Barely a day passes in Germany without news of the potentially fatal interdependencies of various economic sectors. After the production halt of the nitrogen plant in Piesteritz, one of Germany’s largest producers of fertilizer and AdBlue, and the insolvency of toilet paper producer Hakle, the looming insolvency of the pipeline component manufacturer Uhlig, as a result of the exploding energy prices, might endanger the completion of Germany’s liquified natural gas (LNG) terminals.
The pipeline components manufactured by Uhlig are handmade connectors vital to the construction of these terminals and not produced elsewhere in Germany. But their energy-intensive production may render the company insolvent before the LNG terminals, which should relieve the pressure on gas prices, can be completed.
“We have had monthly costs of €12,000 for gas in the past,” Marcus Rinke, the technical director of Uhlig, told NDR media, “but currently those expenses have increased tenfold and are still rising.” Presently, each plate of metal shaped in the company’s furnace creates a minus for the company. CEO Matthias Pollak noted that Uhlig “cannot renegotiate existing contracts that need to be fulfilled,” adding that “the question is whether we can still fulfill them.”
In case of insolvency, the completion of Germany’s first LNG terminal may be significantly delayed. While the future owner of the terminal, Uniper, had been bailed out by the state earlier this year, there is no financial help on the horizon for companies like Uhlig. “We notice that end operators are being bailed out with billions of euros, while we are forgotten and thus have to fight for our very survival. To us this comes across as a paradox,” said Rinke.
This notion is supported by the Minister of Economy of Lower Saxony, Bernd Althusmann of the christian-democratic CDU, who stressed the necessity of supporting the middle-class, as doing otherwise may lead to “chain reactions” with “fatal consequences” that might “cause a severe recession.”
German environmental activists had long prevented the construction of LNG terminals, but with the beginning of the Russian invasion of Ukraine, the government wanted to switch to alternative gas sources as quickly as possible, even though that didn’t deter activists from blocking building sites as recently as mid-August. The gas terminals are currently under construction and were scheduled to go online within a few months. The insolvency of Uhlig, however, might delay the completion significantly.