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POLITICO: Is this the end of Made in Europe? How the European industry fights the energy crisis this winter


The white-hot furnaces of Duralex have been burning near the banks of the River Loire, near Orléans, France since the year the Second World War ended. But this winter, not a soul is to be found along the silent production lines of the firm’s glass factory in La Chapelle-Saint-Mesmin — and not a single piece of glass is being produced.

The furnace itself is in “hibernation” mode until April — because the gas required to keep it going at full blast was simply too expensive. When operated at these lower temperatures, it can’t produce anything. But if it were to be turned off entirely, molten glass would solidify inside it and the equipment would be destroyed.

"We had to make a difficult decision,” said José-Luis Llacuna, president of La Maison Française du Verre, the group which owns the Duralex and Pyrex brands, sitting in his office next to the factory. “It has technical and human risks, but makes us save energy.”

An empty assembly line and chairs at the Duralex plant
Photo: Giorgio Leali

Even if you don’t realize it, you’ve probably held a Duralex product — an unsung triumph of European manufacturing. Their sturdy glass tumblers can be found in every French school canteen and are exported all over the world. You can buy them at the U.K.’s John Lewis department stores and even at the MoMA in New York. 

Llacuna says the factory's future in Europe is safe, but its struggle this winter is symbolic of a deeper crisis affecting Europe’s centuries-old manufacturing base, as high energy prices and high politics collide.

The cost of energy — driven to record levels in 2022 by Russia’s invasion of Ukraine and its shut-off of vital gas pipelines — has become too much for many manufacturing firms to remain competitive if they stay in Europe. At the same time, a vast package of American subsidies for green industry has shocked and angered EU officials, who see the U.S. — a supposed ally — tempting businesses to relocate across the Atlantic. 

The energy crisis is particularly acute for sectors like glass, chemicals, metals, fertilizer, pulp and paper, ceramics and cement, which require the most energy to fuel their industrial production — and between them employ 8 million people. But facing ever-growing economic competition from both China and now an increasingly protectionist United States, European leaders openly warn of a contagion of “deindustrialization” affecting all manufacturing across the continent.

Preventing such a dire outcome — and the social and political fallout — has shot to the top of the EU’s agenda in 2023. 

In a new year email to staff, seen by POLITICO, the European Internal Market Commissioner Thierry Breton singled out efforts to boost Europe’s global competitiveness as “a top priority.” 

“High energy prices in Europe will continue to affect our fellow citizens, but also entire industrial supply chains and [small and medium-sized businesses],” Breton wrote. “At the same time, China, the U.S. and other countries are trying — not without success — to attract our industrial capacities.

“Without a strong manufacturing base,” Breton’s email states plainly, “Europe’s security of supply, export ability and job creation is at risk.”

As of December, European manufacturing — and in particular the continent’s industrial powerhouse Germany — had weathered the worst of the winter energy crunch, cutting gas consumption by around 15 percent without a corresponding drop in overall output. 

Photo: BASF SE

But with gas prices — despite recent falls — still around six times higher than the average price of the previous 10 years, and more than four times higher than in competitor countries like the U.S., many still fear that larger firms will simply relocate operations outside Europe while smaller businesses could fold entirely.

Deepening the gloom, the long-cherished vision of Europe as the driving force of a green industrial revolution has been thrown into serious doubt by Joe Biden’s $369 billion Inflation Reduction Act. With its huge subsidies for green technologies and "Buy American" clauses, European leaders fear the package will lure more and more of their companies across the Atlantic.

“Given the actions of the U.S. and China, we see the real danger of deindustrialization and disinvestment,” a senior European Commission official said. 

Losing manufacturing capacity means losing jobs and that — said Luc Triangle, general secretary of the IndustriALL European Trade Union, which represents manufacturing workers — has “political consequences.”

“We are not exaggerating when we say that European industry — starting with the energy-intensive industries on the frontline — is facing an existential crisis,” Triangle said. The same “existential” threat applies to the 8 million workers in the energy-intensive sector, IndustriALL has warned. 

In its annual labor market review, published last month, the European Commission said that employment rates in the EU remained strong despite the war, with unemployment falling to 6 percent in July. But it also warned that continuing high energy costs pose a “major risk” to jobs in the EU, particularly in energy-intensive manufacturing sectors.

Though fairly small in scale so far, the impact on jobs is already being seen. In December, the European Foundation for the Improvement of Living and Working Conditions (Eurofound) published a list of job losses — including 441 lay-offs at an aluminum oxide producer in Tulcea, Romania in June; 300 at a plant in Žiar nad Hronom in Slovakia by the end 2022; and 350 at a ceramic tiles manufacturer in Poland.

The organization said the energy crisis’s impact on employment in the bloc was likely “only just beginning.”

Triangle warned that, like in the former manufacturing towns of northern England that went on to back Brexit, accelerated industrial decline in central and eastern Europe could fuel a voter backlash against the EU that might yet become an enduring legacy of the crisis.

“There are political consequences,” Triangle said. “Which parties are going to win, thriving on the dissatisfaction and disappointment? The parties that have an anti-European agenda, or an extremist agenda.”

Leader of the far-right Sweden Democrats Jimmie Åkesson
Photo: picture alliance / DPR / A.Wiklund

Warnings from businesses have grown louder — as have calls for coordinated, EU-level action to rescue Europe’s manufacturing base. France is now demanding a comprehensive new EU-wide "made in Europe" strategy. 

In October, the decision of BASF — the German chemicals giant, based in Ludwigshafen since the mid-19th century — to permanently downsize its operations in Europe sent shockwaves through European manufacturing, Triangle said.

The wider impact beyond energy-intensive sectors was highlighted in November when Volkswagen warned that Europe was no longer “cost-competitive in many areas, in particular when it comes to the costs of electricity and gas" — a shot across the bows from an automotive sector that is the jewel in Europe’s manufacturing crown, employing 13 million across the continent.

At their final summit of 2022 in December, EU leaders insisted they had heard the call. The meeting produced an instruction to the European Commission to rapidly draw up proposals “with a view to mobilizing all relevant national and EU tools” to address the dual energy and competitiveness crises hitting European industry.

The issue is due to dominate an EU leaders’ summit scheduled for February 9-10.

But, amid disagreements between countries over the way forward, which path the bloc will take remains unclear. 


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