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ENERGY

Gas crunch pushes German glassmaker to the brink

In 400 years, Heinz-Glas, one of the world's biggest producers of glass perfume bottles, has seen off many crises - including World Wars and the oil shock of the 1970s in the last century alone. But Germany's current energy emergency strikes at the heart of its very existence.

Quality controller Michaela Trebes inspects flacons on an assembly line at the German glass producer Heinz-Glas Group in Kleintettau, Germany on August 3rd 2022.
Quality controller Michaela Trebes inspects flacons on an assembly line at the German glass producer Heinz-Glas Group in Kleintettau, Germany on August 3rd 2022. Photo: Ronny Hartmann / AFP)

“We are experiencing an exceptional situation,” Murat Agac, deputy chief executive of the family-owned company founded in 1622, told AFP.

“If there is a halt in gas supplies… then glass production will very likely disappear” from Germany, he said.

To make glass, sand is heated to temperatures of up to 1,600C and gas is the most frequently chosen source of energy.

Until recently, a glut of gas flowing to Germany via a pipeline from Russia had helped keep production costs low, allowing Heinz-Glas to book annual revenues of some €300 million.

With competitive prices, exports made up 80 percent of the glassmaker’s total output.

But this economic model is now being called into question after Russia’s invasion of Ukraine.

READ ALSO: Energy crisis to labour shortage – Five challenges facing Germany right now 

Moscow has cut gas supplies to Germany by 80 percent, in what is believed to be a bid to weaken the resolve of Europe’s biggest economy in backing Ukraine.

Berlin is scrambling for alternative energy sources to replace the resource that once made up 55 percent of its total gas imports.

The consequence: soaring energy prices.

For Heinz-Glas, that has meant a “ten- to 20-fold increase” in costs compared to 2019, said Agac.

READ ALSO: German government fears millions of heating systems could fail in winter

‘3,000 football fields of solar panels’ 

Not only Heinz-Glas, much of Germany’s industry is buckling under the gas supply crunch.

Many companies are drawing up emergency plans as the German government has warned that Russian gas could stop flowing entirely.

With winter looming, the crisis is reaching fever pitch.

Chemicals giant BASF is looking at replacing gas with fuel oil in its second-biggest German factory.

Henkel, which specialises in adhesives and sealants, is considering whether its employees can work from home.

But the consequences of a total halt in Russian gas flows could be irreparable for many companies.

At the Heinz-Glas factory in Kleintettau, opened in 1661, around 70 tonnes of small glass bottles are produced each day, moulded by the heat of the furnaces.

An employee inspects flacons on an assembly line at the German glass producer Heinz-Glas Group in Kleintettau, Germany on August 3rd, 2022.

An employee inspects flacons on an assembly line at the German glass producer Heinz-Glas Group in Kleintettau, Germany on August 3rd, 2022. Photo: Ronny Hartmann / AFP

The delicate vessels adorned with intricate motifs are then sent to the company’s clients — including its biggest, French group L’Oreal — which fill them with perfume.

At every step of the production process — from making the material with quartz sand to the final sculpting of the bottle — heat is essential.

At the company’s second-biggest factory in the mountain village of Piesau, a cut in gas would permanently damage its glass furnace, said Agac.

To ward off the danger in the short term, Heinz-Glas has invested in stocks of liquefied gas, which can be driven in by trucks.

But that triples the energy bill, and would still not be sufficient – the two German factories need the equivalent of “3,000 football fields of solar
panels” to operate.

In the long term, replacing the entire gas system with electric infrastructure would cost €50 million, Agac said, a sum which the company cannot afford.

READ ALSO: Reader question – Should I modernise my heating system in Germany?

Even in the factory of Kleintettau, where furnaces are powered by electricity, around 40 percent of the industrial processes still require gas.

“We need state support,” said Agac, warning that the firm may otherwise be forced to shift production elsewhere, such as India or China, where it already has a factory.

For the 1,500 employees of the company in Germany, the future looks cloudy.

