High Energy Prices Drive Major Production Slump in German Heavy Industry
Economy / Finance

High Energy Prices Drive Major Production Slump in German Heavy Industry

High energy prices are impacting energy-intensive industries more severely than other economic sectors, leading to documented changes in production output.

According to data released by the Federal Statistical Office (Destatis) on Friday, the production within energy-intensive industrial sectors in Germany has seen a decline of 15.2 percent, after adjusting for seasonal and calendar effects, in the period between February 2022 (the month Russia launched its attack on Ukraine and sanctions followed) and March 2026. This rate of decline was notably steeper than the decrease observed across the entire industrial sector (including manufacturing and mining), which fell by 9.5 percent.

These energy-intensive sectors include the chemical industry, metal production and processing, the manufacture of glass, glassware, and ceramics, the processing of stones and earth minerals, the paper industry, and mineral oil processing. These industries are characterized by a particularly high energy consumption relative to their gross value added.

The sharpest decline in output was recorded in the sector responsible for “the manufacture of glass, glassware, and ceramics and the processing of stones and earth minerals” which saw a negative 25.0 percent change in March 2026 compared to February 2022. A related segment, specifically the production of concrete, cement, and quicklime bricks, experienced an even more significant drop of 29.3 percent. Production also fell substantially in the paper industry (-18.5 percent) and the chemical industry (-18.1 percent). The decline in metal production and processing was somewhat less severe, falling by 12.9 percent. A major exception was observed in mineral oil processing: unlike the other energy-intensive sectors, this industry’s production actually increased by 24.6 percent compared to February 2022, following significant growth recorded since January 2026.

Beyond production volume, employment figures in this energy-intensive sector also declined. By March 2026, 794,400 people were working in these industries, representing a decrease of 6.3 percent compared to the 847,700 employees in February 2022. The largest proportional drop in employment was in the paper industry (-8.6 percent or 10,200 jobs). In metal production and processing, employment dropped by 7.1 percent (16,000 jobs), while glass/ceramics and stone processing saw a reduction of 6.4 percent (9,800 jobs). The decline was least pronounced proportionally in the chemical industry (-5.5 percent or 18,300 jobs). Conversely, mineral oil processing was the only energy-intensive sector to show job growth, with employment increasing by 5.8 percent (1,000 jobs) in March 2026 compared to February 2022.

Regarding overall energy consumption in 2024, the energy-intensive sectors accounted for 75.6 percent of the total energy consumed across all industries. The chemical industry was the largest consumer, supplying 27.9 percent of the total energy, followed by metal production and processing (23.7 percent), and mineral oil processing (10.7 percent). The paper industry and the glass/ceramics and stone processing sector accounted for 6.7 percent and 6.6 percent of the total industrial energy consumption, respectively.

According to the statisticians, the primary energy sources utilized in these energy-intensive industrial sectors in 2024 were natural gas (26.3 percent), mineral oils and products (21.0 percent), coal (18.1 percent), and electricity (15.2 percent).