Producing a single 2-meter-wide “mother roll” of toilet paper at Essity’s German factory in Mainz-Kostheim, where the Main River meets the Rhine, uses 700 kilowatt-hours of natural gas – enough to heat a family home for several weeks. during winter.
With rising energy costs and growing fears of power shortages, Essity has had to raise prices and switch to other fuel sources.
German energy crisis put the toilet paper manufacturer under severe pressure. Some have already gone out of business or cut production, and economists fear a wider impact on industry and growth.
“From what we’ve heard, this crisis is likely to be more severe for the manufacturing industry than Covid was,” said Carsten Rolle, head of energy and climate policy at trade association BDI.
The war in Ukraine led Russia to shut down Nord Stream 1, a gas pipeline that runs under the Baltic Sea into the country and is one of Europe’s main sources of gas. Since the beginning of the invasion, prices have risen sharply and inflation in the Eurozone has reached record levels. There are many concerns about the rationing system, especially if this winter is cold.
“The lifeline of industry is energy, and if energy costs are not sustainable, companies and people can no longer afford it,” said Henrik Follmann, CEO of Follmann Chemie, his family’s chemical company that supplies paper makers.
“IN [the current] price level, it will mean automatic deindustrialization for Germany” he said, adding that his company’s main plant in Minden had already stopped producing on weekends after 40 years because it was no longer economically viable.
A survey by the German Chamber of Industry and Commerce, DIHK, found in July that 16 percent of the 3,500 companies surveyed were cutting production or suspending operations.
Reinhold von Eben-Worlée, president of Die Familienunternehmer, an association representing German family businesses, said: “It affects companies of all sizes from the smallest bakery on the street corner to the largest companies such as BASF.
The impact of the energy crisis on the industry has added to fears that what was once the eurozone’s economic powerhouse will soon enter recession. Economists have cut down their forecasts for Europe’s largest economy; Deutsche Bank now predicts it will fall by 3.5 percent next year.
Earlier this month, Chancellor Olaf Scholz announced a €65 billion relief package funded by a windfall tax on electricity producers to help soften the blow. The package includes one-off payments to help households with their energy bills, as well as an extension of the €5 billion aid package for energy-intensive companies first introduced in July. In August, Scholz also announced a reduction in value-added tax on gas sales from 19 percent to 7 percent.
But those in the paper industry say that even with support, the mills will struggle.
One of Germany’s best-known toilet paper brands, Düsseldorf-based Hakle, has already filed for insolvency, blaming soaring energy prices, high pulp prices, transport costs and the strength of the dollar.
By the time Hakle negotiated a new price with its retail partners to absorb its higher overhead costs, prices had risen again. “It pushed us too hard and we were losing too much money,” said Volker Jung, Hakle’s chief executive. “I don’t think the wave of insolvencies can be stopped unless we have [energy price] cap.”
Energy costs have risen to the point where Essity believed it had no choice but to increase the cost of products such as Lotus toilet paper, Libero nappies and Bodyform sanitary napkins by up to 18 per cent.
Essity has already secured cheaper prices for 70 percent of natural gas and electricity, its CEO Magnus Groth said. Essity is also reassessing its dependence on natural gas and has received permission to adapt its plants to alternative fuels.
In Mainz-Kostheim, the pulp is squeezed and rolled, then placed in a giant heating cylinder absorbing natural gas and then stretched. By early next year, the bottle, known as a Yankee dryer — reportedly after a Dutchman named Yonke who helped design it — could run on liquefied natural gas, which can be imported from the US and Qatar.
An unloading station and a new pipeline that can accommodate both LNG and hydrogen, which has a volume three times that of natural gas, have already been laid and will supply the site’s paper machine and power plant. Hydrogen for the factory will come from a plant in Mainz, powered by wind turbines.
Despite the transition to alternative energy sources, the industry still worries that rationing could force companies to choose which production lines are critical to the system. Gregor Geiger, a spokesman for Die Papierindustrie, said: “It may not be necessary to make chocolate chip wrappers, but it will be necessary to make toilet paper.”