“I’ve reached an age when it doesn’t matter so much for me anymore. But younger people must be fearing job losses,” said Michaela Trebes, 61, inspecting hundreds of little flasks emerging from the production lines.

But for now, the management remains optimistic that Heinz-Glas can pull through.

Since 1622, “there have been enough crises… in the 20th century alone, World War I, World War II, the oil crisis in the 70s, many, many critical situations. We survived them all,” said Agac.

“We will somehow also overcome this crisis.”

By Florian CAZERES

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POLITICS

Civil servants ‘getting burnout’ over energy crisis, says German minister

Public sector workers trying to tackle Germany's ongoing energy crisis are suffering from illness and burnout, Economics Minister Robert Habeck has said.

Civil servants 'getting burnout' over energy crisis, says German minister

The Russian invasion of Ukraine has unleashed economic turmoil in Europe, placing Germany’s new coalition government under pressure to firefight multiple crises.

Perhaps the largest of these is the energy crisis, which has prompted fears of gas shortages in the winter months and seen prices for fossil fuels soar for both households and businesses.

According to Economics and Climate Minister Robert Habeck, the staff at his ministry – who are charged with tackling the energy crisis – are struggling to cope with the extraordinary pressure that they have been under in recent months. 

“People, at some point they have to sleep and eat too,” the Green politician said at a congress of the Federation of German Industries (BDI) in Berlin. “It’s not bullshit I’m talking now: people get sick. They have burnout, they get tinnitus. They can’t take it anymore.”

READ ALSO:

In the last nine months alone, the Economics Ministry has produced 20 laws and 28 ordinances, Habeck revealed. He said this was likely more than the ministry produced over the entirety of the previous four-year legislature. 

Highlighting the strain that his staff were under, Habeck explained that it was always the same people in charge in drafting new laws in the battle to secure the energy supply.

To say that the Tourism Ministry could help restructure the electricity market would be like “telling the artist who made the sculptures that he can be the president of the Federation of German Industries,” the Green politician added. 

Batting off criticism that the ministry had occasionally been slow to act, Habeck said: “Of course you could say, ‘why didn’t you do the regulation a week earlier’. But it’s not because people are sleeping, it’s because there is a limit to their physical capacity.”

Gas levy criticism 

Germany has had to cope with an ever intensifying energy emergency over the past few months, culminating in Russia reducing supplies and then turning off gas deliveries via the Nord Stream 1 pipeline entirely in September. 

Most recently, the government took steps to nationalise its largest gas supplier – Uniper – in a move to prevent the collapse of the country’s energy infrastructure. Uniper has suffered losses of billions of euros this year due to the costs involved in replacing cheap Russian gas supplies at short notice. 

Habeck, who has appeared increasingly world-weary and exhausted in recent months, has faced sharp criticism for a number of decisions made during the crisis. 

Most controversially, his decision to implement a gas levy to bail out major energy companies has been met with consternation from both the opposition and the Greens’ coalition partners, the Social Democrats (SPD). 

On Friday, SPD leader Lars Klingbeil reiterated concerns about the fairness of the gas levy at a time when many are struggling to pay their energy bills.

SPD leader Lars Klingbeil

SPD leader Lars Klingbeil speaks to the press during the ARD Summer Interview in Berlin. Photo: picture alliance/dpa | Fabian Sommer

In a situation where the government is facing multiple decisions in a short space of time, ministers also require the strength to “reconsider and correct their path”, Klingbeil told RND.

“(The gas levy) is about supporting the gas supply infrastructure,” he added. “However, this must be done fairly.”

In spite of the nationalisation of Uniper, Habeck has confirmed that the gas levy – which adds 2.4 cents per kilowatt hour of energy onto gas bills – will still be introduced on October 1st.

However, on Thursday he announced that there would be changes to Energy Security Act to ensure that only companies who needed the bailout would benefit from the levy.

According to the ministry, the changes are set to be passed by the cabinet on September 28th.

READ ALSO: Germany to push ahead with gas levy plans

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