Nestled in the green hills of southern Germany, chemical giant Wacker Chemie churns out a wide range of products, from an ingredient for chewing gum to the polysilicon crystals in solar cells.
The electricity to produce all that - enough power for more than 700,000 households annually - has become more costly at Wacker's main factory in Burghausen. It has played a big part in pushing up the firm's total energy bill by 70 percent over the last five years, to nearly half a billion euros.
It's a different story across the Atlantic in the U.S. state of Louisiana. There, chemicals maker Huntsman Corp pays 22 percent less for its power than it did just seven years ago.
The tale of those numbers underlines a profound shift underway in two of the world's biggest industrial powers. Thanks in large part to Germany's decision to phase out nuclear power and push into green energy, companies there now pay some of the highest prices in the world for power. On average, German industrial companies with large power appetites paid about 0.15 euros ($0.21) per kilowatt hour (kWh) of electricity last year, according to Eurostat, the European Union's statistics agency.
In the United States, electricity prices are falling thanks to natural gas derived from fracking - the hydraulic fracturing of rock. Louisiana now boasts industrial electricity prices of just $0.055 per kWh, according to U.S. Energy Information Administration data.
Peter Huntsman, chief executive of the family firm, calls the United States the new global standard for low-cost manufacturing. Huntsman is spending hundreds of millions of dollars to expand in the United States, and rapidly closing plants in Europe. The company estimates that a large, modern petrochemical plant in the United States is $125 million cheaper to run per year than in Europe. That sum includes cheaper power, waste disposal and myriad other factors, and Huntsman said the contrast is similar for Asian plants.
"It's not a question of whether other countries are competitive or not," Huntsman, brother of former U.S. presidential candidate Jon, said in an interview. "They're not."
Power isn't the only reason the United States is becoming so attractive to manufacturers again. Average labor costs in China have more than doubled since 2007 to around $2 per hour, while they've risen less in the United States to around $18 per hour, with worker productivity far higher in the United States, according to U.S. government statistics. When you factor in the cost of shipping goods from Asia, it's little wonder that America has re-emerged as one of the most competitive places to build stuff.
That's a dramatic change from just a few years ago, when Germany was held up as a model of manufacturing prowess. As recently as 2011, politicians in Washington were openly discussing how to copy Germany's success.
"We need to be more like Germany," General Electric Chief Executive Jeffrey Immelt said in an interview that year with Reuters.
Now things are heading the other way. German Chancellor Angela Merkel's energy policies - designed to sharply boost the share of renewables in Germany's energy mix, tackle climate change and cut Germany's dependency on foreign gas and oil - are a rising source of concern for the country's industry, particularly energy-intensive companies like Wacker. According to Germany's Chamber of Commerce and Industry, half of the country's industrial companies believe their global competitiveness is threatened by Germany's energy policy, and a quarter of them are either shifting production abroad or considering doing so. The United States is among the top destinations.
In March, BMW, the world's largest luxury carmaker, said it would invest $1 billion to expand its plant in Spartanburg, South Carolina, making it the German group's biggest production facility by 2016. In all, German companies invested more than 800 billion euros in U.S. expansions between 2008 and 2012, according to the most recent Bundesbank statistics. Germany's Chamber of Commerce and Industry reckons that investments could reach 200 billion euros in 2014, an all-time high.
"In the energy-intensive sectors, such as chemicals, we are facing substantial challenges that will prevail for a longer time," said Carsten Rolle, head of energy and climate policy at the Federation of German Industries (BDI). "It isn't sudden but a creeping process with new investment going more often to the United States and other places abroad, where energy costs are much lower."
A big bet
Wacker, which had sales of 4.5 billion euros last year, is one of the German firms making the shift stateside. The company is investing up to $2.4 billion in a new polysilicon plant in the U.S. state of Tennessee. With 650 employees and capacity of at least 20,000 tonnes a year, the plant will boost Wacker's capacity to make the material by nearly 40 percent. While the company remains tight-lipped about its exact power costs in Germany, analysts estimate that it will pay a third less for electricity in Tennessee than in its main plant in Burghausen.
Wacker still employs about three quarters of its 16,800 workers in Germany, but most of its capital spending has shifted outside the country. Six years ago, the company spent 84 percent of its investment budget at home. Last year that dropped to 37 percent.
And as energy prices rise, the group is eager to slash costs to soften the blow.
In Germany, "we're cutting corners wherever possible," said Christian Essers, in charge of the firm's energy purchases. "But at some point the steps to improve efficiency are getting smaller while the effort to take them gets bigger."
At Huntsman, which had 2013 revenues of $11.08 billion, executives have begun paring down European production of basic chemicals, which typically have small margins. In the last 18 months it has spent $100 million to close several plants and cut more than 600 jobs in Europe.
Huntsman plans to close a Belgian plant this year that makes chemicals used in detergents and soaps, blaming weak profits.
At its Geismar, Louisiana, plant, Huntsman is spending $78 million to boost production capacity of methylene diphenyl diisocyanate (MDI), a chemical used to make insulations and other common consumer goods. When the upgrade is finished early next year, Geismar will be the largest MDI plant in North America.
That's a far cry from five years ago, when Geismar was the most expensive MDI plant in Huntsman's portfolio, more expensive than peers in the Netherlands and China. At times Huntsman was running the Geismar plant far below its capacity because of the expense.
