As energy prices in Europe skyrocket, and gas shortages abound, many European companies are finding they can no longer compete with competitors abroad. As a result, they are choosing to cut their own overhead, by moving abroad themselves, to environments with lower energy costs and no energy shortages.
Many are moving to the US, where energy prices remain relatively low, and where the government has not threatened energy rationing, which many of these companies would find deadly to their bottom lines. In addition, many companies note that Washington has been creating many subsidy programs for everything from green energy products, to semiconductor chip manufacture.
On Monday, it was reported that German automaker Volkswagen is looking to relocate its manufacturing plants from Germany to Eastern Europe. This came after Volkswagen, as well as Danish Jeweler Pandora, both announced plans to expand their operations within the United States.
ArcelorMittal, a steel maker in Luxembourg, just announced it would be slashing production at its German plants, shifting the work to a facility in Texas. OCI, a chemical company based out of Amsterdam, has also announced it would be moving ammonia production to the United States. Ammonia production uses natural gas as a feedstock, making it prohibitively expensive in Europe, as well as unfeasible if there is rationing.
American businesses operating in Europe have also been adapting the distributions of their production operations to the spikes in energy costs. Tesla has announced it would be pausing plans for battery production in Germany, as JP Morgan announced it would be closing its headquarters in Frankfurt due to the risk of blackouts disrupting its live-trading operations.
At their peak in 2022, European gas prices hit more than 400% of their norms, as the TTF hub in the Netherlands showed gas futures skyrocketing to €346 euros ($353) per megawatt hour in August. Prices have since been declining as reports have come in of reserve storage facilities approaching capacity, however it is expected they will rise again in the winter as usage peaks, and Russian supplies continue to remain limited.
