The industrial companies are optimistic about 2022, but the pitfalls are many.
Last time Nettavisen Økonomi spoke with top manager Lars Rotseth (52) in Kverneland Group, he gave clear message to the Minister of Trade and Industry about the high electricity prices.
Today, electricity prices are at a much higher level, and the 530 employees at the plow factory in Rogaland must do what they can to keep electricity consumption down.
– We have received a huge increase in costs and a multiplied electricity bill, says Rotseth.
The factory is world famous for high quality steel, and every fourth plow sold in Europe comes from the company in Jæren. In the early 2000s, the company replaced the oil furnaces with gas furnaces after political pressure, before the factory started converting to electricity a few years later.
– It’s very tough right now. Gas is also expensive, so we have to continue the conversion to more electric stoves, says Rotseth.
Kverneland Group
- Kverneland was established in 1878 and quickly specialized in heavier agricultural implements for larger farms.
- Today, Kverneland is world-renowned in agriculture as a giant producer of plows.
- Kverneland was bought by Japanese Kubota in 2012 and listed on the stock exchange. The group has 2,550 employees and Kverneland Group has around 530 employees.
–
–
–
Also read: Decrease in the number of redundancies
High order backlog and increased expenses
The director of industry is like many other business leaders in southern Norway: He expects more employment and higher turnover in 2022, but there are some uncertainties.
– Earnings are under strong pressure, partly due to increased electricity costs, says Rotseth.
Of 600 companies surveyed in the Oslo area, Agder, Vestland and Rogaland, 58 per cent believe that the development in the next twelve months will be better than the current situation. The industrial companies are among the most positive, according to the Business Tendency Survey of Sparebank 1 SR-Bank.
– These companies have several legs to stand on, have done well through the pandemic and have a high growth rate. Despite the pandemic, there is good drive in the industry and it seems that the upswing continues, says chief economist Kyrre Knudsen in Sparebank 1 SR-Bank.
The companies expect growth in 2022
SpareBank 1 SR-Bank’s business cycle barometer is a temperature gauge for the business community in southern Norway. In the survey, the companies give their expectations for the next three and twelve months, as well as the development in the past year.
- The survey in brief: The first months of 2022 may be characterized by uncertainty and lower activity, but then companies in southern Norway expect growth to continue.
- Of the 600 companies surveyed, expect 58 percent that the development in the next twelve months will be better than today.
- The industrial companies, the building and construction industry and the energy industry are the most optimistic about future developments. While 62 percent of companies in industry and construction expect growth, optimism is even higher among companies that have part of the turnover towards oil and gas.
- Part of the business world, for example the accommodation, catering and culture industry, starts the year with lower growth and higher uncertainty in early 2022.
–
–
–
However, business leaders point to several things that create uncertainty: Infection development, scarce access to raw materials, challenges with shipping and production restrictions at suppliers.
– In the plow factory in Klepp, we have orders for the next six months. We are completely dependent on bringing in raw materials. The situation is not entirely positive, because purchasing and electricity are more expensive than before, says Rotseth.
In terms of sales, Kverneland Group in Norway is in a better position at the beginning of 2022 than in 2021.
– The question is whether this is a continuing trend, the effect of the pandemic or the consequence of market prices rising and people having to secure themselves. We will not know until the end of the year, says Rotseth.
The seas: Therefore, we suddenly got the most expensive power in Europe: – Has painted itself into a corner
Asks politicians to consider electricity assistance to companies
The plow factory uses energy equivalent to about 50 GW a year in electricity and gas to make machines and tools – and especially plows – for agriculture. The director calls for action from politicians to protect companies from sky-high price peaks in electricity in the future.
– We need predictability. If the politicians accept that we should have such an extreme volatility, we must get a compensation scheme in place for us who are not in the greenhouse industry, Rotseth says.
Several times around New Year, southern Norway had the highest electricity prices in Europe.
– Hopefully this is a temporary situation. But if Germany and other countries will continue to shut down energy sources without increasing power production themselves, I fear that this may persist, says the Kverneland director.
– What can you do to renegotiate your own electricity agreements?
– We try to renegotiate the contracts, but it is not a good idea to negotiate long-term agreements at a time when prices are so high. But we have a close dialogue with the suppliers to avoid the highest peaks, says Rotseth.
The seas: Fears of January crash: – Over 600,000 are worried about the economy
–
