The British manufacturing sector is currently navigating a perfect storm. While the industry grapples with a skills gap that could see 20% of the workforce retired by 2026, an equally urgent structural threat is hollowing out operational margins: the sheer volatility of the UK energy market.
At a recent industry meetup organised by the Made in Group, James Wood, CEO of Optimised, a Patron of the group, delivered a sobering masterclass on why the current energy landscape is a top barrier to growth. For UK industry leaders, the message was clear: the status quo is no longer an option.
The Competitiveness Gap: A 400% Disadvantage
The disparity between domestic and international energy costs is no longer just a "challenge" - it is a fundamental threat to the British export economy. Wood highlighted a startling comparison: a manufacturer in the Midlands currently faces costs of approximately 25p per kWh, while their direct competitors in Canada are operating at roughly 6p per kWh.
With prices recently spiking from £70/MWh to over £100/MWh, Wood noted that for some firms, the volatility has moved beyond a margin squeeze to a genuine threat to operational survival.
Beyond the Headlines: The Non-Commodity Crisis
While most headlines focus on global gas prices, the real "hidden" killer for UK industry is the system charge. These non-commodity costs, driven by government policy and aging infrastructure, actually constitute the bulk of your energy bill.
"There is a big increase coming on your transmission charges from April 2026, around 60%," Wood warned.
Because these charges are typically bundled into rates, most organisations lack the visibility to see how they are being squeezed. However, where there is complexity, there is opportunity. Wood shared a case study of a Midlands chemical manufacturer where a forensic audit recovered £980,000 in misapplied charges. That is nearly £1 million in capital returned to the bottom line, money that was already theirs.
Taming Volatility: The Power of the Collective
Ultimately, organisations within UK industry need to take responsibility for their procurement strategy to remain competitive. A recurring problem is the "single-day buy," where firms gamble their future on a market whim.
To address this, Optimised is leveraging the power of collective action through their strategic procurement "baskets." By pooling the requirements of multiple members, they create a cumulative fund of £10m to £30m in energy spend, providing SMEs with the market leverage usually reserved for multinational corporations.
The "Basket" Advantage:
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Wholesale Performance: Last year, the Optimised Trading & Risk team outperformed the market average by 31%, rising to 40% during peak periods.
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Aggregated Buying Power: Larger volumes increase supplier appetite, forcing them to price their margins more competitively.
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Reduced Risk Premia: By integrating various consumption profiles into one bulk volume, suppliers can reduce the "volatility fees" typically attached to individual sites.
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The Credit Challenge: As credit insurance becomes harder to secure, the basket framework spreads risk, offering a more bespoke approach to credit assessments that keeps high-energy users operational.
The Roadmap to Resilience
Wood’s roadmap for navigating this crisis is built on three essential pillars: Visibility (using sub-metering to catch waste), Risk Management (moving away from spot-buying to collective hedging), and Forensic Auditing (recovering hidden system charges).
In an industry where we cannot afford to lose a single penny of investment toward the next generation of engineers, taking control of energy data is no longer optional - it is the difference between survival and growth.
Optimised is a Patron of the Made in Group. Members of Made in the Midlands and Made in Yorkshire can access the Collective Energy Procurement Basket to help manage risk and secure the future of their operations.
Is your energy strategy fit for 2026? Request a no-obligation assessment with Optimised to uncover hidden costs and determine whether the Collective Procurement Basket is right for your business.