Rising energy costs are crippling the Hunter's manufacturing sector's ability to compete on the world stage.
While large and small manufacturers have absorbed an onslaught of power and gas hikes in recent years, many now accept they have no option but to increase prices.
Electricity costs have more than doubled in the past six months.
Owner Peter McKinnon said the costs would invariably impact on its competitiveness.
"This morning we gave a price to a US company and they came back and said 'it's too expensive you are going to have to bring it down,'" he said.
"Here we are with quite innovative new products. There's great interest from a global and export perspective but we are not going to be competitive if we keep getting these types of (energy cost) premiums.
The federal parliament passed emergency legislation on Friday designed to bring down energy costs.
Business Hunter chief executive Bob Hawes said he was pleased the government had gone beyond just capping the price of gas and coal, which he said would have had only a limited impact on controlling prices.
"The last federal budget was forecasting increases in energy bills for households of between 40 and 50 percent over the next two years and the latest measures look like being able to restrict that to between 20 and 30 percent. It's a great start and we hope the same rates can be achieved for businesses, but the bills are still going to hurt when they come in," he said.
"The situation concerning the cost businesses in the Hunter are paying for power is far more complex than it is for households, and we are seeing cases where costs for some local businesses have gone up by in excess of 200 per cent. Whilst this is not the norm, the cases aren't isolated. This is simply not sustainable, and we'll be looking closely at the latest measures to see how this might mitigate the situation in which some businesses find themselves".
Tomago Aluminium, the state's largest electricity consumer, announced in October that it will work with industry and technology partners to develop opportunities for establishing renewable power generation and energy storage projects in the region and beyond. It hopes to switch to renewable energy by 2029.
Tomago Aluminium chairman David Fallu told the Newcastle Herald that energy prices were placing significant pressure on the aluminium smelting industry.
"The cost position of electricity in Australia obviously means that all smelters, even those with leading operational efficiency positions like Tomago, are forced to operate in the fourth quartile of the global cost curve and that's a very uncomfortable place," he said.
"When you combine that with other cost inputs that are utilised for production, like gas, coke and pitch, it makes it a very challenging position. That's why we are going through the process (of transitioning to renewables) but it just makes that process all the more difficult."
In the short to medium term, gas would remain a critical part of the plant's energy security strategy.
"The most important thing for electricity security is generating consistent supply through the transition period. Thermal firming and gas in particular plays a critical role in that and we have seen how much reliance we have on that as generating capacity has come out of the system, he said.
"As a result, I think the most important thing to be focusing on is the supply side to ensure that there's stability and security in energy generation."
Australian Workers Union National Secretary Daniel Walton said government intervention to control energy costs was an essential component of the Hunter's clean energy transition.
"Without government intervention I have no doubt we would see closures and job losses in the Hunter Region - it's that simple," he said.
"Manufacturing is energy intensive and although one day that energy will be zero carbon, we haven't yet reached that point in terms of technology. We need affordable gas and coal to keep manufacturing viable in the Hunter today so that it's ready to expand into a zero carbon future."
Likewise, Australian Manufacturing Workers Union state secretary Cory Wright said workers were bearing the brunt of rising energy costs in the manufacturing sector.
They see their job security eroded and their wages continue to stagnate when the bosses say there's not enough money for a pay rise," he said.
"Workers across the Hunter are feeling the sting of high energy prices, wondering if they'll be able to pay their next power bill as the cost of living continues to rise. Governments could have prevented this situation through regulation of the power generation sector, but instead we've had our electricity assets sold off to profit-making entities.
"The AMWU welcomes the federal government's efforts to cap gas prices and provide bill relief to working families, but we are concerned about the potential for handouts to oil, coal, and gas companies. The government's focus should be on creating a plan for workers in traditional industries to gain new skills and be supported through a transition to renewables, not on propping up corporations with public money."
WHAT DO YOU THINK? We've made it a whole lot easier for you to have your say. Our new comment platform requires only one log-in to access articles and to join the discussion on the Newcastle Herald website. Find out how to register so you can enjoy civil, friendly and engaging discussions. Sign up for a subscription here.
