German power bills squeeze Eastern suppliers

Germany's shift to lower-carbon energy is becoming a competitiveness problem that reaches well beyond German borders. A survey by Germany's chambers of industry and commerce (DIHK) found that 40% of firms now rate the energy transition's effects negatively (FAZ). One-third have cut investment in their core operations because of energy bills. And 20% said they had moved production abroad or were considering it, a figure that rises to 40% among industrial firms, though it mixes actual moves with contingency plans.

This is not proof of a factory exodus. But it signals something real: German manufacturers are pulling back on spending and orders, and the countries whose factories supply them are feeling it first.

How a German power bill crosses borders

German factories sit at the top of production networks running through Poland, Czechia, Slovakia and Romania. Chemicals, metals, cars and machinery flow through these chains as parts, components and unfinished goods. When a German producer delays an upgrade or trims orders because energy eats into margins, those decisions travel fast. The ECB (the European Central Bank, which sets monetary policy for the euro area) flagged this in its 2026 economic bulletin: euro-area manufacturing has lost competitiveness in some segments, and costs move quickly through supplier links (ECB).

The power bill German factories actually pay goes beyond the wholesale price on exchanges. Eurostat breaks the final industrial electricity bill into three layers: the energy itself, network charges for using and expanding the grid, and taxes and levies. Germany's industrial electricity prices fell 4.2% year on year in June (Destatis), so the worst of the 2022–23 price shock has faded. But grid fees and carbon costs from the EU emissions trading system (where polluters buy permits to emit CO₂, and that cost gets baked into electricity prices) keep the total bill high enough to change investment decisions. Wholesale prices dip; the structure around them does not.

Romania and Slovakia show the exposure

Romania illustrates the vulnerability. Transport equipment and machinery make up a large share of its exports to Germany (HotNews). Romanian industrial output fell 3.3% year on year in January–May 2026, with manufacturing down 4.5% (ZF). Vehicle output in the first half of the year dropped 12.7% to 247,972 units (PSNews), and more than 18,000 auto and parts workers lost their jobs between January 2025 and April 2026 (Jurnalul). German energy costs did not single-handedly cause these declines, but Romania's dependence on German orders means any German retrenchment hits hard.

Slovakia's response is more visible. Industrial orders fell 3.4% and output dropped 2.0% in May (Slovak Statistics). Bratislava is compensating energy-intensive firms through carbon-cost refunds and cheaper state hydropower (Denník N). Volkswagen's Slovak plant is building on-site solar to cut power bills by millions (Autoviny). These firms are spending to reduce energy exposure, not to expand capacity. Across Europe, auto-sector restructuring cost more than 70,000 jobs in Germany in 2024 and over 40,000 more in 2025 (Eurofound).

Some plants can win inside this reshuffling. Certain Czech VW factories reportedly produce below the group's €3,000-per-vehicle cost target while German sites exceed it (EVmagazin). But cheaper Czech plants still depend on weakening German demand.

The evidence does not show a German industrial collapse. It shows a slower loss of investment confidence, with Central and Eastern European suppliers absorbing part of the cost through weaker orders, deferred upgrades and layoffs in sectors they did not choose to make vulnerable.