Spiraling energy costs in Sweden have several manufacturing companies on the verge of closure, with the country’s steel industry being hit particularly hard by a dramatic rise in production costs, the Swedish Samnytt publication reports.
Steel forging company Bharat Forge in Karlskoga has experienced a quadrupling of its electricity prices and now risks being forced to halt its operations. This is primarily due to the fact that its furnaces are electric and consume up to 60,000 megawatt-hours per year, according to the news portal, and the rise in energy prices has seen production costs soar by many millions.
“We cannot bear these costs, it is completely impossible,” site manager Niklas Blom told the publication.
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The production of steel components at the factory is critical for other manufacturers including the car industry and paramount to the just-in-time supply chain — it manufactures crankshafts and front axle beams for both Volvo and Scania vehicles.
The rise in production costs affects the company’s ability to remain competitive in comparison to manufacturers in other EU countries.
“Unfortunately, this leads to us in Sweden losing competitiveness against low-wage countries. In the end, business will disappear from Sweden. Our employees feel very bad. And if our employees feel really bad about this, the company won’t feel good either,” said Blom.
The site manager has called on the government to provide greater support for the industry, believing state intervention is now essential and urgent to save the company; he remains positive that negotiations will be successful.
Should this not materialize, however, he warns that there will be “a kind of economic crisis in Sweden” that will lead to a “collapse” of manufacturing, a demise that will prove to be a lucrative opportunity for low-wage EU member states to take advantage of.
Sweden is not the only European country with a collapsing steel industry. Just last month, the head of Germany ArcelorMittal, which is the largest steel producer in the world, said production in Germany is no longer competitive.
“Production in Germany is currently no longer competitive,” said Reiner Blaschek, the CEO of ArcelorMittal Germany, which recently shut down two plants in the country. He is calling for quick political intervention, saying, “We need competitive energy prices for industry.”
