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Mercedes races threat of gas rationing by making extra parts

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Mercedes-Benz is stockpiling parts it makes using natural gas in a move to keep production going for several weeks even if Germany introduces drastic fuel rationing.

The automaker has produced extra parts made at its foundries in Untertuerkheim, which go into gearboxes, axles and transmission components to build up stockpiles at plants in the U.S. and China.

This will allow carmaking operations in Alabama and Beijing to keep going even if a shortage of natural gas in Germany forces operations in the country offline, according to Mercedes production chief Joerg Burzer.

“You do not know what is coming exactly, it depends on temperatures during the winter,” Burzer said in an interview. “We have increased our inventories toward China and toward the U.S.”

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German manufacturers are racing to prepare for potential gas rationing as the government seeks to shield households and critical industry from shortages.

Since Russia effectively halted gas flows in response to the continent’s support for Ukraine, Europe’s powerhouse economy has stepped up its efforts to fill gas storage sites and find alternative supplies before winter.

Concerns for severe rationing have eased in recent days after gas storage levels in Germany went above 90 percent this week.

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The country, which is the most dependent on Russia for gas in Europe, is also seeking deals with Qatar, Saudi Arabia and United Arab Emirates about shipments of gas and hydrogen.

Aside from the supply risk, industry faces a surge in input costs led by energy price hikes. Producer prices jumped by a record of nearly 46 percent in August, triggering deep concerns for future competitiveness.

Burzer said Mercedes has already cut its gas use by 10 percent and could as much as halve consumption if necessary.

In a critical situation, the company needs to maintain supply of about 10 percent of its usual gas needs to function normally, Burzer said.

“In an emergency situation, where there is a shortage of gas, we can substitute a significant amount of our gas consumption with fossil fuel energy supplies — this shift is prepared and ready to go,” Burzer said.

“We are pretty sure we will not have a situation where we have 0 percent of our usual gas supply.”

The company’s 25-person energy crisis task force has also been working on identifying Germany-based suppliers that would be at risk in a gas-rationing scenario and is in talks with them about shifting production to locations outside Germany.

“Southern, southern-west Europe is a little bit different in terms of gas supply risk. If there are opportunities for our suppliers to move production, we are talking to them,” Burzer said. “It’s everything that needs gas: plastics, glass, foundries.”

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Volkswagen has said it may move some production out of Germany if the country experiences gas shortages.

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