Find it realistic that the Volkswagen concern reaches something as risky and complicated as it is partial shift of production from east to west Europe knowing that energy prices can be very different in a short amount of time than today? Or do you read today’s VW statement more like pressure on national governments and the European Union to speed up aid to businesses?
This interpretation is being offered as the next Extraordinary Energy Council approaches September 30th. But I say this is definitely not the main reason. Because we’ve been hearing warnings from many companies for weeks. The situation is so dire that companies are talking about it completely face to face. Volkswagen is just one of them. It is far from just Volkswagen or Škoda from which we hear warnings.
Who is still sounding the alarm?
Daughters of multinational parent companies. They live in a system where the foreign mother – German, Italian, French – sends them an assessment once a month of how they are compared to other countries where the mother has other daughters. So far, mothers have emphasized personnel costs, deadlines for authorization procedures and the like. Now energy prices have come to the fore.
Today I heard from two companies that employ thousands of people in the Czech Republic and are the daughters of colossal foreign companies that have started falling out of the ratings mentioned. Precisely because they have the most expensive energy. Production in the Czech Republic is slowly ceasing to pay them. This is what we are facing now. Companies cannot deal with it. The prices are already so absurd that they do not compensate for them. It is not necessary to search, but to find an overall effective solution at national and European level.
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When Volkswagen makes such a strong statement, I suppose the situation of a number of Czech small and medium-sized companies can be very critical.
We have been hearing this warning from companies for several weeks. The novelty is that companies have found themselves in such a critical situation that they are ready to talk about it directly, in a non-anonymous way, specifically. So far we have heard from glass factories and ceramic factories that they are in big trouble, but they don’t want to be named. Because it could upset employees, creditors, banks or competitors could take advantage of it. The fact that the otherwise very conservative Volkswagen concern says it out loud really means something. We must all take this signal very seriously.
How many companies are affected by the existential crisis?
Until now it might have seemed that classic sectors such as glass processing, metallurgy, foundries or construction were at war with the skyrocketing prices of electricity and gas, companies that had already exhausted their savings, reduced margins and raised profits. prices. But the problem is much bigger and has spread not only to the automotive industry but also to telecommunications, for example. We have heard from mobile operators how this entails huge additional costs for them in terms of having to keep their BTS transmitters running and powering their servers. The increases are so huge that they can threaten their future investments, which the industry needs for its modernization.
For instance?
This refers to investments in high-speed connectivity due to the Internet of Things, machine learning and everything that is part of the so-called fourth industrial revolution. In the long run, this would mean a major problem for the entire economy.
How’s your union doing?
Today we are sending an official letter to the Prime Minister and other ministers on behalf of all three major employers ‘unions: the Confederation of Industry, the Chamber of Commerce and the Confederation of Employers’ Unions. We highlight threats and offer solutions.
What solutions?
The absolute minimum that the Czech delegation should return from the Extraordinary Energy Council is an extension of the temporary crisis framework. We are already very late in using it. We asked the government for its activation as early as June. The problem is that it is only valid until the end of this year. An extension is needed for the whole of next year.
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How come?
Because two thirds of companies have fixed prices for electricity and gas until the end of this year, but only a fifth have fixed prices for next year as well. Because now, before the end of the fix, when they started negotiating with their suppliers for an extension, it was almost impossible to renew the contract in some cases. And if so, at prices that would not be sustainable for companies in the long run. This problem will arise much more intensely early next year and beyond. It is therefore necessary not only to expand the framework, but also to change its parameters. The problems of the part of the companies seeking support are only partially solved.
Expensive energy and price cap:
Would it help if the government allowed more industrial companies to limit energy prices?
Definitely yes. They must try to negotiate a system-wide solution where the final gas-fired plant determines the prices of the electricity at which it is purchased. This is unsustainable and should be changed at the European Union level. Here I see the potential to reduce the price of electricity in the long run.
The second thing is that more allowances must be released from the market stabilization reserve to the market in order to at least partially reduce this burden on businesses. If this does not work, it is necessary to negotiate at the European level that it will be possible to limit prices, to relax public support even for large companies according to agreed pan-European parameters. It must not happen that public support is completely slackened, that it is up to the will of the nation-states to help their large corporations. The rich countries would support their activities much more than the Czechia with empty state coffers.
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