Firms wait to feel benefits
PLUMMETING commodity prices are bringing little cheer to Teesside’s small business community.
Despite the benefits of falling prices - and the cut in UK interest rates - benefits have yet to feed through to firms whose margins are being squeezed by customers requesting discounts.
Alex Carter, director of Hartlepool energy firm Durable Technologies Ltd, said he had seen a decrease in fuel prices “but not much else”.
He said: “What happens two or three months ago doesn’t really affect us now.
“It takes around six months or so for the prices to feed through.”
Steven Winspear, managing director of Dean Construction in Hartlepool, said he was having to pass on fuel and raw material price cuts to his customers.
The company allows for sudden fluctuations in steel prices by forward buying by no more than three months, but Tony Sarginson, North East regional manager for manufacturers’ organisation EEF, said many more were tied into much longer term deals and were unlikely to see the benefits of deflation until they renegotiated terms.
He urged power companies to pass on the recent fall in wholesale energy prices.
“We’re talking to government on this issue,” said Mr Sarginson. “Price reductions would be a great boost for high energy using areas like Tees Valley.”
According to UK energy analyst Inenco, consumers are unlikely to feel the benefit of any reduction until March at the earliest. Then customers could expect reductions of 15% for electricity and between 20% and 25% for gas, it said.
Dave Nicholson, MD of Billingham haulage firm Nicholsons Transport, said there had been no commitment from his supplier to reduce costs by next spring.
“They say we’ve been undercharged and are asking us to pay the same rate until further notice - but nobody has put a timescale on it. It’s scandalous.”
More Than Business’ latest Business Inflation Guide (BIG), which measures a basket of 20 of the most important items for small businesses, showed rising inflation had hit small firms in the North harder than in any other region - up 10.4% in the year to the end of September and 3.9% in the second quarter alone.
