German toilet paper manufacturers struggle amid energy crisis
It seems like whenever there’s a global crisis, toilet paper is the first thing to go. First, manufacturers struggled to keep up with demand during the coronavirus pandemic, and now they are struggling to maintain supply as costs surge amid the global energy crisis.
German toilet paper under threat
The supply problems are currently being caused by the rising cost of energy, and worries over power shortages. In Mainz-Kostheim, in the federal state of Hesse, the hygiene and health company Essity operates a plant that manufactures toilet paper. Due to rising costs, producing a two-metre wide “mother roll” of toilet paper at the plant uses 700 kilowatt-hours of natural gas – enough to heat a house for several weeks over winter.
Toilet paper manufacturers in Germany have had to cut production, and some have already gone out of business. Essity has already had to raise prices and switch to other energy sources. The international company has raised prices on some products by as much as 18 percent, and has also acquired permits that will allow it to adapt its plants to alternative fuels, like liquefied natural gas and hydrogen.
German industry suffering from production cutbacks
It’s not just toilet paper manufacturers that are feeling the pinch; a survey of 3.500 German companies, conducted by the German Chambers of Industry and Commerce (DIHK), recently found that 16 percent of the companies had reduced production or halted operations temporarily. The president of the Die Familienunternehmer family business association, Reinhold von Eben-Worlée, said to the Financial Times: “It is hitting companies of all sizes from the smallest bakery on the street corner to the biggest companies like BASF.”
The energy crisis and its impact on German business has led to many economists fearing a recession is looming, with Deutsche Bank expecting the German economy to shrink by 3,5 percent next year. “The lifeline of industry is energy, and if energy costs are not sustainable, companies and people cannot afford it anymore,” said Henrik Follmann, chief executive of Follmann Chemie, in the FT. “At [the current] price level, it will mean an automatic deindustrialisation for Germany.”
There is some worry that businesses will have to start prioritising certain production lines. For the paper industry, this could mean stopping the production of paper wrapping and packaging in favour of the manufacture of toilet paper.