Surging energy costs put German industry ‘really in danger’

Explore how surging energy costs are posing a significant threat to German industry and its competitiveness in the global market. Read more at straitstimes.com.

LONDON – Mr Max Jankowsky represents the third generation of his family to run a foundry in eastern Germany, but he is worried that history might end with him.

The foundry, GL Giesserei Loessnitz, makes metal presses used by carmakers like Volkswagen and BMW. It consumes vast amounts of electricity, natural gas and coke, a coal-based fuel. And the cost of all that energy is crippling his business and thwarting his efforts to move away from fossil fuels.

The challenge he and his business face has only intensified since the war in Iran sent the prices of oil and natural gas soaring.

For many industrial companies in Europe, high energy costs have been a big concern, especially since Russia’s 2022 invasion of Ukraine. But even before then, electricity, fuels and other forms of energy were consistently much higher in Germany, Italy and other European countries than they are in the United States and China.

Since the end of February, when the US and Israel attacked Iran, European natural gas prices have risen more than 50 per cent, further exposing the region’s vulnerability. Brent crude, the international benchmark, is trading at around US$100 a barrel, up nearly US$30 from the end of February.

“It’s so, so hard to survive,” said Mr Jankowsky, who is 32 and has been the foundry’s chief executive since 2020.