The energy crisis in Germany has put a lot of pressure on toilet paper manufacturers. Some companies have already cut back or suspended production, and economists fear a broader impact on the industry and economic growth, the FT reported.
“From what we hear, this crisis is likely to be more severe for manufacturing industries than Covid was,” said Carsten Rolle, head of energy and climate policy at the BDI business association.
“The lifeline of industry is energy, and if energy costs are not sustainable, companies and people cannot afford it anymore,” said Henrik Follmann, chief executive of Follmann Chemie, his family’s chemicals company that supplies paper manufacturers.
“At [the current] price level, it will mean an automatic deindustrialisation for Germany,” he said, adding that his company’s main factory in Minden had already stopped manufacturing at weekends, after doing so for 40 years, because it was no longer economically viable.
A survey conducted by the German Chamber of Commerce and Industry (DIHK) in July showed that 16 percent of the 3,500 companies surveyed had cut production or suspended operations.
Reinhold von Eben-Worle, president of Die Familienunternehmer, an association representing German family businesses, said: “It is hitting companies of all sizes from the smallest bakery on the street corner to the biggest companies like BASF.”
Earlier this month, Chancellor Olaf Scholz announced a €65 billion bailout package, funded by a windfall tax on power producers, to soften the blow. The package includes one-time payments to help households with their energy bills, as well as an extension of the €5 billion support package for energy-intensive businesses that was first unveiled in July. In August, Scholz also announced a reduction of the VAT on gas sales from 19 percent to 7 percent.
But representatives of the paper industry say that even with the support, mills will struggle to survive.
One of Germany's best-known toilet paper brands, Hakle of Dusseldorf, has already filed for bankruptcy, blaming rising energy prices, high pulp prices, transportation costs and the strong dollar.
By the time Hakle negotiated a new price with its retail partners to compensate for the higher overhead, prices had risen again. “It pressed us too much and we were losing too much money,” said Volker Jung, managing director of Hakle. “I don’t think the wave of insolvencies can be stopped unless we have an [energy price] cap.”
Energy costs have risen to the point where Essity felt it had no choice but to increase the cost of products such as Lotus toilet paper rolls, Libero diapers and Bodyform sanitary pads by as much as 18 percent.