Firms resort to energy crisis management

Firms resort to energy crisis management

The frequency of management meetings, both at large energy-intensive groups and less energy-dependent companies, is increasing as their executives have entered crisis management mode.

That is due to the fact that after concerns over high energy prices came the possibility of the complete interruption of energy supply from Russia, and then the prospect of a slump in consumer demand due to the energy crisis, inflation and the decline in consumer and business confidence recorded in all indicators, especially in Europe.

Until recently the exercise was about the percentage of the increased cost that would be transferred to the final price paid by the customer – because demand was there. But now, as inflation persists and the cost of money increases, many private construction projects as well as other investments and capital expenditures are either being suspended or canceled in practice. Metallurgical, other raw materials and manufacturing industries are beginning to see early signs that demand in 2023 may prove significantly weaker than in the current year.

Even where demand remains active, possible gas shortages or pan-European and national regulations that will also limit energy consumption, render the continuity of production precarious. And there is no need to look far: Shutdowns in European metallurgy industries started coming in before the summer. Even if there are no such interruptions, it is unknown whether the end-customer will be able to bear the ever-escalating energy costs for a long time.

It is not only the heavy industries that have already drawn up or are now drawing up alternative plans, such as the shift to burning diesel or liquefied petroleum gas in their furnaces for those who can. Transport companies, airlines and shipping companies are carefully measuring the data from their markets. For example, shipping groups are concerned about a possible decline in construction activity on the islands, which would significantly limit the traffic of trucks, therefore requiring an immediate adjustment of their business plans, limiting the transport capacity offered. That is, fewer routes or even fewer ships.

Corresponding exercises and continuous adjustments are being carried out by airlines, which in fact are directed to foreign markets, where the crisis has even more pronounced characteristics.

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