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A fibreglass manufacturing facility in Wigan is facing potential closure, placing approximately 250 jobs at risk, unless its Japanese parent company, Nippon Electric Glass (NEG), can secure a new business partner or buyer.
In a troubling development for the UK’s industrial landscape, NEG announced a thorough “strategic review” of its Electric Glass Fiber UK (EGF) division, which is anticipated to last around two months. This review underlines the challenges the UK composites sector is grappling with, particularly due to escalating costs related to raw materials, energy, and logistics, which have resulted in decreased sales.
NEG highlighted that the current operational climate has been marked by significant competitive pressures, leading to the decision for a performance recovery initiative. The Wigan facility specializes in producing fibreglass that is crucial for reinforcing composite materials used in electric vehicles and wind turbine blades.
The potential shutdown of the Wigan site could exert additional strain on the British government’s forthcoming industrial strategy, set to be revealed in June. This strategy is expected to emphasize sectors imperative for economic growth, including advanced manufacturing.
The industrial sector across the UK has been reeling from surging energy prices, particularly in the wake of Russian military actions in Ukraine, which have disrupted the market since 2022. This situation has been compounded by recent news that British Steel plans to cease steel production in Scunthorpe, leading to the closure of its two blast furnaces and affecting up to 2,700 jobs, characterizing the developments as “devastating” for the workforce and the sector at large.
Financially, EGF reported a loss of £3.47 million for the 2023 fiscal year, a stark contrast to the £7.4 million profit recorded in 2022. The slip in profitability has been attributed to declining customer demand, influenced heavily by an influx of competitively priced Chinese imports and rising costs for essential materials.
During its strategic evaluation, NEG plans to explore various avenues, including the possibility of selling the Wigan operation or pursuing strategic partnerships. However, if these options do not yield positive outcomes, the company may have to contemplate the complete shutdown of EGF’s operations.
Since acquiring the Wigan site in 2016, NEG made substantial investments into the facility, including a notable £15 million capital injection from its parent organization two years later. Currently, the Wigan factory serves as NEG’s sole manufacturing establishment in Europe, while the company maintains operations in Japan, the United States, and other regions across Asia.
Source
www.theguardian.com