Papermakers in Germany say energy crisis is driving up prices and tight supplies
German papermakers, including personal care leader Essity, say they are under intense pressure due to the current energy crisis. Other companies have already declared insolvency or cut production due to soaring gas prices, as industry leaders call on the government to introduce price caps.
“From what we’re hearing, this crisis is likely to be more severe for manufacturing industries than Covid was,” Carsten Rolle, head of energy and climate policy at trade association BDI, told the Financial Times on Friday.
With growing fears of power shortages and rising energy costs amid reduced gas deliveries from Russia, Essity – which owns brands such as Zewa, Libresse and Lotus – says it has already had to raise prices by up to 18% and is considering alternative sources of fuel.
Meanwhile, other toilet paper makers, such as Düsseldorf-based Hakle, which has been operating since 1928, have begun declaring insolvency, saying soaring energy prices, high pulp costs and transportation costs made their businesses financially unviable.
“In a very short time, electricity and gas prices have skyrocketed to such an extent that of course they cannot be passed on to our customers so quickly”, Karen Jung, head of marketing at Hakle, told Reuters.
According to the economic institute IWH, some 718 German entities became insolvent in August, a jump of 26% compared to the previous year. This figure is expected to remain around 25% in September and climb to 33% in October.
Germany’s paper industry is now calling on Olaf Scholz’s government to enact an energy price cap, saying it’s the only thing that can stop insolvencies. “I don’t think the wave of insolvencies can be stopped unless we have a [energy price] cap,” Volker Jung, chief executive of Hakle, told the FT.
Meanwhile, Paper Industry Association Vice President Martin Krengel said in a statement that the “priority” was from “to ensure that people are supplied with this important commodity.”
Prices in Germany, as well as much of the EU, have been skyrocketing for several months now. Germany’s Federal Statistical Office (Destatis) reported this week that energy prices in the country have jumped some 139% in the past 12 months, while the price of electricity has jumped 174%. .9%.
Economists have warned the economy is heading into a recession, with German GDP expected to fall 0.7% next year.
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