Dusseldorf After two years of corona silence on New Year’s Eve, the Germans can let it rip again this year. For Thomas Schreiber, head of Europe’s largest fireworks manufacturer Weco, this is a great relief: “Our company fought to survive, I had many sleepless nights.”
Despite corona aid, the family business is burdened with loans in the hundreds of millions, and production in Freiberg, Saxony, with 100 employees, had to close. In order to facilitate financing in the future, the entrepreneur from Eitorf near Bonn is now looking for an investor.
Weco has been delivering 130,000 pallets of fireworks to retailers since the beginning of December. The rockets, firecrackers and firecrackers were stored for two and a half years. “We incurred additional costs in the eight-figure range,” says Schreiber. “Fortunately, fireworks don’t have an expiry date. Germany would also not have sufficient capacity for proper destruction.”
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Rockets and firecrackers are dangerous goods and require special storage and transport vehicles. That is why Weco supplies every branch of discounters, hardware stores and supermarkets individually. “A major logistical effort.”
Fireworks are likely to be 30 percent more expensive in 2023
Weco and the German pyro industry do more than 90 percent of the business on the last three days of the year. “Before Corona, we were always profitable with a return on sales of around five percent,” explains the entrepreneur. As a result of the sales ban, sales collapsed from 104 million to 15 million euros in the 2020/21 financial year.
It was only through a lot of lobbying in Berlin that it was possible to receive corona aid of 15 million and 18 million euros for 2020 and 2021, annoyed Schreiber. “That’s not even half the casualties we’ve suffered.”
It took a year for the aid to be paid out for the first time. Despite the capital injections, he is not grateful to politicians: “The sales ban was completely disproportionate.”
Almost all of the remaining 200 employees were on short-time work in 2021. In order to finance production and storage, Weco has had a loan of 150 million euros for two and a half years. The additional costs could not be passed on to retailers. “We’re bound by the old conditions from 2019.” Higher prices for fireworks shouldn’t be seen until next year.
Schreiber considers price increases of at least 30 percent necessary in 2023, and significantly more for some product groups. The higher freight rates from China in particular had an impact. Weco imports 75 percent of the pyrotechnics from the country of origin of the fireworks.
The Weco boss is relieved that he can sell fireworks again: “Our company fought to survive, I had many sleepless nights.”
(Photo: Weco)
Weco started in 1948 with sparklers, which founder Hermann Weber made in Eitorf. Crackers and cannonballs followed later. First Weber supplied the wholesale trade, later also discounters directly. Because the company could not produce such quantities itself, it had to procure fireworks from China.
Through imports, Weco was able to continue to increase its market share in Germany. Today it is 65 percent, ahead of Comet from Bremerhaven. In this country, Weco mainly produces rockets and batteries because production can be easily automated.
New Year’s Eve sales of fireworks in Germany peaked in 2017 at 137 million euros, according to figures from the Association of the Pyrotechnic Industry (VPI). Innovations such as composite batteries fueled sales. In 2019, the business had already fallen significantly to 122 million euros. According to Schreiber, there is a lack of innovation.
Doctors, environmental and animal rights activists are calling for a ban on fireworks
In addition, more and more Germans are doing without firecrackers. Under the hashtag #böllerciao, an alliance of environmental, medical, animal welfare associations and the police union is even calling for a final ban. The German Environmental Aid wants to put a permanent end to the “senseless banging”. Firecrackers and rockets based on black powder are harmful to the environment and health.
For millions of asthmatics, every year begins with symptoms lasting several days, explains Norbert Mülleneisen, a specialist in pulmonary medicine and environmental medicine. “Because on no other day of the year is the fine dust pollution as high as on New Year’s Eve.”
>> Read here: Fireworks industry fears “death blow”
Weco boss Schreiber counters this. On the one hand, fireworks are a cultural asset. “On the other hand, our fine dust is hygroscopic and combines with water droplets. It causes less damage than car exhaust or industry – and only on one day a year.” According to a study confirmed by the Federal Environment Agency, the New Year’s fireworks produce around 1,400 tons of fine dust. This corresponds to less than one percent of all particulate matter emissions in Germany. However, the Federal Environment Agency also says that the fine dust pollution on New Year’s Day is higher in many places than on any other day of the year.
The VPI association not only wants to reduce the amount of fine dust, but also avoid plastic waste in the future. “Today, environmental protection has a different status, before there was no pressure to act,” admits Schreiber.
In the future, Weco will make the pointed caps out of cardboard instead of plastic.
(Photo: Weco)
Weco has already converted all machines for the next season. Pointed caps are then molded from cardboard instead of plastic. China imports will have hardened paper foam caps that dissolve in water from 2023. Packaging is switched to paper folding boxes.
More pillars with airbags and logistics
In the medium term, Weco wants to become less dependent on seasonal business. As a second business area, a subsidiary on the Freiberg site produces ignition tablets for airbags. So far, more than 100 million security systems have been equipped. “However, with the US airbag manufacturer Joyson, we only have one customer and are dependent on their order situation,” explains Schreiber. In order to be more broadly based, Weco wants to establish itself as a logistics service provider. “We already pick goods for other companies outside of the fireworks season.”
It is uncertain whether Weco will remain a family business in the long term. Managing director Schreiber took over 46 percent of the shares in 2003, his ex-colleague Dieter Kuchheuser held 44 percent and two current managing directors shared ten percent. “Our children will not run the company later,” the 58-year-old clarifies. “You need strong nerves for that. As an entrepreneur, you have to finance nine figures in advance and hope to recoup them in just three days.”
Above all, Weco wants to make itself more independent of the house banks. After the corona crisis, there was a growing desire for a strong investor to take over the financing. “Anyone interested in the tradition of New Year’s Eve fireworks should get in touch.”
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