Current Plant & Machinery Trends That Are Driving Value

In my role as Senior Director within Hilco’s Plant & Machinery division, I’ve found that the value of assets depends on a complex mix of factors. Each element plays a part, from utilisation and power consumption to age, government policy shifts, and evolving environmental targets. Market dynamics, such as demand, supply, lead times, and saleability at home and abroad, also have a significant impact.

Through Hilco’s recent experiences in the Engineering, Automotive & Steel industry sectors the above factors play a major role in determining precise valuations for our clients.

Having managed various large projects for clients on behalf of Hilco, I have seen the following factors arise.

Steel Production

The average electric price faced by UK steelmakers for 2024/25 is £59.48 per MWh compared to the French price of £47.76/MWh and £52.04/MWh in Germany. That’s a price gap of up to £7-12/MWh, meaning we pay £26 million or 14-25% more for our electricity this year than our European competitors. The price disparity is predominantly driven by higher UK wholesale costs and partly through greater network charges.

Steel production is incredibly electro-intensive, and power charges are one of the largest barriers to sustainable steelmaking in the UK. With proposed steel industry shift to electric arc furnaces, it is expected the sector’s electricity consumption will roughly double.

With US Tariffs of 25% on UK steel and the proposed European tariff of 50% on non EU steel, this sector will certainly have a rough ride ahead.

Figure 1: Electricity prices for steel producers in France, Germany, and the UK (2024/25)

Automotive

Consolidation of contracts to provide aftermarket spares to Tier 1 Automotive suppliers of Internal Combustion Engine vehicle parts meaning a number of plants were either underutilised or over utilised.

Older production plants which are energy inefficient were causing higher unit prices for production in a competitive marketplace.

Food & Beverage

UK factories which heat, chill or freeze as part of their production processes are seeing steep utility price rises compared to their European competitors. This was particularly prevalent in larger food processing factories recently visited.

Engineering

Larger factories both in the UK and Europe are investing in automation and robotic handling to limit employee levels to counter increases in wage levels and employer national insurance contributions long term.

Raw material costs combined with increased site energy overheads have resulted in a number of plants either being left dormant or running at a loss both in this sector and in the energy from waste and steel sectors.

A number of Chinese assets are now entering the European marketplace whereby improved quality is significantly driving down equivalent European prices, however essential support packages are required due to the lack of localised maintenance support.

Machine tools, injection moulding and food and beverage equipment have recently been appraised on sites that have originated from China. Whilst their economic lifting policy is currently not as lengthy as their European versions, the initial outlay savings in capital expenditure pays dividends in a market with long lead times and expensive raw material pricing when the initial machine can be a fraction of the cost.

Energy & Power

Recent appraisals by the P&M team, have included assets appraised which provide alternative energy solutions including hydrogen generators, electrolysers, biomass boilers and energy from waste plants. Each of these have their complexity around scalability, price points, feedstock issues, unit prices, plant, farm and land ownership and the associated running and build costs all factored into our valuations.

Glass Manufacture

From Hilco’s recent experience in this sector, we have seen volatility in the prices of key raw materials such as silica, soda, and lime as well as disruption to timely deliveries across their supply chains.

This sector is highly energy-intensive, and as such, has been heavily impacted by the sharp rise in energy costs in addition to the increase in labour and transportation costs, which have driven up overall production costs.

Tariffs

Due to the U.S tariffs imposed on certain UK goods, UK exporters are faced with either absorbing these costs or passing them on to their customers.

UK Manufacturers are at a disadvantage over goods supplied from those countries not subject to the same tariff levels and U.S buyers may prefer tariff free alternatives.

There is additionally, a supply chain disruption around uncertainty with how trading partners react and delays to alternative supplier’s or trade routes. Hilco has witnessed this with manufacturers who have an urgent requirement for critical machine spares.

The U.S is one of the UKs largest exporters for steel. With non-competitive energy costs plus the 25% tariff imposed, this potentially prices some UK producers out of the market and can cause margin erosion. The UK already faces high energy costs, rising material costs and weak domestic demand so this sector is extremely volatile.

Figure 2: Top Five UK Goods Exports to the US
Total Annual Value, 2023

Advising on the Value of Assets in Times of Change

Should you require any valuation assistance for your machinery and business assets, our team would be delighted to offer our expertise. Over the years we have gained extensive experience in delivering valuations that are not only reliable and concise but also tailored to meet the specific needs of each client. We understand that accurate valuations play a vital role in business planning, financial reporting, insurance, and transactions, and we pride ourselves on ensuring that every report we issue is both clear and transparent.

Whether you are seeking clarity on the current value of your machinery, need support with asset-based lending, or require valuations for compliance or strategic decision making, our team is committed to providing a service that combines technical accuracy with practical insight.

By drawing on both industry knowledge and proven methodologies, we help you approach business decisions with greater confidence and clarity.

If you are looking for a valuation partner who understands the importance of precision, reliability, and timely delivery, we would be pleased to share our capabilities and demonstrate how our approach can add value to your business. Get in touch!