Business & Environment


January 30, 2023

Floods in Germany – How Badly Companies are Affected

“Economy from above” is a collaboration between WirtschaftsWoche and LiveEO. This is a translation of the original article (written in German by Anja Holtschneider and Annina Reimann. Access the original article here.

Mountains of rubble pile up in front of houses, in many places roads are impassable and bridges are washed away. Only now, as the water drains away, does the full extent of the flooding in western Germany become apparent. For companies and businesses, an initial assessment of the damage is now possible: Which machines are broken, how much infrastructure has been destroyed? The answers to these questions will determine whether and how quickly normal operations can be resumed. Even if the cleanup work on the Erft and Ahr rivers is only just beginning, the damage to companies is likely to run into billions.

The plant of copper recycler Aurubis in Stolberg, North Rhine-Westphalia, is particularly affected. The plant was flooded last week, and the access road was washed out. Some of the impact can also be seen on our satellite imagery. The company declared “force majeure.” Deliveries to customers and acceptance of supplies are currently impossible, the copper producer says. Since Sunday, a cleaning company is on site to clean machines and halls. It is not yet clear when operations will resume. Aurubis assumes that the damage caused is covered by insurance. The Group also does not see its annual targets at risk. At least the IT is working again in Stolberg in the meantime, so the 400 employees can at least be paid their salaries as planned. “We are rebuilding, we will produce again,” a company spokeswoman assured.

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The plant of the automotive supplier ZF Friedrichshafen in Bad Neuenahr-Ahrweiler, Rhineland-Palatinate, is just as badly devastated by the flood. There is currently no talk of a rapid resumption of production. It will take months for the plant to return to full capacity, ZF told WirtschaftsWoche. The supplier used to produce electric damping systems for cars at the plant. These can be used to cushion potholes, for example. The product is used primarily in premium cars. In principle, however, it can also be replaced with a conventional damper. It remains to be seen whether the plant shutdown will cause bottlenecks in the supply chain. So far, automakers are not reporting any major problems.

However, the ZF plant in Bad Neuenahr-Ahrweiler is considered the lead plant for the product, so there are few other options for producing the dampers in the required quantities elsewhere. “We are in detailed analyses with all affected customers on how we can bridge this phase without restricting vehicle production,” the automotive supplier said.

The damage to the assembly lines is immense. All plants must be completely rebuilt, ZF says. Therefore, the automotive supplier wants to establish manual assembly lines in the coming weeks. However, ZF will not be able to meet the market demand with this. In addition, many employees have been affected privately by the disaster. It is questionable when they could return to work. An emergency team has been set up and is currently still trying to get an idea of the situation.

The heavy rain also caused disruptions at energy giant RWE. Water entered the Inden open pit mine near Aachen, and coal mining was stopped. The associated Weisweiler power plant is only running to a limited extent and is being supplied with coal from reserves. RWE plans to restart the open pit mine in the coming days. The power plant is not expected to reach full capacity again until the beginning of August.

In addition, RWE had to shut down several hydroelectric plants in the Eifel, Moselle, Saar and Ruhr regions. In the meantime, the plants are back in operation: “Virtually all plants are producing electricity again,” the energy company announced on Thursday. Overall, RWE expects the damage to be in the mid-millions.

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The Steigenberger Hotel in Bad Neuenahr can’t think about normal operations yet. The flood has severely devastated the first floor and basement, and cleanup is still underway. It is not yet possible to predict when the hotel will be able to receive guests again, a spokesman for Deutsche Hospitality, to which the Steigenberger hotel group belongs, said.

The hoteliers evacuated the guests in time and played it safe: the guests were taken to the Petersberg near Bonn. The hotel there is more than 300 meters above the Rhine.

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Bayer operates a plant in the chemical park in Hürth-Knapsack in the Rhine-Erft district. Crop protection agents are produced there. Although the site was only minimally affected by the heavy rain directly, the flood did destroy the traffic infrastructure in the surrounding area. Now the Bayer plant, like other industrial companies, cannot be supplied with raw materials by rail as usual. However, Bayer has so far been able to replace the supply well with trucks. Now the plant is running at full capacity again. Many employees at Bayer have also been severely affected by the disaster in their private lives. Bayer is giving them up to ten days paid leave.

The Haribo confectionery group has its headquarters in the middle of the flood zone. Emergency services used the plant in Grafschaft in the Ahrweiler district as a situation center in the first few days. Many employees have been affected, and Haribo is supporting them with emergency financial aid and arranging housing. Production was not affected by the floods, but Haribo, like Bayer, is noticing the serious damage to infrastructure. “Motorway 61 – our most important north-south route and also connection to the seaports in Western Europe – is closed until further notice,” a company spokesman said. There is also an enormous volume of traffic on the alternative routes. Haribo hopes to avoid delivery backlogs or to make up for them as quickly as possible. However, the situation is still unclear and Haribo is operating on sight.

Supply chain problems will keep companies busy for some time. It is not yet clear what consequential effects the destruction will have, said the German Engineering Federation (VDMA) in North Rhine-Westphalia. The situation in the mechanical engineering sector had already been strained by the corona pandemic and material shortages. Now it has become even more difficult due to the destroyed infrastructure, the VDMA NRW announced.

According to Deutsche Bahn, 600 kilometers of tracks are affected, and more than 50 bridges have been destroyed by the flood. DB Netz, which is responsible for the rail infrastructure, first repairs lines with a high benefit for rail traffic, which also require little costly construction work. Still, it takes months, if not years, to repair the damage. “Our goal is to have about 80 percent of the damaged infrastructure back in shape by the end of the year, DB Netz said. According to an initial estimate, the water damage has caused 1.3 billion euros worth of damage to tracks and stations. However, important routes for freight traffic, such as those to the Benelux countries or along the left bank of the Rhine, are once again passable. The terminal in Wuppertal is also back in operation.