Adapting to rising electricity prices

Many businesses in Ho Chi Minh City believe that increasing electricity prices is “sooner or later”. In the context of economic difficulties, to curb input costs from increasing with electricity prices, many businesses have implemented solutions to adapt to the current situation.

Businesses implement many electricity-saving solutions such as reducing waste, increasing labor productivity, etc. Photo: UP

Increased costs

Talking to Tien Phong reporter on the morning of October 22, 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 increase in electricity prices is not too surprising. However, this will strongly impact the production costs of enterprises, especially Cat Van Loi Company specializing in the field of electrical mechanics, which is greatly affected when the market build Vietnam is in trouble. Currently, the company has just started to recover after participating in the Long Thanh airport project (Dong Nai), Noi Bai airport ( Hanoi )... The company has just expanded its market to ASEAN countries such as Cambodia...

According to Mr. Lam, in the context of the economic recession at home and abroad, businesses are forced to compete fiercely to maintain market share, unable to increase selling 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 to increase, putting more burden on manufacturers.

“Electricity prices have increased by nearly 4.8%, meaning the company will pay more than VND20 million per month for electricity alone. If we add other costs that are also increasing such as input material prices, gasoline, 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 production facility (Binh Tan district) specializing in consumer goods production, said that electricity prices account for about 10-15% of the price structure of finished products. The increase in electricity prices will certainly affect business because input materials have increased in price in the first months of 2024. Meanwhile, purchasing power in the market is currently quite weak. "We cannot increase prices during this period because business has been very difficult all year. The facility only relies on the last months of the year to sell products. Now, if we increase prices, consumers will turn their backs and not buy. Customers will choose similar products from other countries with cheaper prices," Ms. Tien said.

According to many businesses, when fuel costs, specifically electricity prices, increase, if they do not increase product prices when launching to the market, profits at the end of the year will decrease. However, in the context of the current gloomy purchasing power of all industries, businesses are considering increasing selling prices.

Find ways to adapt

Faced with the problem of increased input costs, instead of complaining, Cat Van Loi Company is looking for ways to adapt. That is to increase labor productivity, optimize production processes; reduce waste in production to reduce product costs. And the final solution is to go green by using solar power. If solar power is installed, the company estimates the investment cost to be about 1 billion VND.

According to Mr. Nguyen Xuan Lam, Director of Thuan Phat Garment Company (Thu Duc City), increase electricity prices is an inevitable rule to ensure energy security. Increasing prices will help people be more responsible in using electricity economically. “When electricity prices increase, production facilities will have to restructure costs, optimize production lines to operate more economically, change technology... At the same time, this also accelerates the transition to renewable energy forms such as rooftop solar power. However, I think the cost of investing in solar power is quite high. Meanwhile, on holidays, festivals, Tet...; the days when businesses do not produce electricity, they have excess electricity, while they cannot resell it, so they do not dare to invest", Mr. Lam said.

According to Mr. Do Phuoc Tong - Chairman of the Ho Chi Minh City Mechanical and Electrical Enterprises Association, the increase in electricity prices is inevitable because the cost of electricity production is increasing.

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 big challenge. To adapt, this company has implemented many solutions such as dividing the operating time into many time frames, including minimizing operations during peak hours. The company has also increased investment in modern machinery and production equipment, and launched competitions for innovations, technical improvements, fuel savings, etc. "The company's board of directors has just issued a document instructing workers to operate new machinery and equipment to minimize operating costs. At this time, some generators can operate optimally because of the new equipment," said Mr. Thoai.

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