01 March 2006 | Anusha Bradley

Purchasers in the plastics manufacturing industry have been hit hard by rising energy and raw material costs and the sector is facing large-scale job cuts.

The British Plastics Federation (BPF) said the high cost of energy could lead to 7,000 job losses - about 3 per cent of the 230,000-strong sector. The plastics industry is worth £12.4 billion-a-year.

The BPF said some firms face 100 per cent increases in bills.

A survey of its members found that 44 per cent are not passing the extra costs on to customers. As a result, more than a quarter of firms are reducing production and more than half are cutting investment.

Nearly half have cut staffing levels by about 6.5 per cent. More than 10 per cent are now looking to relocate to countries where utilities are cheaper.

Victoria Griffiths, UK supply manager for plastic bag firm CeDo, said it had been hit with a "double whammy".

The company, which makes plastic bags for supermarkets, moved in October from fixed-year contracts to buying a month ahead in a bid to cut its £1.4 million annual electricity bill. Griffiths believes this saved jobs.

"We put in more time and resources to tracking the market. It is difficult to convince the board the costs are down to market conditions, not poor purchasing," she said.

SMmar2006