Mercedes Races Threat of Gas Rationing by Making Extra Parts

Mercedes Races Threat of Gas Rationing by Making Extra Parts

23 Sep    Finance News, Physics

Article content

(Bloomberg) — Mercedes-Benz AG is stockpiling parts it makes using natural gas in a move to keep production going for several weeks even if Germany introduces drastic fuel rationing.

The German luxury automaker has produced extra parts made at its foundries in Untertuerkheim, which go into gearboxes, axles and transmission components to build up stockpiles at plants in the U.S. and China. This will allow carmaking operations in Alabama and Beijing to keep going even if a shortage of natural gas in Germany forces operations in the country offline, according to Mercedes-Benz production chief Joerg Burzer. 

Article content

“You don’t know what’s coming exactly, it depends on temperatures during the winter,” Burzer said in an interview. “We’ve increased our inventories toward China and toward the US.”

German manufacturers are racing to prepare for potential gas rationing as the government seeks to shield households and critical industry from shortages. Since Russia effectively halted gas flows in response to the continent’s support for Ukraine, Europe’s powerhouse economy has stepped up its efforts to fill gas storage sites and find alternative supplies before winter.

Concerns for severe rationing have eased in recent days after gas storage levels in Germany went above 90% this week. The country, which is the most dependent on Russia for gas in Europe, is also seeking deals with Qatar, Saudi Arabia and United Arab Emirates about shipments of gas and hydrogen. 

Article content

Aside from the supply risk, industry faces a surge in input costs led by energy price hikes. Producer prices jumped by a record of nearly 46% in August, triggering deep concerns for future competitiveness. 

See also  UK retailers hit by drop in footfall as slowdown in spending hits as energy bills rise

Burzer said Mercedes has already cut its gas use by 10% and could as much as halve consumption if necessary. In a critical situation, the company needs to maintain supply of about 10% of its usual gas needs to function normally, Burzer said.  

“In an emergency situation, where there’s a shortage of gas, we can substitute a significant amount of our gas consumption with fossil fuel energy supplies — this shift is prepared and ready to go,” Burzer said. “We’re pretty sure we won’t have a situation where we have 0% of our usual gas supply.”

The company’s 25-person energy crisis task force has also been working on identifying Germany-based suppliers that would be at risk in a gas-rationing scenario and is in talks with them about shifting production to locations outside Germany. 

“Southern, southern-west Europe is a little bit different in terms of gas supply risk. If there are opportunities for our suppliers to move production, we are talking to them,” Burzer said. “It’s everything that needs gas: plastics, glass, foundries.”

Leave a Reply

Your email address will not be published. Required fields are marked *