The head of Britain’s largest packaging company has launched a sharp attack on British government policy, which has resulted in significantly higher energy costs than in the rest of Europe.
Miles Roberts, CEO of DS Smith, said that at a time of tremendous growth in online shopping, the UK paper industry has shrunk significantly over the past decade, while the German sector has doubled because of the cost of electricity on the island nation compared to the US were much higher than the EU.
“The fundamental problem is that energy costs for heavy industry users are almost twice the European average,” he told the Financial Times. “That is quite a disadvantage compared to other countries. The government has imposed more and more taxes on companies. “
DS Smith announced major investments this year to build new production facilities in Italy and Poland and to expand in Germany.
According to Andrew Large, director general of the Confederation of Paper Industries, a trade group, the German paper industry has grown from three to seven times the size of the UK due to Berlin’s policy of helping the industry with the additional costs associated with decarbonization.
Roberts is the latest industrialist to call on the UK government to take action to cut costs for manufacturers after a global surge in gas prices hit the country particularly hard due to a lack of gas storage facilities and reliance on weather-dependent wind power.
Monthly average wholesale electricity costs in the UK reached £ 200 per MWh in September, almost double the French and German average of £ 110 per MWh, according to the Energy Intensive Users Group.
The lobby group calls for a reduction in network costs, a cost-containment mechanism for the rise in gas prices and measures to reduce some CO2 costs. The government has offered loans to help us weather the crisis.
Roberts highlighted the UK emissions trading scheme launched in May as problematic, which sets a price on carbon emissions that has risen to nearly £ 75 per tonne, a premium for Europe.
Paper is a £ 12 billion industry in the UK and employs 62,000 people. Roberts said if government policies did not get more supportive, it threatens further decline and the UK would become more reliant on imports for a product with immense domestic demand growth.
“We are committed to becoming CO2 neutral. Various governments in Germany, France and Spain have been very supportive of this, ”he said, adding that he would like to continue investing in the UK.
“We just have to understand what British government policy will be like.”
The Ministry of Economic, Energy and Industrial Strategy did not immediately respond to a request for comment.
Not everyone in the packaging industry agrees with Roberts. Tony Smurfit, CEO of Smurfit Kappa, Europe’s largest paper-based packaging company, told the FT last month that industrial companies should wage their own battle against higher energy costs.
“The government must intervene to protect poor people from massive energy costs. The industry should take care of itself, ”he said.
DS Smith, which ships 28 percent of its boxes to the UK, is benefiting from the pandemic surge in e-commerce.
It keeps rising fiber optic, energy and logistics costs in check through price increases, hedging agreements and its own fleet of vehicles.
The FTSE 100 group increased its dividend Thursday after seeing an 80 percent increase in pre-tax profit to $ 175 million in the six months to the end of October.
The group’s shares were unchanged in late morning trading on Thursday.
