Europe’s Truckmakers Stockpile Natural Gas as Energy Crisis Worsens
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Europe’s biggest truckmakers are stockpiling natural gas and preparing to shift to alternative fuels amid the threat of a winter shortage as Russia continues to cut off pipelines to the continent.
Mercedes-Benz Trucks, a unit of the world’s biggest commercial vehicle maker Daimler Truck Holding AG, is switching to oil for a large part of production at plants in Germany, according to division head Karin Radstrom. Volkswagen AG’s Traton SE, owner of the Navistar, Scania and MAN brands, has a “huge” gas tank on the way and is going back to “good old coal,” said Chief Executive Officer Christian Levin.
“The worst period will be the cold months when there’s competition with private households, hospitals and business,” Levin said, speaking at the IAA Transportation show in Hanover, Germany. “The entire Volkswagen group is preparing for a period of shortages.”
As Europe’s energy crisis rolls on and temperatures have started to cool, skyrocketing prices rippling through supply chains are starting to hit home. Germany, which is most dependent on Russian gas, has seen imports of vital chemicals jump 40% during the first half as companies increasingly replace gas-intensive processes with products from elsewhere.
Manufacturers are also grappling with higher costs that are pushing many smaller companies supplying key parts to the brink. Others have begun partly filling European polymer orders to the car industry with materials from facilities in North America and China, where possible.
Christian Levin, Scania president and CEO, has just pointed out that only two of the vehicles on the company's stand at the IAA are NOT electric. pic.twitter.com/eYuwR4I9iA — FOCUS on Transport (@FOCUSmagSA) September 19, 2022
“We have identified at-risk parts and we’re talking to suppliers about them,” said Levin. “We need to act responsibly and make sure they survive these tough times.”
Italian truckmaker Iveco Group NV said it was holding talks with suppliers about their struggles with energy prices, adding it is discussing options for financial support or assistance in securing energy supplies. Several of the company’s suppliers had planned extended production breaks over the summer due to the high price of electricity and gas.
“In most of the cases we could motivate them to restart production for us,” Iveco Chief Executive Officer Gerrit Marx said. “We have a full order book and we need our suppliers to be on board.”
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While energy availability and its cost has taken center stage, Traton continues to work through shortages for semiconductors and other parts that are capping production at about 85%, Levin said. Mercedes likewise is still struggling to source enough chips, even as the situation has improved from a year ago, according to Radstrom.
“It’s almost part of normal business somehow,” she said.
After months of chip shortages idling production, truckmakers remain in catch-up mode even as the energy crisis takes center stage and order books are full.
“It’s a very uncertain time and we look at the early indicators,” said Radstrom. “I see all the signs, but I don’t see it in the business. I’m cautiously optimistic.”