UK Industrial Strategy Hindered by Rising Energy Costs

The closure of Sheffield’s Tinsley Bridge automotive division last September was attributed to escalating energy prices and insufficient government assistance, according to its chairman, Mark Webber.

With a history spanning two centuries, Tinsley Bridge was known for manufacturing railway springs and was once part of British Steel. In recent years, it was operated by Webber, other directors, and employees. Despite attempts to secure funding for automation and manage soaring gas expenses, the company ultimately had to lay off all 110 skilled employees.

Webber noted that the closure was executed methodically, with ample notice given to staff and clients one year in advance. Most employees remained until the final shutdown in September 2024 to fulfill outstanding orders for suspension parts for trucks, despite the looming job losses.

All departing workers received redundancy packages and were assisted in finding new employment, with many quickly hired due to the high demand for skilled metalworkers familiar with heat treatment.

The company enjoyed a £20 million workload in its last year, which has since been distributed among suppliers in France and India. The site is being considered for redevelopment into logistics warehousing.

Webber explained that the business’s downfall stemmed from energy costs that were significantly higher than those of competitors in Europe, affecting pricing and customer retention.

There were also pressing needs for investment in automation. Webber lamented the lack of government support, suggesting that with a couple of million pounds in investment, the company could have preserved those 110 jobs. He emphasized that if a new investment firm promised job creation, the government likely would have been more responsive.

Despite his outreach to various stakeholders prior to the closure announcement, many expressed regret upon learning of the shutdown, indicating they would have offered assistance.

According to a recent report from Make UK, industrial energy costs in the UK are four times higher than those in the US and 46 percent above the global average.

The Confederation of British Industry (CBI) echoed these concerns, stating that businesses are currently operating at a disadvantage, exacerbated by lingering energy price increases since the 2022 Russian invasion of Ukraine. CBI Chief Executive Rain Newton-Smith noted that almost 90 percent of firms have experienced rising energy costs over the past three years, with a significant number cutting back on investments.

Webber concurs with these assessments, arguing that without a substantial change in how energy prices are managed, the UK’s industrial strategy will remain fundamentally flawed. He acknowledged the assistance received from the Confederation of British Metalforming (CBM), which supports manufacturers.

CBM President Stephen Morley indicated that while the sector faces numerous challenges, including tariffs, energy costs are the most pressing concern.

The Financial Times reports that government ministers are considering increasing subsidies for 370 energy-intensive businesses under the British Industry Supercharger scheme established in April 2024. However, Morley cautioned that smaller engineering firms may end up shouldering higher costs to support larger companies.

Tinsley Bridge Limited was one of three branches within the Tinsley Bridge Group. It had received loans from government-backed regional business finance initiatives in 2022 and 2019, while the other divisions continue operations, with Tinsley Bridge Services thriving due to demand from major construction, oil and gas, and rail sector clients, generating revenues of £6.5 million annually.

Conversely, Tyzack Machine Knives, a £7 million turnover company that produces blades for the steel and scrap industries, is struggling with high energy costs as it exports 80 percent of its production and competes against US and European rivals with access to cheaper gas.

A government spokesperson stated that by transitioning to clean energy, the UK aims to mitigate the volatility of fossil fuel markets and secure business and household finances with domestically controlled energy sources. They emphasized that initiatives are in place to reduce energy costs for essential UK industries, aiming to save businesses £5 billion over the next decade.