Adapting to rising electricity prices

Many businesses in Ho Chi Minh City believe that the increase in electricity prices is inevitable, sooner or later. In the context of a still challenging economy , many businesses are implementing solutions to adapt to the current situation in order to mitigate the increase in input costs.

Businesses are implementing various electricity saving solutions such as reducing waste and increasing labor productivity… Photo: UP

Increased costs

Speaking with a reporter from Tien Phong newspaper on the morning of October 22nd, Mr. Le Mai Huu Lam, General Director of Cat Van Loi Industrial Electrical Equipment Manufacturing Joint Stock Company (Cu Chi district, Ho Chi Minh City), said that the electricity price increase was not entirely unexpected. However, this will significantly impact the production costs of businesses, especially Cat Van Loi Company, which specializes in electrical and mechanical engineering and is heavily affected by the market fluctuations. build Vietnam is facing difficulties. Currently, businesses are only just starting to recover after participating in projects such as Long Thanh Airport (Dong Nai) and Noi Bai Airport ( Hanoi )... Businesses have also only recently expanded their markets to ASEAN countries such as Cambodia...

According to Mr. Lam, in the context of the domestic and global economic downturn, businesses are forced to compete fiercely to maintain market share and cannot raise prices during this period for fear of losing customers, while production costs are increasing. In addition, global political tensions could push fuel prices even higher, causing input costs to continue rising, adding further burden to manufacturers.

"Electricity prices have increased by nearly 4.8%, meaning the company will pay more than 20 million VND extra each month just for electricity. If we add other rising costs such as raw material prices, fuel, logistics, etc., the additional costs for the business will amount to several hundred million VND per year," Mr. Lam analyzed.

Ms. Nguyen Thi Thuy Tien, representative of Minh Huy Plastic Manufacturing Company (Binh Tan District), which specializes in producing consumer goods, said that electricity costs account for about 10-15% of the cost structure of finished products. The increase in electricity prices will certainly affect business because input materials have already increased in price in the first months of 2024. Meanwhile, purchasing power in the market is currently quite weak. “We cannot raise prices at this time because business has been very difficult all year. The company only relies on the last months of the year to sell goods; if we raise prices now, consumers will turn away and not buy. Customers will choose similar products from other countries that are cheaper,” Ms. Tien said.

According to many businesses, when fuel costs, specifically electricity prices, increase, if they don't raise product prices when they bring them to market, their year-end profits will decrease. However, given the current sluggish purchasing power across various sectors, businesses are very cautious about raising selling prices.

Find ways to adapt

Faced with rising input costs, instead of complaining, Cat Van Loi Company sought ways to adapt. These included increasing labor productivity, optimizing production processes, reducing waste to lower product costs, and finally, greening through the use of solar power. The company estimates the investment cost for installing solar panels at approximately 1 billion VND.

According to Mr. Nguyen Xuan Lam, Director of Thuan Phat Garment Company (Thu Duc City), electricity price increase This is an inevitable rule to ensure energy security. The price increase will encourage people to be more responsible in using electricity economically. “When electricity prices rise, production facilities will inevitably have to restructure their costs, optimize their production lines for more efficient operation, and change technology… At the same time, this will accelerate the transition to renewable energy sources such as rooftop solar power. However, I believe that the investment cost for solar power is quite high. Meanwhile, on holidays and Tet (Lunar New Year)…; days when businesses are not producing, there is surplus electricity that cannot be sold back, so they are hesitant to invest,” Mr. Lam said.

According to Mr. Do Phuoc Tong, Chairman of the Ho Chi Minh City Mechanical and Electrical Business Association, the increase in electricity prices is unavoidable due to rising electricity production costs.

Mr. Tran Van Thoai, Director of Minh Hung Wood Company (Thu Duc City, Ho Chi Minh City), said that the increase in electricity prices at this time is a significant challenge. To adapt, the company has implemented many solutions such as dividing operating hours into multiple time slots, minimizing operation during peak hours. The company has also increased investment in modern machinery and equipment, and launched a competition for innovative ideas, technical improvements, and fuel savings… “The company's leadership has just issued a document guiding workers on operating new machinery and equipment to minimize operating costs. At this time, some units can operate optimally because of the new equipment,” Mr. Thoai said.

Source: https://baoquangninh.vn/thich-ung-voi-tang-gia-dien-3325581.html