Dusseldorf Just this week, the figures showed just how serious the situation is: Since the Second World War, statisticians have been measuring the so-called producer prices, which reflect the average price development of raw materials and intermediate products. And these producer prices rose by almost 46 percent in August compared to the same month last year – more strongly than ever since records began.
This is bad news, because companies are trying to recoup these rising input costs – in this case, primarily energy – through the prices of their products whenever possible, which in turn is being felt by consumers.
And this is not a temporary effect. According to economists, energy prices may fall again next year, but nobody in Europe expects them to return to pre-war levels.
This is due to the fact that the share of liquefied gas in consumption is increasing, which is significantly more expensive than pipeline gas from Russia. The high energy prices damage the competitiveness of companies. Manufacturers of steel, chemical products and fertilizers have already reduced their production – sometimes drastically.
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These declines in production are now also having an impact on the economy. The Handelsblatt Research Institute (HRI) expects a slight decline in economic output in Germany for the third quarter. This downturn will accelerate in late autumn and winter before the economy is likely to stabilize again in the course of the first half of 2023. “This crisis,” states HRI President Bert Rürup, “will make us all poorer.”
Efficiency revolution in companies
But: There is also hope, says Monika Schnitzer. In the podcast “Handelsblatt Disrupt” and in today’s cover story, the economist from the Ludwig Maximilians University in Munich argues that the crisis this winter will initially cause many companies difficulties. At the same time, however, the energy shortage will lead to a significant increase in efficiency. Schnitzer backs up her hypothesis with Japanese data from the period after the 1973 oil crisis and after the reactor accident in Fukushima.
In both cases, energy suddenly ran out in Japan, electricity and gas prices skyrocketed, and the government imposed strict consumption targets. This triggered a small revolution in efficiency, because energy-saving technologies that were previously uneconomical suddenly became more economical: more efficient refrigerators, vehicles and factories, for example.
The cut was immense, however, because it fundamentally changed the country’s economic structure: petrochemicals shrank, high-tech industry grew, as did the automotive industry, which sold its economical Toyotas and Hondas all over the world.
Schnitzer now believes that a similar development is possible in Germany. “In the past ten years, saving energy was simply not a priority in many companies because it didn’t pay off,” says the economist, which is already shown by the many office and factory roofs without solar cells.
The revolution became visible in Berlin
For years, the federal government has been planning to increase energy productivity in Germany – this goal has been missed for years. For example, it is completely incomprehensible why the sun in Germany is still heating up tens of thousands of dark hall roofs while the equipment underneath has to be cooled with electricity from coal and gas-fired power plants.
In view of the rising gas prices and electricity prices, many companies are looking to the winter with concern.
Many companies are at the limit, which is also shown by the large Handelsblatt report for the weekend. They shut down plants, send colleagues on short-time work or question entire locations. And some of them, even more government billions will not help, will not survive the crisis.
But many others will adapt to the new situation, with a different energy mix and new, more efficient technologies. And this process has long since begun, as could be seen at the Ifa electronics trade fair in Berlin a few weeks ago, when companies such as Miele and Grundig outbid each other with economical appliances: washing machines that use artificial intelligence to determine optimized savings programs, better insulated refrigerators or energy management systems, let the household appliances only start when the solar cells on the roof are supplying a lot of electricity.
Something similar will now happen in industry – for years economists have been pointing to the savings potential through more efficient pumps and motors, better use of process heat, automated building technology and digitally controlled systems. The demand for it should now increase very quickly. And the good news: Such technology comes more often than average from German companies.
Europe needs a boost in modernization
This does not mean that the recession of the next few quarters can be prevented. But it is a sign of hope for the time after. Because Europe, that much is certain, needs a new push towards modernization – and technology from Germany could play an important role in this.
But what is also true is that this modernization push is only sustainable if companies actually invest in the development of these technologies, universities train the experts needed for this – and politicians do not increasingly burden those companies that have to spend millions on their own green conversion .
This change, if it is to be really sustainable, is a change that has to start in the mind.
More: Journey through an entrepreneurial country at the limit