Manufacturers caught in energy crunch are ‘stressed and traumatised’

“Our competitors in China in this industry, they are mostly using coal gas, furnace oil and coal,” he said. “But in Australia, we are obliged to use gas because it’s a [clearer] burning fuel and it helps us meet our environmental norms.”

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Energy-intensive businesses including foundries are anticipating increases to fixed-price contracts when they go to market again, while some paying spot prices are paying up to five times more for electricity.

Australia’s biggest foundry, Adelaide-based Intercast & Forge — which manufacturers iron castings for railways and the automotive sector — has been forced to halt production multiple times in the past two months due to price spikes, and met with its 170 staff on Thursday to discuss options for working irregular hours to lessen the blow of operating below break-even prices.

“We’ll still incur higher costs than what we like, but the long-term value of supplying customers is more important in the short term than just turning off,” said general manager Brett Lawrence, who is also Australian Foundry Institute’s national president.

He said the heightened power bill would lead the company to increase prices by up to 10 per cent, forcing costs onto suppliers and consumers.

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“But arguably, it’s only if we can continue selling … in some cases, because we export so much, we’ll get pretty quiet because we weren’t getting the orders,” Lawrence said.

“If people are whingeing about CPI in the last quarter, look out if this starts to be translated and be consistent across the board.”

Jhunjhunwala said it was ironic Australian natural gas exports would assist international competitors at the expense of local manufacturing.

“It’s crazy what’s happening here,” he said. “The solution has to be multifaceted. But if something can be done right away, it should be done.”

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