Cost pressures blowing up

 Cost pressures blowing up

 When we think we’ve overcome one challenge, it feels

like another is thrown our way.

 

We’re just now starting to get back to normality when it comes to the Covid pandemic, but this year has thrown up a number of other challenges when it comes to costs.

Energy prices are up, fuel prices are up, and inflation is at levels we’ve not experienced since the 1980s.

 

Inflation expectation, in particular, has hit record highs.

Conducted between 23 August and 13 September,the British Chambers of Commerce (BCC) Quarterly Economic Survey – the UK’s largest independent survey of business sentiment, involving 5,737 businesses, and a leading indicator of UK GDP growth – has shown that while businesses continue to recover from the deepest recession on record, persistent weakness in

several indicators highlight concerns over the strength of the recovery.

 

For example, 62% of industrial firm respondents are planning price hikes over the next three months.

 

The latest data from the Office for National Statistics shows that the cost of living inflation had risen from 2% to 3.2% in August alone, with the Bank of England expecting that figure to rise to more than 4% by the end of the year.

Shevaun Haviland, BCC director-general, said: “The

supply chain crisis, alongside wider labour shortages

and spiralling price rises, is clearly starting to drag on

our economic recovery from Covid. Businesses are being

battered by a deluge of upfront cost pressures, including

huge increases in the prices of key raw materials

and shipping, as well as now facing a rise in National

Insurance contributions. At the same time, they are

losing out on opportunities for growth due to the labour

shortages, despite many already raising wages and

offering training.”

 

Colin Porter, managing director at Porters Bodyshop

in Northern Ireland, said: “Like all other businesses in

our sector – and beyond – we are seeing increasing

costs from energy bills to the general buying of our

materials. There is no doubt that this will have an effect

 

on our bottom line, however we all can look at ways of

managing these costs without major increases in repair

costs to our customers and while still maintaining high

quality repairs at all times.

 

“We are actively looking at our energy consumption

within the business and we watch closely the use of wet

and dry materials. We do this by looking at our average

paint mix per job report and the cost of materials per

sold hour. These are just some of the ways we manage

our main costs to the business; by reviewing these

reports closely it lets us see how we are performing

and opens up ways of improving things. However, costs

are still going up therefore it’s down to all of us to start

thinking slightly differently about how we manage our

businesses into the future.”

 

Ashley Bernstein, managing director of Merseyside

Car Hospital, added: “As we slowly come out of the

Covid pandemic, we are now experiencing shortages and

a significant shortage of a large number of vehicle parts,

equipment and courtesy vehicles. As we are all aware,

there has been a dramatic increase in energy bills, as

well as general business expenses, and as a company

we have been affected by this increase in costs. That

said, we have been pro-active in ensuring that we are

looking at every aspect of our business, from ensuring

that all lights are switched off in areas not being utilised

and making sure there is no wastage across heating and

other utilities. We have always and continue to monitor

all products being used to ensure there’s no waste. Price

increases are out of control, however tightly monitoring

our operating costs helps to soften the blow of these

dramatic increases.”

 

MG Cannon’s Robert Snook is finding the positives

in the situation viewing it as an opportunity to look at

everything in your business and improve efficiency allround.

He said: “Bodyshops facing price increases find

it hard to directly pass on these increases due to fixed

rate contracts being in place. However, there are things

that can be done to mitigate their impact. No matter

where you are with your suppliers right now, you will

still be able to buy differently and/or buy better and/

or buy less, without doing less work or reducing your

business sales and often without it being bad news for

your suppliers either.

 

“Look at each supplier, supply process, and product

line through a new lens – when was the last review

with that supplier, when did you last benchmark that

product, price or service, how can you involve the

supplier in your new objectives and what structure do

you need to manage purchasing better from now on?

You will often be surprised by the results and wonder

why you didn’t look at these things before. Body shops

often try and offset increases by only focusing on

doing more or selling more, but there are often unseen

savings opportunities from buying better – innovations

in these areas come out of challenging times like

these, so this is your best opportunity to take a fresh

look at these things.”

 

The BCC’s Havilland concluded by saying: “The focus

Must now be on creating the best possible environment

For businesses to grow and thrive. By supporting firms

Through the difficult months ahead, they can begin to

Generate wealth, create jobs and support communities.

That is by far the best way to sustainably deliver the

Tax revenue the government needs to support public

Services and the wider economy.”

source: Bodyshop By By Danielle Bagnal