Eastern Europe could be the major beneficiary of rising energy costs and the handicap that the Climate Change Levy (CCL) is creating for UK recycling businesses.
Bandvulc Tyres director Richard O’Connell believes that the environmentally friendly side of the tyre sector is being undermined and unfairly penalised despite its green credentials.
Because of legislation which he describes as “bizarre”, he suggests that he may have to consider any future investment in eastern Europe.
O’Connell said: “Energy costs are spiralling out of control and putting extreme pressure on our manufacturing competitiveness. We’re finding ourselves constantly running faster in order to just stand still, diverting valuable investment away from product research and development in order to channel it into ways of reducing energy consumption.”
But while O’Connell has called for Government to consider introducing tax breaks for professional recycling companies, enabling them to maintain their home base, costs have taken a victim north of the border.
One of Scotland’s oldest manufacturing companies, Smith, Anderson & Co has announced that its papermaking operation at Fettykil Mills, Leslie, in Fife has gone into receivership.
Directors of the firm had implemented a rescue plan last year, but despite most of that being successfully put in place, turmoil in UK energy markets has seen gas and electricity prices continue to increase.
With forward prices nearly 50% higher than when the rescue plan was formulated, the company found they were fighting an almost impossible battle.
A spokesman for the parent company Smith Anderson Group said: “The rescue plan that was implemented last year for Smith, Anderson & Co was completely undermined by ever increasing energy costs.
Unfortunately, these costs have made our papermaking business unsustainable.”
With UK energy prices rising at twice the rate of mainland Europe, Goodyear has already announced intentions to close its UK tyre factory and companies such as Michelin are building wind turbines to avoid the impact of increases.