UPDATED 25th October 2022
Customer price increases
As we have indicated for some months, the unprecedented increase in raw materials and transportation costs which has been seen worldwide, has necessitated the need for price increases to maintain our service levels in a sustainable manner.
Unfortunately, the impact of the Russian military operations against Ukraine has now generated an additional upward pressure on our energy costs in the UK and Europe, where currently all our manufacturing activities take place, with gas and electricity being the primary fuels. Most economic indicators show that the UK in particular has seen the steepest increase in energy prices since the start of 2022 and this also impacts the cost of raw materials. Even with the Energy Bill Relief Scheme introduced by the UK Government on 1 October 2022 to limit the rates our suppliers can charge, we continue to experience significant energy cost inflation which has now reached an unsustainable level for us.
As a result of the above and given the extreme volatility of the situation on energy prices, we have no choice but to address this issue through the introduction of an Energy Surcharge.
Throughout the pandemic, we globally achieved high service levels and over 90% On Time in Full (OTIF) performance for our customers. Implementing the Energy Surcharge will help us to sustain the strategic business continuity investments we have made in supply chain, capacity, inventory, and quality.
The Energy Surcharge is proportionate/correlates to our direct increase in energy costs. It is a temporary measure and capped in line with the Energy Bill Relief Scheme.
We recognise the impact this exceptional measure may have on customers but in the current circumstances this is fundamental to our ability to continue to supply customers with the same high level of reliability, quality, and service on a long-term basis.
COVID-19: Safety, health and well-being of our people
At Victrex, the safety, health and well-being of all our employees is the highest priority and fundamental to everything we do, alongside security of supply for our customers and ensuring we continue to be a sustainable business. We established a COVID-19 committee at the start of 2020 and continue to take appropriate precautions and remain proactive in our approach, even if case rates have declined globally since the start of the pandemic.
Chemicals as an essential industry
The UK government defines Chemicals as an essential industry with essential workers, with Victrex also having a long-standing history in supporting many critical and “life-sustaining” applications, particularly in Medical. In the US, many states define Chemicals as being ‘life-sustaining’. Overall, our global supply chain continues to function effectively with high service levels for our customers.
Return to site
Overall, the majority of our global employees have now Returned to Site, supported by our Global Flexible Working Policy, although our Return to Site plans vary by region:
- Our UK Return to Site was completed in March 2022, with all controls lifted and some guidelines remaining
- Our China technical centre reopened in June 2022 with local controls in place in line with legislative requirements
- Our US offices and manufacturing facilities have all returned to site
- Our Europe team have all returned to site with some local controls in place
- Our Japan team returned in May 2022 with Korea teams returning in June 2022 with some local controls in place.
Risk assessments for Return to Site are only in consultation and approval through our COVID-19 committee.
Sustainability is integral to Victrex’s business model and is a clear part of our purpose ‘Bringing Transformational & Sustainable Solutions That Address World Material Challenges Every Day’.
Our products enable environmental & societal benefit for our customers and society, for example, by supporting lightweighting and CO2 reduction in Aerospace and Automotive applications, and clinical benefit in Medical. We have a target to grow our Sustainable products from nearly 50% today to over 70% by 2030. We are accredited by the likes of Apple, in their Clean Energy Supplier programme; FTSE Russell, in their Green Revenues Index and MSCI, one of the leading ESG rating agencies, with an A rating.
Our broader Sustainability agenda includes Resource Efficiency and minimising our use of resources, including a carbon net zero goal by 2030 in our own operations (Scope 1 & 2 emissions); Social Responsibility, including a strong Diversity, Equity & Inclusion (DE&I) agenda, a focus on STEM (Science, Technology, Engineering & Maths), where we are seeking to develop and inspire the next generation of students in science and innovation through outreach work; and employee volunteering in the communities we serve.