Germany’s steel and metalworking sectors are deeply alarmed over the seemingly endless increase in energy prices, which threatens to profoundly disrupt the value chain.
“We are in a substantial industrial crisis. Companies are cutting back on production. Every day we are losing added value that will not come back,” says Christian Vietmeyer, managing director of steel and metal fabricators federation WSM. He calls on the government to make quick amendments to the relief package it recently announced, and which was criticised by many sides as insufficient.
“We are facing the abyss,” he warns.
WSM thus echoes the call made by several automotive supplier sectors, which admonish that the traditional supply relationship between themselves and OEMs might no longer work (see Kallanish 12 September).
Current economic figures show how production at Germany’s steel and metalworking industries is losing more and more momentum. In July, it fell by another 2% year-on-year.
“The volume of orders is shrinking enormously, by 14.1% y-on-y in July, by 11.4% in the second quarter,” says Holger Ade, head of energy policy at WSM. Vietmeyer adds that “business expectations for the next six months are sinking to the level we experienced during the pandemic outbreak.”
Fabricators feel sharp headwinds from all sides, with supplier mills ceasing production, and electricity contracts expiring with no new offers from energy suppliers for 2023.
“Add to that the gas shortage – no one knows what the allocation will be in the worst case,” Vietmeyer says.
These factors are driving companies closer to the breaking point every day.
“We are already seeing the first insolvencies,” he says.
Christian Koehl Germany