Energy price swings aren’t just a budgeting nuisance—they can wipe out margins, delay orders, and make planning feel impossible. But with the right practical moves, manufacturers can regain control. Here’s how smart businesses are staying ahead, not just surviving but growing stronger.
Margins are tight enough without energy costs jumping 20% in a month. For many manufacturers, volatility in energy pricing turns planning into guesswork and weakens customer confidence when costs get passed down. The good news? You don’t have to sit back and take it. There are clear, straightforward ways to take back control and protect your margins.
Why Energy Price Volatility Hits Manufacturers Harder Than Most
Energy isn’t an overhead line item for manufacturing businesses—it’s baked into every product you make. From the machines on the floor to the HVAC systems running nonstop, energy is one of the few inputs you can’t eliminate, only manage. That’s what makes it dangerous. When prices spike, you’re left with two bad options: eat the cost or pass it to the customer. Either way, someone loses.
Let’s say you run a precision machining operation. You quote a job today, factoring in normal power rates. A few weeks later, rates surge, and the actual production cost is 12% higher. Your margin disappears. You either absorb the hit or go back to the customer with awkward news—neither builds trust. Worse, most energy costs hit without warning unless you’re actively watching markets, which most manufacturers simply don’t have time to do. That’s the trap. You’re reactive, not proactive. And in a volatile energy environment, that can be lethal to growth.
The High Cost of Doing Nothing
Ignoring energy price risk might seem like the simplest path, especially when you’re busy juggling customer demands, lead times, and workforce issues. But doing nothing can actually cost you more than you think. There’s the direct cost of higher bills, sure—but also the indirect impact on production planning, delivery timelines, and even your team’s ability to hit targets under unpredictable operating conditions.
One manufacturer of industrial ovens learned this the hard way. When natural gas prices spiked during a regional freeze, their monthly energy bill more than doubled. That delay caused a major delivery backlog. The customer they disappointed didn’t renew the contract. The sting wasn’t just the spike—it was the lack of planning that turned a temporary issue into a long-term business loss.
The takeaway here is clear: energy volatility doesn’t just hit your wallet. It hits your reputation, your relationships, and your ability to grow. The businesses that survive these shocks aren’t the ones with the biggest budgets—they’re the ones with the smartest responses.
Lock In Stability with Fixed-Rate Energy Contracts
One of the easiest ways to gain some predictability is by locking in a fixed-rate contract with your utility or through a broker. A lot of manufacturers don’t even realize this option exists—or they assume it’s just for massive companies. Not true. Fixed contracts are available to businesses of all sizes and can cover electricity, gas, or both.
A powder coating business in Illinois signed a 3-year fixed-rate electricity contract when prices were relatively low. The decision didn’t seem urgent at the time, but one year later, when rates jumped 18%, they were unaffected. Meanwhile, neighboring shops saw energy bills jump thousands per month. That one strategic decision protected their margins and let them keep customer pricing stable during a turbulent year.
If you’re not reviewing your energy contracts annually—or better yet, every six months—you’re leaving money on the table. It’s worth spending an hour with a broker who understands your region. They can often negotiate rates better than you could get directly and flag upcoming market changes. Locking in pricing won’t eliminate volatility, but it gives you time to plan, quote more accurately, and stay competitive.
Don’t Let Energy Leaks Drain Your Profit
Another simple but often overlooked strategy is identifying where you’re wasting energy—and fixing it. Many plants and workshops run older machines that draw far more power than necessary or leave equipment running idle overnight. Those “small leaks” add up fast. If you’re not metering or at least manually checking your power use, you’re guessing—and probably guessing wrong.
A small plastics manufacturer did a walk-through of their shop after noticing higher-than-usual bills. They found an air compressor that stayed on 24/7—even on weekends—because no one had thought to put it on a timer. That one fix saved nearly $3,000 a year. Not bad for five minutes of work.
There are low-cost energy monitors now that give you real-time data without needing a full audit. Even if you just install one or two to spot-check your heaviest machines, you’ll start seeing patterns—and saving money. This kind of visibility makes energy something you can actually manage, not just react to when the bill comes.
Shift Energy-Intensive Work to Off-Peak Hours
Most utilities offer time-of-use pricing, where energy is cheaper during off-peak hours (often early mornings, nights, or weekends). But many manufacturers never take advantage of this—usually because no one told them about it. Shifting heavy-load tasks to those cheaper windows can reduce your bill significantly, often without any new equipment.
A shop that does custom CNC work realized they could run three of their largest jobs overnight instead of during the 2–6 p.m. window, when rates were highest. The result? Monthly energy costs dropped 20% and production actually sped up, since machines were available during regular hours for smaller runs.
Call your energy provider and ask what rate structure you’re on. If you’re on a flat rate, ask if time-of-use pricing is available and worth it for your profile. It’s a one-time phone call that could unlock real savings—especially for high-consumption processes like welding, cutting, drying, or cooling.
