Black Country hit by energy costs.

The Black Country Chamber says firms are struggling to cope with recent price rises which are hitting their performance with a vengeance.

Almost two thirds of companies surveyed had experienced or were expecting bills to increase by up to 39 per cent, while ten per cent noted an increase of 40 to 59 per cent.

And 3.5 per cent of respondents reported a staggering increase in energy costs of 80 per cent or more.

Black Country businesses are saving energy to cut costs

Chamber policy and representation assistant Peter Drake, who conducted the survey, said: "The negative effects of energy bills have been revealed as significant and wide-ranging.

"Sixty one per cent of respondents overall blamed rising energy costs for a decrease in profits. That proportion rose to 75 per cent for manufacturers." Up to a quarter found that their competitive edge was blunted and that financial planning was being made more difficult by repeated price increases.

One company said: "Over five years we invested more than £100,000 in energy saving systems to find all the savings have been more than eaten up by price increases.

This meant increasing prices at a time when it is almost impossible to compete with Chinese imports."

Despite the prices only 1.4 per cent of respondents reported cuts in production and 5.5 per cent job cuts.

Businesses are taking a wide range of steps to cope with rising energy costs.

Almost half of respondents planned to change their energy suppliers (47.3 per cent), and 41.8 per cent were prepared to operate their business at a reduced profit margin.

A quarter of respondents (24 per cent) were aiming to raise customer prices. Just over 17 per cent were intending to withhold staff pay rises.

Helping the environment was a small concern among local businesses, as only 1.4 per cent of respondents were preparing to switch to greener, more renewable forms of energy.

Several companies had been deterred from using greener energy by its high cost.

One respondent said: "Alternative technology, solar power, should be more commonplace and affordable."

The chamber said there was not much hope for long-term decline in energy costs, with 84.9 per cent of firms expecting further price increases in the next two to three years.

There was strong demand for government action to alleviate pressure on business. More than half thought a cut in fuel duty would ease the situation, or that some sort of cap on utility prices was needed. A company based in West Bromwich said: "If energy costs continue to increase, the Treasury should not exploit the extra revenue gained in taxation.

"This would offset some of the increase paid by the customer or consumer."

Meanwhile, most firms fear that energy prices will continue to rise over the next year despite hopes of cheaper gas and oil this winter, according to a survey yesterday.

A poll of more than 200 manufacturing firms by the Engineering Employers Federation revealed that they have been hit by average increases of 55 per cent in gas prices and 42 per cent in electricity costs this year.

Sources: http://www.icbirmingham.co.uk

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