ORLÉANS, France – The assembly line at the Duralex glass factory sits idle, its massive industrial equipment dark and still.
On a normal day, 250 employees work around the clock to produce 200,000 sturdy glasses and bowls.
But earlier this month, the Orleans plant suspended operations as production costs soared after Russia limited its natural gas exports to Europe. This put many of its workers on furlough.
Soaring energy prices could shatter the image of this iconic glassmaker – and alter Europe’s industrial landscape, as European policymakers and analysts increasingly worry that companies are packing their bags and leave for the United States.
Guillaume Bourbon, head of forecasting at Duralex, explains that the company had to stop production when natural gas soared to 40% of operating costs from 4% a year ago.
“It’s crazy for us,” he said during a factory tour. “We can’t pay that much for energy. It’s just not possible.”
Duralex, which exports 80% of its products, has seen many ups and downs since its founding in 1945, Bourbon says. But he never imagined that.
He says the company has negotiated a much lower three-year energy contract starting next April 1 and will resume operations. But volatility makes it impossible to project business costs beyond that.
Businesses across Europe are going on standby. Manufacturers of gas-guzzling fertilizers have all but shut down production. Steelmaker ArcelorMittal has temporarily closed factories in France, Spain, Germany and Poland.
None of this is helped by the recently passed US Inflation Reduction Act. It provides $369 billion in spending that includes grants to support companies that invest in renewable energy. The incentives, combined with cheaper energy prices in the United States, have raised fears of an exodus of European manufacturers to America.
“My concern as a European citizen is that these industries are shut down and not restarting,” says Francois-Régis Mouton, regional director for Europe at the International Association of Petroleum and Gas Producers.
Europe focused on the climate
Mouton blames more than the war in Ukraine and Russia’s decision to effectively slow its gas exports to a trickle. According to him, the political decision-makers of the European Union should have tempered their ambitions to fight against climate change and consider efforts in favor of the energy independence of Europe.
“They kept saying ‘fossil gas, we have to kill fossil gas’. OK, we killed it but how do we survive?” he says. “Instead of doing that, they could have said that it is better to produce it in Europe and not to depend on Russia. As a result, domestic energy production decreases a lot in Europe. Because we are not investing. “
The EU has rejected fossil fuels in its drive to achieve carbon neutrality by 2050, says Thierry Bros, a global energy specialist at Sciences Po University in Paris.
“We said to that [fossil fuel] industry that it’s outdated, that we don’t need it,” he says. “At the end of the day, if people want to heat themselves, if you want to cook, if industry is going to keep producing, you need fossil fuels. fuels.”
Now the coal is back
And European leaders are aware of the significant energy needs to get through the winter. To fill the void from Russia’s gas cuts, some countries are turning to coal again.
Before Russia invaded Ukraine, Germany pledged to phase out coal by the end of the decade. But instead of closing several coal-fired power stations by the end of this year, 20 are being revived – or extended beyond their shutdown dates – to ensure the country has enough power to get through the winter. .
Ina Fassbender/AFP/Getty Images
European countries are also looking for gas for the coming winter. Much of the continent’s current needs will be met by liquefied natural gas (LNG) imported from the United States.
But that won’t be enough, says Bros.
Companies could move to the United States
“A lot of these industries will never reopen in Europe,” says Bros. “They’ll never get enough power anyway, so why the hell would you use gas in Europe if it’s coming from the US? You better set up your chemical business in the US”
There is more and more talk of a coming deindustrialisation of Europe, bringing unemployment, a change in lifestyle and possibly social unrest.
This is exactly what Russian President Vladimir Putin wanted, says Bros. “He started two wars,” he says. “One in Ukraine, and one against the EU using gas as a weapon.”
Experts say European companies that close could move their operations to the United States, where energy is plentiful and much cheaper.
“Europe is faced with the flight of its industry, its jobs and its capital to the United States”, recently wrote the French economist and historian Nicolas Baverez in the magazine Point. He estimates that it will take several years to compensate for Russian gas, and during this period energy will be rationed and expensive in Europe.
Fabrice Le Saché, spokesperson for France’s largest trade association, MEDEF, calls the possibility of losing companies to the United States a “catastrophe for our economy”.
“It’s not a win-win situation when your closest ally becomes very weak,” he says. “It is not in America’s interest to see our industry collapse.
#Europe #fears #industries #fly #United #States #energy #costs #force #factories #close