Founded in 1622, the Heinz-Glas company primarily supplies L’Oréal in bottles. But the explosion in gasoline prices shakes the institution.
With its 400-year history, the Heinz-Glas company, which makes glass bottles for top perfumers including L’Oréal, has seen the storms pass. But the current gas crisis rocking Germany could be fatal.
“We live in an extraordinary situation,” said Murat Agac, executive assistant to the CEO of this German family business, which has seen 13 generations at the helm since 1622.
“In the event that gas deliveries end (…) glass production will disappear,” he adds.
Located in the glass region of Rennsteig, halfway between Bavaria in the south of the country and Thuringia in the east, the company is one of the world’s leading players in the sector.
In his Bavarian factory in Kleintettau, almost 70 tons of glass emerges every day from the noise of the machines and the heat of the furnaces.
A cost multiplied by 10
To manufacture and shape this material, the factory needs high temperatures, up to 1,600 degrees. Gas is widely used in this process.
Until recently, the resource flowed freely and cheaply thanks to pipelines linking Germany with Russia. But that era is over. Moscow has reduced its deliveries by 80% in the wake of the war in Ukraine.
Result, an increase in prices. For Heinz-Glas, the cost “has multiplied tenfold, sometimes even twentyfold compared to 2019”, a situation that “is not economically sustainable”, estimates Murat Agac.
At Kleintettau, small vases, adorned with relief motifs, are shaped in the oven, carefully inspected by workers, before being shipped to the company’s clients, including France’s L’Oréal.
The consequences of stopping Russian gas deliveries would be very serious for the company, which produces a million of these bottles a day in Germany.
The furnace at the group’s second factory in Piesau, a mountain village at the foot of the pastures, would be permanently damaged if stopped, according to Agac.
Even at the Kleintettau factory, where the furnaces are powered by electricity, about “40%” of the industrial process is still gas-powered.
50 million to pay
Like Heinz-Glas, it is the entire German industry, the mainstay of the eurozone’s leading economy, that is under threat.
Russian gas accounted for up to 55% of German imports before the war in Ukraine.
Manufacturers are now bracing for an imminent end to deliveries, while the government is already raising the specter of rationing.
Chemical giant BASF has come up with a radical plan to replace gas with fuel oil at its second German plant. The Henkel group, a specialist in detergents and adhesives, for its part foresees a massive use of teleworking.
To cope, Heinz-Glas has invested in a storage basin for liquefied gas, which could arrive daily by truck.
But this should cost “three times more expensive” than today, and it will not be enough.
In the long term, the substitution of the entire gas system for electrical infrastructure could cost “50 million euros” to the group, an amount that is considered unable to pay.
After the plague…
“We need state support,” says Murat Agac, leaving the risk of relocating to India or China, where the company already has a factory.
The group’s two German factories would also need the equivalent of “3,000 football pitches of solar panels” to operate.
For the company’s 1,500 employees in Germany, and the 54,000 industry employees across the country, the picture is bleak.
“I am old, but the young people here fear for their work,” Michaela Trebes, 61, tells AFP as she inspects hundreds of small vials that come off the production lines, perfectly lined up.
The leadership tries to reassure the troops. “When we were founded, we lived through the Thirty Years War (…) the plague. And only in the 20th century, the First and Second World Wars, the oil shock. We will overcome this crisis”, says Mrs. .Agac.
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