The Economist: Germany may lose the entire industrial system

Steel plant in Duisburg, Germany

Germany is likely to remain without an industrial system due to a severe energy crisis, said the author of the British magazine The Economist.

According to the newspaper, the German industry in recent years kept on cheap energy from Russia and the possibility of marketing their products in the markets of China. Due to the sanctions restrictions, as well as slowdown of the Chinese economy, Germany was faced with the challenge of the industrial system to the test. Referring to the head of the Association of German industries BDI Siegfried Russwurm, journalists reported that production in Germany was under threat of extinction.

“The situation is toxic for many businesses. Through the global supply chain, this poison can spread to the rest of the industrialized world, which is strongly dependent on German manufacturers. The biggest problem of German industry was the growing cost of energy. The price of electricity for the next year has increased 15-fold, and the price of gas is ten times,” — said The Economist.

Also, there is a pattern: stronger from the energy crisis affected more than small enterprises. Almost a quarter of companies with number of employees less than 1 000 people cancel or reject orders for production. Special attention was paid to the publication of production of bread.”In the country more than three thousand varieties of bread for about ten thousands of manufacturers are experiencing difficulties like never before in postwar Germany. They need electricity and gas for heating furnaces and work dough kneading machines, even despite the increase in the price of flour, butter, and sugar, as well as on the work of the bakers. The seller in the 127-year-old Berlin network of bakeries Wiedemann reported that the company was desperately short of staff and they are trying to save power, for example, holding furnace outlet cold and baking all the bread in the headquarters,” he told the newspaper.

In addition, the industrial crisis caused including problems with the supply chain, further destroys the same chain. ArcelorMittal, the German steel giant announced plans to close two plants in Northern Germany and send employees on leave. Stickstoffwerke Piesteritz, Germany’s largest producer of ammonia and urea, two important chemical materials, shut down their factories for the production of ammonia in Saxony-Anhalt.

“Demonstrating how these steps apply to supply chains, the stop led to a lack of AdBlue, a product that is critical to cleaning diesel trucks, they help to associate Germany with foreign markets. Stephen Coutts from the Kiel Institute warns that “economic avalanche heading in the direction of Germany.” Shortly global clients are German companies feel the echoes of this phenomenon,” concluded the authors.

Western countries are faced with rising energy prices and a surge in inflation due to the imposition of sanctions against Moscow and the policy of refusal of the Russian fuel. Amid the rise in price of fuel, especially gas industry in Europe has largely lost its competitive advantage that has affected other sectors of the economy. Also USA and European countries are faced with a record over decades of inflation.