Even Small-Scale Power Generation Can Change the Game
You don’t need a massive solar farm or wind turbine to benefit from self-generated energy. Even modest solar panels, small wind setups, or battery backups can add stability and reduce your exposure to grid volatility. The real power of these systems isn’t just in the savings—it’s in the control.
Take a bakery that invested in rooftop solar and battery storage mainly to keep refrigeration running during blackouts. They ended up saving more than they expected, especially during summer months when grid rates surged. The extra layer of reliability gave them negotiating leverage with suppliers and peace of mind during every storm season.
There are tax incentives, grants, and financing programs that can make these investments accessible even to smaller manufacturers. If you’ve got a high, flat roof or open land nearby, it’s worth investigating—not just for long-term savings, but for day-to-day operational confidence.
Treat Energy Like a Strategic Input, Not Just a Bill
Too many businesses treat energy as something to pay, not manage. But if you think of it like raw material or labor, it becomes part of your strategic planning. That means tracking it by product line, forecasting seasonal changes, and baking it into your pricing—so you’re never caught off guard.
Some accounting systems already let you allocate energy costs by job or machine. If yours doesn’t, even a simple spreadsheet can help. When you know which products are most energy-intensive, you can quote smarter and look for ways to shift or redesign production.
It’s not just about cutting costs—it’s about control. The more visibility and predictability you build around energy, the more confidently you can grow—even when markets are anything but calm.
Don’t Let Energy Be a Blind Spot in Your Growth Plans
There’s a big difference between reacting to energy price shocks and building a business that’s resilient to them. The companies that manage to grow during volatile periods aren’t necessarily luckier or better funded. They’re simply more prepared. One of the smartest mindset shifts you can make as an owner is to treat energy as a managed cost, not just a fixed one. That means building it into how you make decisions—from quoting to purchasing to scheduling.
One example that stands out: a packaging manufacturer in the Midwest brought in a part-time facilities manager whose sole focus was operational efficiency. Within three months, they’d renegotiated energy contracts, adjusted run schedules to off-peak hours, and added a small solar system. They didn’t have to lay off anyone, buy new machinery, or chase new customers—they just got leaner and more predictable. Their margin went up 6% in a year. That margin became the buffer they used to invest in automation. That investment created even more breathing room.
The real opportunity here isn’t just about lowering costs—it’s about creating stability that fuels better decisions. If you don’t have to panic every time energy prices spike, you can think longer-term. You can say yes to more complex jobs, more confidently quote fixed prices, and know that your margins are protected.
Energy is never going to be something you control 100%. But how you respond to it? That’s fully in your hands.
3 Actionable Takeaways You Can Use This Week
- Call your energy provider and ask about fixed-rate options, time-of-use pricing, or any programs that reward you for reducing use during peak hours. You might be surprised by what’s available.
- Walk your shop floor after hours and look for machines or systems that stay on when they shouldn’t. Set timers, put up signs, or assign someone to shut things down—it adds up.
- Reach out to an energy broker or advisor and get a quote for fixed pricing. Even if you don’t switch now, you’ll be smarter for it—and better prepared for the next spike.
You don’t need to overhaul your whole operation to protect yourself from energy price swings. You just need to start managing energy like the critical input it is. A few smart moves today could mean the difference between a tight quarter and a profitable one tomorrow.
5 Smart Questions Manufacturing Business Owners Are Asking About Energy Price Volatility
How do I find out if I’m overpaying on energy right now?
Start by comparing your last 3 months of bills to the average commercial rate in your region. A quick call to a local energy broker or your utility’s business service line can also give you a clear answer—sometimes in minutes.
What’s the easiest first step if I have zero time to deal with this?
Look at your last 2–3 energy bills, then call a broker to see if you’re eligible for a fixed-rate contract. It’s a one-call task that can lead to meaningful savings and more predictable monthly costs.
Is it worth investing in solar or on-site power if I plan to sell the business in a few years?
Yes—especially if you can show stabilized margins and reduced operating costs. Buyers love predictable businesses. On-site energy can boost valuation, not just savings.
Can I pass energy costs to customers without losing them?
You can, but only if you’re transparent and consistent. Many businesses now include an “energy surcharge” line item when costs spike—but long-term, locking in rates gives you more stability to avoid awkward pricing surprises.
What software do I need to track all this?
You don’t need new software to get started. A simple Excel sheet tracking energy spend by month, per job or department, is a powerful start. If you grow from there, some ERP systems let you allocate utility costs by product line.
Take the First Step Toward Stability Today
The most dangerous thing you can do with energy prices is assume you’re stuck with them. You’re not. Whether it’s locking in a better rate, shutting down idle machines, or rethinking when you run your high-load jobs, there are practical steps you can take today to build a more resilient, profitable business. You don’t have to solve everything at once—just start. The sooner you do, the stronger your foundation will be. Energy might be unpredictable, but your margins don’t have to be.