Energy costs hits industry hard, says German plastic packaging association

By Rachel Arthur contact

- Last updated on GMT

German plastic packaging association

Related tags: Renewable energy

The German plastic packaging market is facing tougher competition, with energy costs placing native companies at a disadvantage, says a national packaging association. 

It is calling for a reduction in an energy surcharge to help the industry compete against international companies.  

The IK Industrievereinigung Kunststoffverpackungen says 40% of its members evaluate the general economic situation as good, but have a much bleaker outlook on their own turnover.

'A huge burden'

In the first quarter of 2014, 4% of companies expected turnover reductions. In the fourth quarter, manufacturers regard the situation ‘very reservedly’ - with nearly 30% expecting turnover reductions.

The association (of which 60 - 70% of members are from food and drink packaging companies) blames Germany’s EEG (Erneuerbare Energien Gesetz, or renewable energy law). The EEG aims to encourage renewable energies and improved energy efficiency, but includes a surcharge on consumers to support renewable energy sources.   

Inga Kelkenberg, manager communication and economics, told FoodProductionDaily.com the surcharge has been rising in recent years.

“The EEG is an extra cost coming in on top of general energy prices,” ​she said. “This is a big burden, a huge burden, and the main reason we think that other countries (where they don’t have the levy) can produce products cheaper.”

The association believes that, without a reduction in fees, the competitive disadvantages for medium sized German industries will become even more pronounced over the next year.

Rising costs

“We’d like to have it [the EEG surcharge] lowered. It’s unrealistic to have it scrapped. It would help if it stays stable, although that alone is not sufficient. There are other costs rising too, such as raw materials, but the biggest burden is the energy,” ​Kelkenberg added.

As a result, competition from other countries ‘has become much more acute’ this year. This applies to both export-orientated packaging producers, and smaller companies who face competition from foreign suppliers within the German market.

“In the past our competition was coming from Turkey but now it’s also other European countries that are close by,” ​added Kelkenberg.

IK is working with other associations who are similarity affected by the EEG to try and address the issue.

The IK Industrievereinigung Kunststoffverpackungen (German IK Association of Plastic Packaging) has over 300 members. It says it represents the lion’s share of the German plastics packaging market, accounting for more than 4m tons of plastic packaging and films. 

Related topics: Processing & Packaging

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