[Skybird]

FOCUS writes:
--------------------------
Panic is spreading in parts of the German economy due to the rapid rise in gas and electricity prices. In view of the further round of price increases expected by the beginning of next year, both companies and their industry associations fear that production in Germany could become permanently unprofitable. The Munich-based Ifo Institute expects that the development of energy prices will lead to increased investment abroad.

"At first glance, the cost share for energy is not that high," says Ifo economist Oliver Falck. The share of energy costs in gross production value is 0.5 percent in the automotive sector, 0.8 percent in mechanical engineering and 3.1 percent in chemicals.

"Nevertheless, a sharp rise in energy prices can affect the competitiveness of those industries in particular that face tough international competition and already realize relatively low sales margins due to competition." Falck expects "temporary production stoppages and the relocation of particularly energy-intensive production steps abroad."

According to Falck, energy-intensive production is also very capital-intensive - in other words, expensive. Relocations are not readily possible, he said. "However, we will probably see relocations abroad in new investments." At the VDMA mechanical engineering association, a spokesman says, "Companies won't make such an important decision solely because of energy prices, but sharply rising energy prices can of course tip the scales in individual cases."

Because of high energy prices, the president of the Association of German Chambers of Industry and Commerce, Peter Adrian, also warns of numerous insolvencies in the coming months. "If energy prices do not drop significantly, the lights will go out in tens of thousands of companies in this country in six months at the latest," he told the "Rheinische Post" (Friday). This would threaten a loss of prosperity of incomprehensible proportions. In addition, gas prices in Germany are about ten times as high as in the USA.

How immense the energy demand of the most energy-intensive companies is can be seen from the data of the Federal Statistical Office. The city of Ludwigshafen, with a population of just 171,000, has the highest gas consumption in all of Germany. This is because the city on the Rhine is home to BASF's main plant.

BASF does not provide figures for Ludwigshafen alone, but energy costs for the European sites combined were €800 million higher in the second quarter than a year earlier, according to the chemical company. Compared with the second quarter of 2020, the additional costs of energy supply thus amounted to one billion euros.

A consequential damage of the high energy prices: Domestic supply chains have long since been disrupted, and supply problems are no longer confined to Chinese imports. "We have received numerous responses from member associations reporting production cutbacks by member companies due to the massive rise in energy prices," says Bertram Brossardt, the CEO of the Bavarian Business Association (vbw).

BASF has greatly reduced its ammonia production, and the production of acetylene, a basic material for many plastics, textiles or even solvents, is also not running at full capacity. According to a BASF spokesman, demand has declined because some acetylene downstream products cannot be produced competitively at present.

"The cost of electricity, oil and gas accounts for about 12 percent of production costs in the chemical industry," said Wolfgang Große Entrup, chief executive of the industry association VCI. "In basic chemicals, the share is even higher at around 16 percent. For individual chemicals, for example ammonia or chlorine, the share is even more than 70 percent."

Chemical products are needed to manufacture almost all industrial products. "In the third quarter, energy costs in the chemical industry were almost 150 percent above the previous year's level," says Große Entrup. Within two years, the industry's energy costs have more than quadrupled, he said. Prices for many precursors have also risen by triple digits since 2020, he said.

Distressed entrepreneurs see the situation even more dramatically than economists. The biggest cost problem for many industrial SMEs is not natural gas, but electricity. For years, some companies bought electricity on the spot market because prices there were cheaper than long-term supply contracts.

Spot prices have multiplied, but many companies with long-term supply contracts are now also facing immense electricity price increases. At the end of the year, contracts will expire in many places. Many companies used to pay less than ten cents per kilowatt hour, but now they are facing prices of around 40 cents, according to Andrea Thoma-Böck, managing director of the family-owned company Thoma Metallveredelung in Heimertingen.

"Very few companies will still be in the fortunate position of being covered in 2023," says the entrepreneur. "The rest are waking up to this new pricing world that no company can handle." Some companies can't find anyone else willing to sell them electricity. "To make matters worse, many companies are being denied an electricity contract," Thoma-Böck says.

The automotive industry association VDA surveyed 103 suppliers as well as bus, trailer and body manufacturers in September; ten percent reported restrictions on production. Once the high electricity prices take full effect, vbw CEO Brossardt expects production to become unprofitable in many companies. "The companies won't be able to hold out for long. This doesn't just affect energy-intensive businesses, but the breadth of the economy." Companies are also plagued by uncertainty as to how the gas price cap will be structured.

A more or less creeping exodus of German industry was already taking place before the Corona crisis. According to the Federal Statistical Office, the share of "goods of foreign origin" in German exports has risen steadily, from just under 10 percent in 1990 to 24.5 percent last year. This indirectly shows how massively German industry invested in foreign production.
--------------------------------
Oly the Greens will be happy. They wanted this since their founding days in the early 80s. Because they have until today not understood that without economic production there will be no wealth anymore to plunder that they can redistribute to their clients and that of the left parties. All world shall become a Hobbit village! Well, utopia is near. Rejoice!