C2 Background
German plastics packaging association IK warns: record price jumps endanger production

07.01.2022 The extreme price pressure on electricity and gas as well as the persistently high raw material prices mean that one in four manufacturers of plastic packaging and films already has to turn down orders. For 2022, the industry expects a further sharp increase in electricity costs of 28%. Numerous companies see their existence threatened by this development. The industry is calling on the new federal government to provide urgent relief.

Dr Martin Engelmann, IK CEO.
© Photo: IK Industrievereinigung Kunststoffverpackungen
Dr Martin Engelmann, IK CEO.

According to a recent survey by the IK Industrievereinigung Kunststoffverpackungen e.V. among its members, industrial electricity cost manufacturers of plastic films and packaging an average of 16.7 cents/kWh last year. For 2022, the industry expects a further increase to an average of 21.4 cents/kWh. "The dramatically increased electricity and gas costs are threatening the existence of many of our member companies," warns Dr Martin Engelmann, CEO of the IK Industrievereinigung Kunststoffverpackungen, also with a view to foreign competitors.

Not sustainable in the long run even for companies in good health

"Annual increases in electricity cost intensity of more than 25% are not sustainable in the long run, even for healthy companies. Already today, 27% of our members have to turn down orders for cost reasons. This is not about maximising profits, but simply about covering costs!" In most cases, the high costs are only partially passed on to the customers.

"In view of the energy price explosion, the new federal government must not close its eyes to the economic consequences," Engelmann demands. Only a few weeks ago, the EU Commission made it clear that manufacturers of plastic films and packaging are significantly affected by the carbon leakage risk. "The German government should therefore use the leeway as quickly as possible and initiate regulations to protect domestic industry from excessively high energy prices," says Engelmann.

High cost pressure limits necessary investments in climate protection and the circular economy

High energy prices are also the most important reason why investments in more energy-efficient production processes and greater use of recycled materials are partly put on hold. "The high cost pressure leads to shrinking margins. This means that many companies simply no longer have the funds for the urgently needed investments in climate protection and the circular economy," Engelmann criticises.

The supply of plastics remains very tight in the industry: 43% of the companies surveyed assessed the situation as bad or very bad in December 2021. 29% even expect a further deterioration in the first quarter of 2022. This has an impact on the companies' production: 32% report restrictions in the ability to supply to a medium or considerable extent.