London/Berlin In its 99 years, Siempelkamp Giesserei has had its fair share of problems. However, pandemic closures, supply chain interruptions, and rising energy prices have placed the Düsseldorf metals industry into unfamiliar circumstances. “Nothing like this has ever been done before,” says Georg Geier, the company’s managing director. What is the main distinction between the past and the present? Customer demand is strong, but Siempelkamp is unable to get or finance the iron, nickel, and energy it requires. It’s the same tale in many of Germany’s industrial companies, which account for over a fifth of the country’s GDP, according to the World Bank.Industry behemoths such as Volkswagen (VLKAF) and Siemens (SIEGY) are also dealing with supply chain constraints, but Germany’s roughly 200,000 small and medium-sized firms are more vulnerable. These firms are an important element of Germany’s “Mittelstand,” a group of 2.6 million small and medium-sized businesses that account for more than half of the country’s economic production and almost two-thirds of its jobs. Many are run by families and are firmly rooted in rural communities. A worker pours molten iron into a mould at the Siempelkamp Giesserei foundry on April 21, 2022 in Krefeld, Germany .The Siempelkamp foundry burns enough energy each year to power a town of 20,000 people. For years, the company paid between €40 ($43) and €50 ($53) per megawatt hour of electricity. But its bills shot up around September and “exploded” to all-time highs after Rusia invaded Ukraina . Average prices in March were around €250 ($267) per megawatt hour.”We’re made aware [of our energy costs] nearly each and every day. “When we get up until we get out.”The battle has fueled global inflation, which had started to pick up last year as nations emerged from pandemic lockdowns, resulting in a rise in demand for oil and products. Western sanctions on Russia’s coal and oil exports, as well as European Union measures to reduce natural gas usage, have driven prices up once further. Supply networks have been further disrupted by sanctions against Russia, a key metal exporter. The largest economy in Europe is particularly susceptible. Germany depends on Russia for around 46% of its natural gas usage in 2020, according to the International Energy Agency. This quantity is likely to have decreased since the conflict began, but any abrupt halt in Russian shipments would be “catastrophic” for businesses like Siempelkam.
