‘Look’, production manager Frank Meinhardt-Ruppin points out, his cheeks reddening at Eschenbach Porzellan’s gigantic smooth-baked oven: ‘that’s where all that gas goes.’ He drops to his knees and smiles at the sight of breakfast plates dozens of meters on the way to the firelight at the end of the treadmill, where they are cured at 1,380 degrees Celsius. The porcelain factory, in Triptis near Leipzig, is running smoothly. And yet, Meinhardt continues in the same breath: ‘It will be at the end of this year’ schluss. There’s only a tiny bit of hope left.”
schluss. For Meinhardt-Ruppin, for the kilns of the porcelain factory, and for the hundred employees in this part of the former GDR area, some of whom have been working on the machines for decades. Shame. Because the order books are bulging, production is at maximum and the 36,000 square meter factory hall is packed with crockery awaiting transport. But according to current forecasts, the energy bill will quadruple next year, from 860 thousand euros to 4.5 million. And that doesn’t appeal to a healthy company either.
After six months of Ukraine war, gas shortages and rising energy prices warns the German middle class of a bankruptcy wave. In the eastern cities, protests have intensified in recent weeks, increasingly led by the radical right. There is great distrust of the government in Berlin here, and the regional economy has always lagged behind that in the west after reunification. Many here can still remember the mass unemployment of the 1990s very well. And fear repetition. It is precisely the kind of social unrest that Putin hopes to fuel by driving up energy prices.
Fearing economic damage and social disruption in equal measure, the government released a remedy for both this month. That is the little hope that production leader Meinhardt-Ruppin refers to: 200 billion euros to keep the gas price down until 2024. The decision sparked anger among southern EU countries, who fear distortions of competition if wealthy Germany starts to fuel its own industry with cheap fuel. But at home in Germany, the government thought: that’s where the flag will probably go. It could sometimes fail.
Uncertainty
Eschenbach Porzellan is running like clockwork, says director Rolf Frowein (64) in the small conference room. A spider’s web hangs from one of the black leather chairs – they’d rather work here than hold meetings. Until the corona crisis, the porcelain factory achieved an annual turnover of 9 million euros. Net profit over 300 thousand euros. Solvency 65 percent, for the enthusiast. He is therefore perfectly capable of absorbing normal economic fluctuations, says Frowein. But this? This cannot be done. Just count.
‘I asked my customers, especially restaurants and hotels, what they would like to pay more. A price increase of 20 to 25 percent seems possible. This means that next year I can make 1 to 1.5 million euros more available for purchasing energy. But according to current predictions, that’s not nearly enough.’
Asked if he is out of the woods now that the government promises to cut gas prices, his answer shows what happens when the impression is created that policymakers have also lost control of the situation. “The Ukraine crisis has been going on for six months, and so far I’ve only received promises from this government. I can’t plan with that. Under Merkel, we had concrete money in the account a month after the start of the corona crisis. Only when I have black and white that the gas price is guaranteed to remain low until at least 2024, can I consider postponing the closure. We are working two months ahead, so that should happen this month.’
Economics is psychology, the saying goes. And the psychology surrounding the Gaspdeckel In Germany, it is all about creating trust, especially among entrepreneurs. Because lack of confidence, that is the route to recession. Finance Minister Christian Lindner spoke very clearly to the business community at the presentation of the 200 billion. Freely translated: we make sure it works out. Have faith. Keep taking orders, keep production high, don’t close departments and don’t send people home.
To trust
But the German government has been arguing about the support packages so far, and about the Gaspdeckel perhaps the most. It underlines how unstable this three-party government is, Frowein says, and how unpredictable its policies are. SPD leader of government wants to help, but the Greens and the (centre-right) FDP are reluctant, for various reasons. One party does not actually want to support the ‘old’ energy-intensive industry, the other does not want to intervene in the free market.’
So no, says Frowein, the flag is not out and the intended closure is in place. On August 26, he resigned all employees after six weeks of doubt and lying awake. Tears flowed. But they understood, says the director, and it shows on the factory floor: people see for themselves at home what happens to the energy bill. In exchange for a bonus, many employees have promised to wait for the end of the year before actually leaving. Frowein himself is now waiting for the details of the support package, which is expected to be announced this weekend. In the conference room he slides two A4 sheets with energy price trends across the table.
The gas price must fall below 9 cents per kWh (about 90 cents per cubic meter, red.). Only then can he continue. At least, says Frowein with a finger to the second A4: if the electricity price remains the same. But that too is out of the question. So all calculations will have to start all over again. “And the Chancellor hasn’t said a word about that yet.”