what was in place – fears are reaching boiling point.
Rob Flello, chief executive of the British Ceramic Confederation, says the stakes are high for the industry. “I worry about what the UK ceramic industry will look like in 2050.”
After all, this is a sector that relies on very high temperatures for firing. Flello says it has already been dealt a “body blow” from the energy crisis over the past year. He claims some companies have seen their energy bills rise from just over £1m for six months to nearly £12m.
The ripple effects could be significant should more businesses be pushed towards the brink. Britain’s ceramic industry is not just responsible for producing tableware and decorative pieces, but also key materials for a variety of other industries including bricks, tiles, clay pipes for building work and advanced ceramics for jet engines and braking systems. Glass and steelmakers, too, are heavily dependent on the sector with ceramics makers producing refractories that form the basis for the kit used to manufacture both materials. “The ceramics sector is pretty big and pretty important,” says Flello. And, for many, the prospect of costs ballooning within the coming months is one that fills them with fear. “Gas increases of up to 20 times previous levels are simply not sustainable,” Flello says.
Ceramics is in a slightly different position than, say, steel manufacturing, in that most do not qualify for existing government electricity aid because they’re not using electricity, but primarily gas.
Estimates suggest less than 5pc of the British ceramics sector qualifies for electricity bill support – a figure that is much lower than in other sectors. Instead, these companies only are eligible for the non-domestic energy bill relief scheme, which gives a discount on gas rates. Flello says the price of gas was around £1.80-£1.90 per therm this week, but over the past year has jumped to as much as nine times its pre-covid level where prices were around 35p.
There are signs that the pressure has already proven too much for some in the industry. Wade Ceramics, a Stoke-on-trent pottery company that produced bottles, recently collapsed into administration, months after firing a warning shot over a £500,000 rise in its annual energy bill.
Where many larger companies will have hedged their energy costs, smaller businesses are likely to be most under pressure.
Sebastian Lazell, chief executive at Derbyshire specialist Denby Pottery, says current market projections are for energy prices to remain extraordinarily high throughout 2023. “So for businesses which are relying upon being able to access and get protection from the price cap that’s in place right now, they face a bit of a cliff edge at the end of March.”
Lazell says that as Denby is a “bigger company, we’re fortunate that we planned and were able to put in place energy protection 18 months ago or so. But anyone who maybe didn’t have those hedges in place must be worried.”
What the future looks like for many ceramics makers remains unclear. Lazell says the pandemic was a difficult time for the sector – particularly those selling fine bone china or tableware to restaurants. “But you could make a case for saying this is a more existential challenge for the industry.”
The key thing, right now, is that “businesses need to know what is happening,” says Jo Gideon, the Conservative MP for Stoke-on-trent Central. “They’re looking now at what contracts they are going to enter into for energy after spring, and they need to really know what support the Government is going to give.”
Bosses such as Simms might be dealing with daily emails on price rises, but all across the industry, the rising cost of energy has proven difficult to deal with. The Chancellor has been clear that the current level of energy support is “unsustainably expensive”. Where he lands on what support is sustainable will determine whether cracks in the sector deepen.