High energy costs hamstring European processors

Skyrocketing electricity and gas prices are increasingly posing a threat to businesses operating in the energy-intensive plastics industry in Europe.

While some converters have so far been able to avoid a cost increase due to current contracts, on average, electricity costs have doubled since January, with many companies facing an up to 750 percent higher electricity price than at the beginning of 2022. In numerous countries, wage hikes coming on top of the soaring costs of energy, are leading converters to take a long hard look at whether to continue production—or to stop the processing lines.

According to European Plastics Converters (EuPC), the situation could negatively impact the supply of essential packaged goods in the EU. The association, which represents some 50,000 plastics converting companies, most of which are family-owned businesses, says the dilemma facing these businesses should not be underestimated.

It points to the fact that, without a contingency plan, for certain industries in some European Union Countries, there is currently "no business case to continue production nor visibility and certainty for investments and further developments." The resultant ripple of closures is now also starting to have significant impact on the European industrial base.

EuPc is calling on the relevant EU authorities to take action. EuPC Managing Director Alexandre Dangis said that very short-term impactful actions needed at the European level to keep the industrial value chains operating.

“We do not need long-term visions towards 2030 or beyond at a time where companies are trying to survive on a daily basis with a cash drain on uncontrolled energy prices,” Dangis said.

Companies represented by EuPC together employ over 1.6 million people in Europe. With winter approaching, it is hoped that by the end of September the EU Institutions will have formulated the clear and short-term remedies needed to support the EU industrial base. These, says EuPC, will be key for the future of the plastics converting sector.