Key Production Finds Energy Crisis Should Not Impact Manufacturing In EU

The reassuring news is that none of our suppliers can foresee reasons why they should stop or ration their output.

Russia’s invasion of Ukraine in February 2022 set in motion a profound energy crisis worldwide, triggering many manufacturing outlets to worry about the forthcoming winter months. As the UK accounts for a small amount of such production, this concern was echoed mainly by operations based throughout the EU. Within this context, vinyl has been flagged as a potential issue as gas burning boilers are used in powering the presses to make it. There have also been concerns about interruptions to supply or even potential blackouts across Europe. While each country is affected differently with its own supply of gas and has an individual government solution to supporting industry, we have investigated the newest information available to address rising doubts in several prominent regions.

The reassuring news is that none of our suppliers can foresee reasons why they should stop or ration their output. All are confident that service should be stable throughout winter. In the unlikely scenario that traditional means of power does become problematic, many providers have additionally put contingencies plans in place with alternative power supplies, thus guaranteeing production for periods should a blackout occur. However, the uncertainty around price remains an issue and we expect energy surcharges to increase further over the winter period.

To provide more detailed data to our clients, we did a further look at some key markets, investigating the current energy policies in a handful of focus countries impacted. Listed below is the latest news available in no particular order.

Poland: As of 11 October 2022, the government put a cap on energy costs for households and small businesses alike. This allows for businesses to plan ahead on pricing, though some increases in energy costs are still likely. The supply looks stable and none of the factories we work with anticipate any issues with supply.

Germany: The German state is set to pay a one-off gas bill this December for all households as well as small to medium size businesses. However, there may still be price increases as gas consumption rates for October have shown an increase of use year on year. Germany has now reached 95% capacity in gas reserves and claims to be able to last for 2.5 months should it’s gas supplies stop. 

Czech Republic: The government is proposing a windfall tax to enable it to support small businesses, but we are yet to hear what support is offered to medium and large businesses.

France: The government announced 45 billion Euro bailout to help shield business from the energy increases and capping prices rises to 15%. Other energy saving measures, from limited hours of illumination of the iconic Eiffel Tower to lowered thermostats at large shopping centres and retailers have all been deployed in an effort to conserve energy.

We will post any additional updates as and when we hear them.

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