News: European industry has begun to move to the US – Expert

One of the main beneficiaries of the energy crisis in Europe is… the American economy. The European economy is shrinking before our eyes – manufacturers of fertilizers, steel, chemicals and many other things that require high energy costs are moving their operations overseas, attracted by relatively low (compared to European) gas and energy prices and more efficient government support for business.

“You don’t have to be a big scientist to think about moving to the United States,” Ahmed El-Hoshi, head of the Amsterdam-based chemical company OCI NV, quoted the Wall Street Journal (WSJ) as saying recently that it will soon begin ammonia production in Texas.

Despite record inflation, big supply problems and fears of a recession, the American economy is still recovering quite quickly and successfully after the pandemic, especially compared to China, for example, and Europe. New programs to upgrade and build infrastructure, microchip development and green energy projects, backed by massive funding, are once again making America’s business attractive to the world.

Danish jewelry company Pandora A/S and German auto giant Volkswagen AG recently announced plans to expand overseas production. Even Tesla Inc. decided to hold off on Germany’s launch of electric vehicle batteries to first try to win tax breaks in the US under President Biden’s Anti-Inflation Act signed into law in August.

Now the main question facing European businessmen is how long high gas prices will last in Europe, which still remains an attractive market for high-precision engineering and has a highly skilled workforce. More and more economists believe that Canadian, American and Qatari gas companies will be able to replace Russian gas for Europe only in the medium term. This means that high energy prices on the continent, at least for gas, will last until at least 2024. It also means that the European manufacturing sector may not recover from the deep effects of the energy crisis.

Luxembourg-based steelmaker ArcelorMittal SA, which announced in September the closure of two mills in Germany, reported good performance in its Texas operations and announced plans to expand it.

The United States is a magnet for European businesses that are suffering from astronomical gas and electricity prices, but moving is very troublesome, expensive and time-consuming. Especially when it comes to such industries as the chemical industry and metallurgy, in which the launch of production can stretch for years.

“It should be understood whether this (the consequences of the energy crisis) will turn out to be structural changes or it will be temporary,” commented the official representative of the world’s largest chemical concern BASF, one of the largest gas buyers on the continent, which, by the way, commented on the situation in the Old World for the WSJ. has already closed production at a number of factories in Belgium and Germany.

The meaning of the comment is clear: if the changes are structural, i.e. come for a long time, then it makes sense to think about moving the main production to the United States.

Many manufacturers in Europe think so now. Svein Tore Holseter, head of Norway’s large fertilizer producer Yara International ASA, believes that the chances of remaining competitive in the US, with its low energy prices and green projects, are much better than in the Old World.

“Some industries could move (to the US) permanently as a result,” he said.

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