With electricity prices up, businesses seek to cut costs

Facing higher power costs, a lot of enterprises are restructuring their production shifts and business plans to reduce electricity usage, according to Tien Phong newspaper.

The companies say that they have to make every effort to cut electricity costs before they think of raising prices to their customers, because raising prices in the post-crisis period, while people are trying to tighten their belts, would be unwise.

Cut expenses first

Vo Van Duc Bay, Deputy Director of Cholon Plastics Company, said that the company’s  board of management still has not reached agreement on whether to raise the sale prices of products at this moment.

“Inputs have all increased in price,” Bay explained. “We’re looking at a five percent higher bill for the materials we import from the beginning of March.  However, it is not easy to raise our prices while purchasing power remains weak and we face stiff competition from imports.”

Bay said that he has asked all divisions of his company to report in detail about the production plan each week.  Based on these reports, management will reorganize production shifts and minimize production in the hours that power costs are at their peak.

The company plans to use rheostats to manage electricity use more effectively and to install power saving lamps.  “Raising sale price will be the last thing we will do if, having taken all consumption-saving steps, our production cost is still higher than the sale price,” Bay said.

Cao Tien Vi, Chairman of Saigon Paper Co., expressed a similar view.  He said that enterprises dare not think of raising sale prices at this moment, though the input materials have all increased in prices.

According to Vi, with the electricity price increases, higher bank interest rates and higher salaries for workers, his production costs in the first quarter of the year are up by at least four percent in comparison with the same period of 2009.  Cost-cutting is essential, he added.  “This will depend on the production management and technologies of enterprises,” Vi said

In the garment sector, said Diep Thanh Kiet, Deputy Chairman of the HCM City Textile, Garment and Embroidery Association, companies will reduce outlays for advertising and public relations in order to help reduce the production cost.

VietNamNet/TP

Tags: electricity of vietnam, energy in vietnam, vietnam electric, Vietnam electricity, Vietnam electricity prices, Vietnam energy, vietnam power