By Paul Homewood
From OilPrice.com
Europe is losing and will continue to lose competitiveness and jobs if it doesn’t tackle its high energy costs compared to other regions, Morten Wierod, chief executive of Switzerland-based engineering giant ABB, told Bloomberg.
“The cost for energy intense industries like chemical, steel production, cement is a challenge, and investments will go elsewhere than Europe if this continues,” Wierod told Bloomberg in an interview published on Tuesday.
This predicament would hinder job creation in Europe, which, the executive said, “is a clear concern.” Bureaucracy is also weighing on the industry and job creation, Wierod said.
Major European companies are already moving to cut costs and retain their competitive edge.
For example, Thyssenkrupp, Germany’s largest steelmaker, said on Monday it would slash 11,000 jobs in its steel division by 2030, in a major corporate reshuffle.
“Urgent measures are needed to improve Thyssenkrupp Steel’s own productivity and operating efficiency, and to achieve a competitive cost level,” the German industrial giant said.
As Europe is bracing for the winter, wholesale electricity prices have jumped in November to the highest level in 20 months, additionally burdening the key industries in major economies that had just started to recover from the 2022 energy crisis.
The highest spot-based electricity prices in Europe since February 2023 threaten industrial production in key economies and loom large over business sentiment.
Earlier this month, falling wind power generation tightened power markets in Europe, with electricity prices in Germany hitting their highest since the peak of the energy crisis in 2022.
The rising energy costs threaten major European economies, just as Germany, the biggest economy in Europe, narrowly avoided a recession in the third quarter of the year. Eurozone GDP grew by 0.4% in the third quarter, Eurostat’s flash estimate showed earlier this month. That was higher than expected as the two top economies, those of Germany and France, outperformed forecasts.