For the glassmakers at iconic French tableware brand Duralex International SAS, the mornings have become a horror show. Daily updates from energy traders drop into their e-mail inboxes, showing the asphyxiating upward climb of prices for the natural gas and electricity that power their energy-devouring business.
Before the energy crisis — which started during the COVID-19 pandemic and became a full-blown economic threat with Russia’s war in Ukraine — the price charts were reassuringly stable.
They have since become a terrifying succession of peaks and troughs, with Russia choking off cheap natural gas deliveries in a battle of wills with European leaders over their support for Ukraine.
Photo: AP
For Duralex, each price spike represents another bite from the bottom line of a 77-year-old company that counts generations of French families, Mongolian yak herders, Afghan diners and African tea drinkers among worldwide users of its glasses, bowls and plates.
Actor Daniel Craig drank from one its “Picardie” tumblers, with a scorpion on his wrist, when playing James Bond in Skyfall.
With energy costs burning through the firm’s cash reserves and viability, Duralex president Jose-Luis Llacuna is taking radical action that he hopes will save his business: He is stopping production.
The thunderous machines that turn incandescent blobs of molten glass into hundreds of thousands of tableware items each day are to fall silent for a few months on Nov. 1.
Duralex is to join a growing array of European firms that have reduced or halted production because they are hemorrhaging money on the energy needed to keep running.
“The first thing I do when I wake up in the morning is look at the daily change in electricity and gas prices,” Llacuna said in an interview at the plant outside Orleans in central France.
“Needless to say, there’s an incredible amount of volatility,” he said. “It’s truly a rollercoaster, and the outlook for the future is a complete unknown.”
Facing the risks of power shortages, rationing and blackouts when demand surges this winter and of an expected recession as businesses shut down, Europe is scrambling for energy alternatives, stockpiling gas and urging consumers to save.
EU energy ministers on Friday struggled to find consensus at emergency talks on the bloc’s latest proposals for alleviating the crisis.
At Duralex, the costs of heating the furnace to above 1,400°C — with roaring torrents of flaming gas transforming the molten glass into tableware on production lines overseen by sweating workers — are set to burn through 40 percent of the company’s revenue if the company keeps producing, “which is untenable,” Llacuna said.
The production shutdown will last at least four months.
The glass furnace cannot be switched off entirely because that could destroy it.
Instead, it would be maintained in a hot slumber, slashing the firm’s energy use by half.
The aim is to then fire it back up by the spring.
In the meantime, the 250 employees are to work fewer days, with drops in pay just as inflation is gnawing at household budgets.
“It’s very hard to stomach,” said Michel Carvalho, a production line crew chief who has been with the company for 17 years.
“Around the world, everyone is suffering from this war,” he said. “We’re hostages. Absolutely. We’re being used. Because being asked to stop work is hard. And we’re not responsible for what is happening.”
Duralex is to fall back on its stockpiles to keep customers supplied during the stoppage, but competitors are circling, using the production halt as an argument to try to lure away the company’s customers, Llacuna said.
He is knocking on government doors for financial help, speaking by telephone to the French economy minister last week.
A prolonged energy crisis could be grim, Llacuna warned.
“It must not last three years,” he said. “Because then European industry will die, and that will be dramatic.”
INVESTOR RESILIENCE? An analyst said that despite near-term pressures, foreign investors tend to view NT dollar strength as a positive signal for valuation multiples Morgan Stanley has flagged a potential 10 percent revenue decline for Taiwan’s tech hardware sector this year, as a sharp appreciation of the New Taiwan dollar begins to dent the earnings power of major exporters. In what appears to be the first such warning from a major foreign brokerage, the US investment bank said the currency’s strength — fueled by foreign capital inflows and expectations of US interest rate cuts — is compressing profit margins for manufacturers with heavy exposure to US dollar-denominated revenues. The local currency has surged about 10 percent against the greenback over the past quarter and yesterday breached
MARKET FACTORS: Navitas Semiconductor Inc said that Powerchip is to take over from TSMC as its supplier of high-voltage gallium nitride chips Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday in a statement said that it would phase out its compound semiconductor gallium nitride (GaN) business over the next two years, citing market dynamics. The decision would not affect its financial targets announced previously, the world’s biggest contract chipmaker said. “We are working closely with our customers to ensure a smooth transition and remain committed to meeting their needs during this period,” it said. “Our focus continues to be on delivering sustained value to our partners and the market.” TSMC’s latest move came unexpectedly, as the chipmaker had said in its annual report that it has
Rick Cassidy, the chairman of Taiwan Semiconductor Manufacturing Co's (TSMC, 台積電) US subsidiary, TSMC Arizona Corp, plans to retire, but the company has yet to name a successor. After Cassidy made his intention to retire known, TSMC Arizona held a special general meeting and approved a resolution that Cassidy would not continue as chairman and would not remain as a director, TSMC said in a statement filed with the Taiwan Stock Exchange last night. The meeting also approved a plan to appoint TSMC Arizona president Rose Castanares as a director, the company said, adding that Cassidy has been named as an advisor
SECURITY WARNING: The company possesses key 3-nanometer technology, and Taiwan should prevent it from being transferred to China, a lawmaker said The Ministry of Economic Affairs yesterday said it would conduct a “strict review” of any proposed acquisition of Taiwanese tech company Source Photonics Co (索爾思光電), following media reports that a Chinese firm was planning to buy the company in the Hsinchu Science Park (新竹科學園區). Local media reported that Suzhou Dongshan Precision Manufacturing Co (東山精密), China’s largest printed circuit board manufacturer, had announced plans to acquire Source Photonics for 5.9 billion yuan (US$823.1 million). The ministry said it has not received an application from Source Photonics and has formally notified the company that any buyout would constitute a change in its ownership structure. The
RSS