Greece: heavy industry, desperate measures to survive

Export at cost price to keep producing

19 December, 15:07

    (ANSAmed) - ATHENS, DECEMBER 19 - Heavy industry in Greece, particularly the sectors that produce steel, concrete, aluminium, copper and paper, are desperately trying to find ways to stem some of the negative effects of the economic crisis the country is going though. Some companies even sell up to 70% of their production abroad at cost price, just to be able to keep producing.

    Energy-intensive industries in Greece fight a daily battle for their survival on a domestic market that has been in recession for four years, with low liquidity, limited financial resources, rising interest rates and a series of austerity measures that seem to ignore their impact on the real economy, like the high taxes on energy. According to officials of the union of industrial energy consumers (Ebiken), the cost of electricity and natural gas for energy-intensive industries can be as high as 35% of total production costs. The price of high-voltage electricity was raised by 10% one year ago by the introduction of an emergency tax of 2.50 euros per megawatt, only 0.50 euro/megawatt in Germany. In the same period, the cost of medium-voltage electricity went up by 15-20% due to a 5 euro per megawatt consumer tax, an average increase on tariffs of 9% and an increase of taxes on energy produced from cleaner sources, like natural gas. Moreover, in September a tax on energy consumption was introduced that is ten times higher than the EU-minimum, together with a massive rise of taxes on petrol and liquid gas that further raised energy costs for heavy industry. The result of these measures, according to Ebiken, is that the Public Power Corporation - the Greek electricity production and distribution company - is not only trying to raise tariffs by up to 20% but also to apply further operational costs. ''It is clear that Greek energy-intensive industries, which are already suffering heavy losses, are no longer able to absorb the high energy costs. We need to change the method used to establish energy prices and rationalise energy taxation, causing energy prices for industrial use to fall instead of rise,'' explained an official of Ebiken who prefers to remain anonymous.

    Regarding the other effects of the economic crisis on heavy industry in Greece, Ebiken has reported the conclusions of a survey on the results of 12 listed companies in the steel, concrete, aluminium, copper and paper sectors. The research shows that the turnover of these companies fell by 33% between 2008 and 2010, that their sales on the domestic market dropped by 60-70% due to the problems in the construction sector and that exports in some way managed to make up for the losses. The 33% decline of sales in the 2008-2010 period was accompanied by a 67% reduction in terms of EBITDA (gross operating margin), while the same companies recorded losses totalling 153 million euros in 2010, against 474 million euros in gross revenues in 2008.

    According to the various manufacturers interviewed by Ebiken, the situation would be even worse if the companies were not coordinating their efforts to contain production costs and remain competitive, guaranteeing employment at the same time.

    ''Today, heavy industry in Greece produces 40% of what it produced in 2008, with all consequences for the country's gross domestic product and employment. Losses keep rising and my company may be forced to close,'' admitted one industrialist. The structural problems heavy industries are dealing with - like the complex procedures to get licenses and the absence of infrastructures for environmental management - increase the risks for existing companies and discourage potential foreign investors. And there is more: another problem that makes companies in Greece less competitive is the absence of a system that manages solid industrial waste, forcing these companies to export their waste, paying five to eight times more to get rid of their waste than their foreign competitors. (ANSAmed).

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