Dhe signals can no longer be ignored: The toilet paper manufacturer Hakle is insolvent. The company could no longer pass the increase in costs on to its customers, supermarkets and drugstore chains. It is unclear what will become of the 220 jobs in Düsseldorf.
The steel group Arcelor Mittal stops two production plants in northern Germany, the employees have to work short-time. The reason: high energy prices. SKW nitrogen works Piesteritz have shut down their ammonia plants. From October, the company would have to pay 30 million euros more per month for the gas levy alone, and that only accounts for part of the additional costs for energy. At this cost level, production is simply no longer worthwhile, they say. The result: for the time being, no more Adblue will come from Saxony-Anhalt, the urea solution that trucking companies and drivers need for their diesel vehicles.
More than six months after the start of the Russian war of aggression in Ukraine, it is becoming clear how far-reaching the consequences are for the German economy. Energy prices have once reached unprecedented heights. Almost all economists are now expecting Germany to slide into recession, as it did during the corona pandemic. What they also expect: that energy prices will remain permanently higher than before the war.
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In its economic forecast published on Thursday, the Kiel Institute for the World Economy (IfW) expects gross domestic product (GDP) to fall by 0.7 percent in 2023, after an increase of 1.4 percent this year. Inflation, on the other hand, is likely to be even higher next year than this year at 8.7 percent.
Getting liquefied gas in tankers from America or the Middle East is more expensive than Russian pipeline gas. Electricity has also become a scarce and expensive commodity in this hot and dry summer. The decision by Federal Minister of Economics Robert Habeck (Greens) to shut down the remaining three German nuclear power plants in this situation is causing irritation. The warnings of de-industrialization in Germany are getting louder and louder. It’s a dangerous development. In hardly any other country does industry account for such a large share of gross domestic product (GDP) and thus of prosperity as in Germany. Around 6 million people work in industry in Germany.
Every tenth company is already throttling
The companies that are in competition with providers from other countries where energy is cheaper than in Germany are particularly affected. According to a survey by the Federation of German Industries (BDI) published on Wednesday, almost every tenth medium-sized industrial company has already interrupted or reduced its production due to the high prices. The association surveyed almost 600 companies, more than 90 percent said that the increased energy and raw material prices were an existential or major challenge for them.
Every fifth company is considering relocating part or all of its production abroad. 40 percent of the companies also said that they were deferring investments in converting their production to climate-friendly processes. Only half as many said they would now accelerate this transition.