Cheap natural gas has changed all that.
"This facility can export product around the world to the backyard of our competitors and still the product would be cheaper, even with shipping," said Huntsman.
At Port Neches, Texas, Huntsman is investing $125 million on an expansion that, when finished in 2015, will make it the world's second-largest producer of ethylene oxide, a chemical crucial in the production of carpet, clothing, soap and scores of other consumer goods.
"We're putting a big bet on the table, and in my opinion this company has yet to take full advantage of the North American shale story," Huntsman told employees at its Geismar site during a town hall meeting in April.
Fracking has allowed the global energy industry to access vast new energy supplies. The process involves injecting sand, water and chemicals at high pressures deep underground to break apart shale rock, allowing oil and natural gas to escape. It first became popular in the United States six years ago and has produced a glut of natural gas in the country, pushing down domestic prices for the fuel by about 61 percent in that timeframe. That's made it more appealing to use in electricity generation. Now roughly a third of U.S. power plants employ it.
Natural gas is also a key ingredient used to make chemicals, akin to flour in a bakery. Automobile tires, for instance, are made using styrene, a chemical which is derived from natural gas.
Cheap, plentiful natural gas has helped boost manufacturing's contribution to U.S. Gross Domestic Product by 15 percent since 2008, when fracking started to become popular. Natural gas made a $2.08 trillion contribution to the U.S. manufacturing sector last year alone.
Natural gas also helps plants power themselves through a process known as cogeneration, the use of excess heat to generate power.
Huntsman's Port Neches plant, for instance, produces all of its electricity through cogeneration. Most new European plants, by contrast, don't use cogeneration due to regulations and a lack of cheap natural gas to power generators, analysts say.
Huntsman pays about 80 percent more for electricity in Germany than on the U.S. Gulf Coast, executives said.
"Germany is going to see the (negative) effect of its energy policy three to five years down the road," Huntsman said, explaining that companies will gradually begin to move operations out due to high power prices. "You won't see this hurt the job market right away."
Germany's high energy costs are rooted in aggressive new energy standards which began during the last decade and are designed to generate up to 60 percent of the nation's electricity from wind turbines, solar panels and other renewable sources by 2035, up from 27 percent now.
The goal is to make Europe's largest economy a leader in tackling climate change, and to prove to other nations that a radical overhaul of power markets can happen without too much financial pain.
The accident at Japan's Fukushima nuclear plant in 2011 emboldened Berlin in its goals, leading Chancellor Merkel to accelerate a phase-out of nuclear power. Before Fukushima, nuclear supplied about a quarter of Germany's power; by 2022 it will supply none.
This transformation, dubbed the "Energiewende" or energy shift, has made Germany among the most expensive places in the world to purchase electricity. The massive rise is not only due to the payments made for solar power, but all other renewable energy sources, most notably offshore and onshore wind parks, biogas and geothermal plants. Costs are also ballooning due to the country's power taxes, which account for 14 percent of the total.
Some politicians have begun to worry about the increase. Economy Minister Sigmar Gabriel warned in January that the power price imbalance could cause a "dramatic de-industrialization" in the country. Officials in his ministry say no issue worries him more than Germany's creeping loss of competitiveness.
"There is this great confidence that Germany is the bulwark of a sick Europe, but now its industry is concerned about maintaining that strength," said Daniel Yergin, vice chairman of consultancy IHS and author of an influential history of the oil industry.
"Germany faces a double whammy of rising energy costs in Germany and falling energy costs in the United States," he said.
Fracking has been controversial around the world due to the mixture of chemicals and sand injected deep in the earth. It has been blamed in parts of the United States for water contamination, earthquakes and methane leaks, though direct correlations have been hard to establish. Given these concerns, it has received a cool reception in Europe.
Germany has not tapped its shale gas reserves, deterred by its powerful renewable energy lobby, which has warned of the environmental risks linked to fracking.
Generally speaking, power costs are less important than labor in industry. But Wacker's plant in Burghausen, on Germany's border with Austria, shows what's at stake.
Founded a hundred years ago, the plant is now one of Germany's biggest industrial hubs, employing about 10,000 staff across an area equal to some 460 soccer fields.
Each day, about 250 trucks and 100 train wagons transport goods to and from the plant, where workers turn methanol, silicon, ethylene and rock salt into more than 3,000 different products.
At Burghausen, Wacker makes polysilicon, one of its most important products and one whose manufacturing process is particularly energy-intensive. At one of the plant's high-security production sites, several cylinder-shaped ovens quietly hum. A lava-like glow emanates from the small windows. Temperatures of more than 1,000 degrees Celsius (1,832 degrees Fahrenheit) are needed over long periods of time to make polysilicon hyper-pure, as clients demand for solar cells.
Wacker Chemie's bigger rival BASF has found an alternative way to protect itself from rising power prices. BASF SE, the world's largest chemical company, generates much of its power in Germany via cogeneration, but it gets the natural gas needed for the plants from its own natural gas division in the North Sea. That gives it a cost advantage.
The company, however, remains the exception, and the burden for Germany's industrial base will get bigger as more and more renewables come online.
For Wacker, it's an ironic twist of fate. It was a small hydro-plant that helped it expand production in Burghausen after World War One. A hundred years on, green energy sources are forcing the group to look abroad when it thinks about the future.
"It's the law of a free economy to start curbing production where costs are higher," Essers said.