European producers, faced with a surge in energy prices, are shifting operations to the United States, hoping to take advantage of both greater stability in the US energy market and government incentives, The Wall Street Journal writes.
Experts warn of the possibility of a new wave of deindustrialization in Europe amid wild energy price fluctuations and persistent problems in supply chains. The operating environment in the US looks much more favorable, especially for chemical manufacturers and companies in other energy-intensive industries. In August, US President Joe Biden signed the Inflation Reduction Act (IRA), which provides, in particular, tax incentives for industrial companies and representatives of the green energy sector.
Earlier this month, the WSJ reported, citing sources, that American electric car maker Tesla Inc. paused a plan to manufacture batteries in Germany in connection with the possibility of obtaining tax benefits in the United States. Sources told the paper that Tesla is considering shipping battery manufacturing equipment to the States for its Berlin facility.
European companies that have announced expansions in the US this year include automaker Volkswagen AG, as well as, for example, the Dutch chemical company OCI NV, which owns an ammonia plant in Texas.
European steelmaker ArcelorMittal SA earlier this month announced it was cutting production at two plants in Germany. At the same time, the results of her Texas enterprise turned out to be better than expected, which the head of the company, Aditya Mittal, explained by the low cost of energy in the region.
Experts note that the US economy has weathered the pandemic fairly well and is more attractive for business than Europe and China, despite record inflation, continued problems in supply chains and the risks of a recession as a result of tightening monetary policy by the Federal Reserve System (Fed). China is still under lockdown to contain the spread of COVID-19, and Europe is destabilized by the energy crisis due to the conflict in Ukraine.
It will be difficult for European manufacturers to remain competitive without lower energy prices or government subsidies, said Svein Tore Holseter, chief executive officer of Norwegian chemical company Yara International ASA.
“Some industries will have to relocate production on a permanent basis as a result,” he said.
