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October 4, 2023

Europe fears its industries will jet to the U.S. as energy costs force plant closures

Source: npr.org

ORLÉANS, France — The assembly line at the Duralex glassware factory sits idle, its massive industrial equipment lies dark and still.

On a normal day, 250 employees work around the clock producing 200,000 sturdy glasses and bowls.

But earlier this month, the plant in Orléans suspended operations because production costs had spiked after Russia throttled its natural gas exports to Europe. That put many of its workers on furlough.

Skyrocketing energy prices could shatter the image of this iconic glassmaker — and alter the industrial landscape of Europe, as European policymakers and analysts increasingly worry that businesses could pack up and leave for the United States.

Guillaume Bourbon, a forecast manager for Duralex, says the company had to halt production when natural gas soared to 40% of operating costs from as low as 4% a year ago.

“It’s crazy for us,” he says on a tour of the plant. “We can’t pay that much for energy. It’s simply not possible.”

Duralex, which exports 80% of its products, has had many highs and lows since its founding in 1945, says Bourbon. But he never imagined this.

He says the company negotiated a much lower, three-year energy contract starting next April 1 and will resume operating. But the volatility makes projecting business costs beyond that impossible.Companies across Europe are going into sleep mode. Gas-heavy fertilizer makers have all but halted production. Steelmaker ArcelorMittal has temporarily shuttered mills in France, Spain, Germany and Poland.

None of this is helped by America’s recently passed Inflation Reduction Act. It provides $369 billion in spending that includes subsidies to support companies investing in renewable energy. The incentives, combined with cheaper energy prices in the U.S., have raised fears of an exodus of European manufacturers to America.

“My concern as a European citizen is that these industries will be closed and will not start again,” says François-Régis Mouton, regional director for Europe at the International Association of Oil and Gas Producers. Readmore

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