German porcelain maker faces fragile future due to war in Ukraine

FRANKFURT, June 29 (Reuters) – For family-run German porcelain maker Kahla, recent cuts in Russian natural gas supplies to Germany and high energy prices due to war in Ukraine pose an existential threat imminent.

“As a manufacturer dependent on gas for our production…we are very concerned,” Kahla chief executive Daniel Jeschonowski said.

“We’re not facing a situation where we have to close tomorrow but that’s not sustainable over a longer period and you just can’t get through. [the price rise] customers,” he added.

His family acquired the 177-year-old business, which makes porcelain dishes for the retail market and the hospitality industry, out of insolvency in 2020.

Current wholesale gas prices of around 10 euro cents per kilowatt hour (kWh) were down from 15 to 20 cents at the start of the year, but were still not commercially viable longer term. term, he said.

Germany’s energy-intensive sectors, including chemicals, metals, paper, ceramics and porcelain, are in turmoil after the country triggered the “alarm phase” of its gas plan last week. emergency in response to dwindling Russian supplies.

Russian gas producer Gazprom said earlier in June that capacity through the Nord Stream 1 pipeline would be reduced to just 40% due to the delayed return of equipment undergoing maintenance.

European leaders such as German Chancellor Olaf Scholz have questioned whether the cut was a political reaction to Western sanctions against Russia for its attack on Ukraine, which Russia denies.

Kahla said he was pleased with the way the energy regulator has so far handled supply cuts. Its system includes a system of planned tenders to encourage manufacturers to consume less and a detailed study of industry needs.

Jeschonowski is confident that a surprise drop in pipeline pressure, feared especially by ceramicists and glassmakers whose kilns can be destroyed by sudden gas cuts, will be avoided.

Nevertheless, it is difficult for the company to reduce its gas consumption.

“I liken it to a bakery, run with a lot of passion. A baker has to keep his oven running. Asking him to save energy doesn’t really help, because he wasn’t wasting energy before,” a- he declared.

There are only a handful of porcelain makers in Germany left facing low-cost competition from Asia and they have exhausted all energy efficiency measures, he said.

Jeschonowski added that relocating overseas to cut costs was out of the question for the company, which is named after his hometown of Kahla in the state of Thuringia.

“I have a passion for producing in Germany,” he said. (Written by Ludwig Burger Edited by Alexandra Hudson)

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