Would this time really…? For years there has been almost permanent doubt about the survival of the country’s only aluminum factory, Aldel in Delfzijl. Making aluminum proved time and again difficult in the Netherlands, given the enormous amounts of power required and the favorable rates for German competitors. Many bankruptcy and relaunch plagued the most famous industrial company in Groningen.
Australian Chris McNamee has been director and owner since the end of last year. But on Monday a postponement of payment was requested – and this time it looks exceptionally bad. Due to the high electricity prices, Aldel had been shut down for several months; the power-guzzling foundry for quite some time. Last month, 175 of the 200 employees were informed of their layoff – only 25 were needed to keep the company on ‘pilot mode’.
“We just wrote black numbers for the first few months of the year,” said financial director Eric Wildschut by telephone. “But due to the rising gas price, we saw that gradually turn into red numbers.” According to him, Aldel uses about 10,000 cubic meters per month to keep ovens warm.
This makes it not a major gas consumer like some other industrial companies, but it is a lot at a gas price of several hundred euros per megawatt hour. And then it will eventually become difficult to compete with, for example, Icelandic aluminum factories, which have cheaper energy at their disposal with geothermal and hydropower.
Wildschut can’t talk too long, he has a busy morning on Tuesday, is looking with the curator to see what else is possible. According to the financial director, talks had been going on with potential buyers for some time. They came to nothing, so that deferment of payment was necessary. It is ultimately up to the curator to see whether a restart is possible, according to Wildschut.
Also read: High energy prices force companies to make difficult decisions. ‘It’s not either stopping or turning’
First example
The money problems of Aldel, which according to Wildschut has a turnover of several tens of millions of euros in normal years, are the first example of a well-known Dutch company that gets into concrete problems due to the high energy prices. It is exactly what heavy industry has been warning about for months: that heavy industry could just disappear from the Netherlands – or even Europe – if the government does not intervene. With all the associated economic and strategic consequences.
In some other countries, such as Germany, there is now financial support. Aldel has also regularly asked for support in the media. But the Dutch government has so far made a different decision: offering support would not help with the switch to green technologies, and you cannot continue to help companies forever if the gas price is permanently high.
It is an attitude that is supported, among other things by the economists of De Nederlandsche Bank. But it could have many consequences in the Netherlands, thinks sector economist Albert Jan Swart of ABN Amro, also for companies other than Aldel. “The industry has significant fixed costs. A lot of capital is needed for buildings and machines, which often require financing. Interest and principal must be paid on this. And then there are the personnel costs. If a factory comes to a standstill and no more cash comes in, it can quickly be the end of the exercise.”
Swart does not expect a restart at the moment. You cannot restart a factory that has stopped. The energy price has to come down first.”
According to financial director Wildschut, the factory could be saved with some government support. Wildschut dismisses the argument that the government cannot compensate companies for high gas prices in the long term. He thinks that gas prices will fall again at some point – not to the levels of the past, but to a lower level than now. “You have high and higher. And we can handle a higher price.”
Also read last Saturday’s column by Marike Stellinga on this subject: How bad is industry shrinkage?