Energy market: Impact on manufacturing companies
In Germany, around 70% of total energy consumption goes to industry1, for example for the generation of process heat. This is necessary, for example, for production processes such as casting, hardening and firing, or for the drying processes of materials. As a result, the rapid rise in energy costs in recent months is increasing production costs. Above all, the shortage of gas supply in the face of unchanged or increased demand also leads to higher prices for natural gas. Within a year, the price of gas has more than tripled. The price of electricity could soon reach the same level, and the cost of both energy sources could rise further.
According to the Federal Statistical Office, the industrial sector still obtains its energy primarily from fossil fuels. 2 Natural gas was the most important energy source in 2020, accounting for more than 30% of total energy consumption in industry. Thus, it's not only private households that are being impacted by the enormous increase in gas prices, but also industries and particularly internationally operating, manufacturing companies such as WIKUS and our suppliers.
The price of gas has been rising since the middle of 2020 and more than tripled year-on-year at the start of 2022. Source: Federal Statistical Office (Statistisches Bundesamt)
The price of electricity has developed just as dramatically since 2021 as the price of natural gas. This will lead to a doubling of the electricity price for industrial customers at the beginning of 2022. Source: Federal Statistical Office (Statistisches Bundesamt)
Natural gas continues to play an important role in a wide variety of industrial sectors and covers about one-third of the energy needs of manufacturing companies. Source: Federal Statistical Office (Statistisches Bundesamt)
WIKUS assures production capability
WIKUS itself has taken precautions and already secured electricity quotas for the year 2023, but these do not cover the entire projected electricity consumption. This forward-looking hedging is designed to do everything necessary to ensure that we can continue to produce without interruption in the coming year.
In addition, we are pushing ahead with a zero-gas strategy to be completely independent of gas imports in the future.
Energy-efficient and environmentally friendly measures at WIKUS
In addition, in order to be prepared for further changes in the energy market, we have already successfully implemented energy-efficient and environmentally friendly measures at the Spangenberg site:
WIKUS continuously invests in the Spangenberg site. This has improved manufacturing processes for optimized production sequences and future-proof operation.
Seit 2009 gibt es eine Photovoltaik-Anlage auf dem Dach einer unserer Fertigungshallen; für 2023 gibt es Überlegungen Solar-Carports inklusive eines Wasserspeichers zu installieren.
The installation of a 4-bar compressed air network with conversion to optimized blasting technology serves to improve surface processing of the materials and save energy.
Together with the local heating pipeline completed in January 2022 and the integration of compressor waste heat for environmentally friendly heating and the ventilation of the production halls, we are taking further important steps to reduce the use of fossil fuels.
The WIKUS corporate headquarters, which opened in 2018, features energy-efficient building technology with automated LED lighting control, intelligent sun protection and building cooling using roof water. An energy optimization of the cooling water system rounds off the advanced building system.
In March 2022, WIKUS was again successfully recertified for the implementation of our energy management system according to DIN EN ISO 50001.
To achieve ISO certification in accordance with DIN EN ISO 14001 for environmental management systems in the second half of 2023.
In particular, the certified management systems help us to continuously improve our processes and increase our environmental performance. They are part of a long-term development towards a holistic, environmentally friendly economy. Through the responsible use of resources and the use of renewable energies, we aim to minimize the environmental impact of our business activities and protect the climate.
External factors of influence
Despite these measures, we are dependent on raw material suppliers for the production of our sawing tools. Increasingly, suppliers are having to pass on their higher cost prices due to the energy crisis. If this development, which can be observed worldwide, continues, procurement and production costs will rise in all areas. In the long term, this will jeopardize global value chains. Measures taken by policymakers, such as energy price caps, could ease the burden on industry.3 The ultimate impact of these measures cannot yet be assessed conclusively. There is still a risk that increased energy prices will be imported via global supply chains. If the policy measures do not take effect, the industry will be forced to develop strategies in order to continue to operate.
We will continue to monitor current developments in the energy market and keep you informed on a regular basis.
Sources:
1 Sector-dependent energy consumption in the processing industry, Federal Environment Agency 2022
2 Energy prices: high increases at all economic levels, Federal Statistical Office 2022
3 Info Portal Energy Crisis, VDMA 2022
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