Roundup: French industry buckling under energy crisis

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PARIS, Sept. 19 (Xinhua) -- The ongoing energy crisis has had a significant negative impact on France's industrial output, with some companies already resorting to layoffs and the government calling for "energy sobriety."

In a report released on Sept. 9, the French National Institute of Statistics and Economic Studies (INSEE) said that almost all industrial sectors had recorded a drop in activity. In July 2022, output decreased in the manufacturing industry (minus 1.6 percent after 0.9 percent in June) as well as in the whole industry (minus 1.6 percent after 1.2 percent in June).

More than one out of two French industrial companies said they had suffered consequences from the energy crisis and that their production bottlenecks had affected profitability.

According to recent surveys, 80 percent of the country's small and medium-sized enterprises fear for their survival.

In the eurozone, industrial production fell 2.3 percent in July month on month and by 2.4 percent compared with July 2021, Eurostat, the European Union's (EU) statistical body, said last Wednesday.

In France, the price of electricity, which is linked to gas price, has exploded. Meanwhile, 29 of the country's 56 nuclear reactors have been shut down for maintenance work and to repair corrosion problems, the French media reported.

The unprecedented accumulation of supply constraints, combined with a spike in demand in the wake of the coronavirus crisis, have sent production costs rocketing in industry, agriculture and construction alike.

Between July 2020 and July 2022, production costs increased by slightly over 20 percent in industry (excluding energy) and by slightly over 35 percent in agriculture, the INSEE said.

In July 2022, output declined again in the "other manufacturing" industries ( minus 1.7 percent after minus 0.2 percent). It fell back in mining and quarrying, energy, water supply (minus 2.1 percent after 2.4 percent), in the manufacture of machinery and equipment goods (minus 1.9 percent after 2.8 percent) and in the manufacture of other transport equipment (minus 3.3 percent after 6.1 percent), the INSEE said, adding that output also contracted in the food and beverages sectors.

Metallurgy, steel, cement and petrochemicals are particularly affected.

As a result, increasing numbers of French employers resort to temporary or permanent layoffs and plant closures.

In the Centre-Val de Loire region, glassware manufacturer Duralex said it will pause production for four months starting Nov. 1 due to rising energy costs and will place its 250 employees on short-time working.

The Arc glass factory also put its ovens on standby on Sept. 1 and put a third of its 4,600 employees on partial furlough.

Chemicals company Borealis said it plans to bring production to a partial halt at its Grandpuits site near Rouen in the Normandy region.

The French steel group Ascometal has also decided to scale back its activity at its industrial sites in Fos-sur-Mer in the Provence-Alpes-Cote d'Azur region and Hagondange in the Grand Est region.

And Aluminum Dunkerque, Europe's largest primary aluminum smelter, will reduce its production by 20 percent until the end of this year.

As part of French President Emmanuel Macron's plan for "energy sobriety," a new working group dedicated to industry had its first meeting on Sept. 7 chaired by Energy Minister Agnes Pannier-Runacher and Minister Delegate for Industry Roland Lescure. The group brings together industry representatives, trade unions, strategic committees, energy suppliers and innovators.

The country's aim is to reduce energy consumption by 10 percent over two years and by 40 percent by 2050. The government also aims to ease the conditions for access to aid for companies. Enditem

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