Entrepreneurs sound the alarm: companies go bust almost every day
More and more sectors are sounding the alarm as energy prices spiral out of control, forcing companies to close down one after the other.
In addition to the large business associations, small and medium-sized companies are also beginning to speak up about the weakening economy. One industrialist in Saxony, for example, spoke for many small business owners, saying.
„The German SME sector is resilient, but not immortal. We are already seeing insolvencies among our customers on an almost daily basis. The situation is worse than is often reported,”
Max Jankowsky, who owns an iron foundry in Germany, told the Frankfurter Allgemeine Zeitung. The operator of the foundry, which employs 85 people, says there is a lack of political strategy to solve the energy problem. He says the industry is still in a difficult situation, which is very discouraging for companies that rely on energy.
Mr Jankowsky calls for more political clarity, because there is currently a lack of framework conditions and he sees no sign of any effort on the part of the government to create them. He also questions whether heavy industry still has a future in Germany, even though it has been the foundation of the German economy.
Mr Jankowsky’s company currently burns coking coal, but he wants to convert his foundry to electricity. However, his small town does not have the transmission lines needed to increase the current three megawatts to the additional nine megawatts required. The entrepreneur is reluctant to make the switch because he has serious doubts about the future competitiveness of his business. He believes that energy prices will still be very high in three years’ time. He also believes that the industry cannot be electrified even in the long term, despite the government’s ambitious plans in this area.
As V4NA has previously reported, Germany has finally abandoned nuclear power, moving in the opposite direction to many European countries which have started to build nuclear power plants and develop and expand existing ones. More and more countries are taking this path as they realise that nuclear power is now the most reliable, predictable and safe source of energy. Germany is going its own way, but inflation can put an end to grandiose, ideologically driven plans in an instant.
Germany is planning huge wind farms in the North and Baltic Seas to generate 70,000 megawatts of electricity. This will require the federal government to work with power companies, but rising material and infrastructure costs could derail any plans.
Steel prices have recently risen by 80 per cent. Special ships that install wind turbines on the seabed now cost 60 per cent more than three years ago. Interest rates have also risen. If offshore wind farms are not built, the energy transition will largely fail.
Utilities complain that the original deal is no longer viable for them. The higher costs cannot be passed on to consumers, and the government’s refusal to spend more money than originally planned on the whole project would make it very expensive, which is why several giga-companies are already considering abandoning the project altogether. An offshore wind turbine currently costs €3 million per megawatt, almost three times as much as before.
If we multiply the construction costs of €3 million per unit by the 70,000 megawatts the German government is aiming for, the total comes to 210 billion euros. Companies are unlikely to be able to cope with that.
Meanwhile, Germany needs electricity more than ever, with the government planning to require households to use electricity for heating rather than natural gas or wood.