Northvolt crisis: Analysis reveals three potential scenarios

What would happen if Northvolt successfully restructures or if the factory closed permanently?
Region Västerbotten sought to find out.
The results of their analysis are now available, and reveal that a total shutdown would severely impact Skellefteå.

The success of Northvolt's restructuring efforts will have a significant impact on Skellefteå and the entire region.

The success of Northvolt's restructuring efforts will have a significant impact on Skellefteå and the entire region.

Foto: Henrik Montgomery/TT

Skellefteå2025-01-31 11:50

Region Västerbotten, a level of government between the national level and the local municipalities, commissioned an analysis of the situation, resulting in a report produced by a consultant during November and December. The report examines how different scenarios regarding Northvolt's future could impact Skellefteå and Västerbotten.

These scenarios include a successful restructuring, Northvolt declaring bankruptcy with a new owner continuing operations in Skellefteå, and a complete shutdown of the facility. The analysis covers the period from 2024 to 2030, comparing these scenarios to previous projections for Northvolt's growth.

In this adjusted reference scenario, the projected 2030 workforce has been revised downward from 4,000 to 2,500 employees, a figure the consultant deems realistic for achieving profitability.

The report concludes that a successful restructuring and a bankruptcy followed by new ownership would have similar effects. Both scenarios predict a temporary dip in 2025 and 2026, followed by a relatively swift recovery by 2030. Employment would decrease by a few hundred jobs, while population and tax revenues would see slight increases.

Unsurprisingly, a complete shutdown would have more significant and lasting negative consequences, impacting employment, population growth, the regional economy, and tax revenues.

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This graphic illustrates various employment scenarios for the municipality of Skellefteå.

In the event of a bankruptcy, employment is expected to decrease by over 3,700 people, and the population is expected to decrease by 4,250.

Additionally, Skellefteå municipality is expected to receive 267 million kronor less in tax revenue in 2030 compared to 2024. Overall, over the years leading up to 2030, this amounts to a billion kronor in lost tax revenue. In Västerbotten generally, employment, population, and tax revenues increase less in this scenario. For example, the population is expected to increase by over 11,000 in Västerbotten in scenario one, but by almost 2,000 people in the shutdown scenario.

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Scenario 0 is according to plan. Scenario 1 is that the restructuring succeeds, and scenario 2a is bankruptcy with someone else taking over the factory. Scenario 2b is that the factory closes.

Skellefteå mayor, Lorents Burman (S) has received a briefing on the report and believes it is good that the municipality’s assessment of the situation is now documented.

– It’s difficult to assess the different effects, and it should be said that it’s an estimate, he says.

He points out that a bankruptcy would mean much more than just a blow to Skellefteå.

– It would be Sweden’s largest bankruptcy, and it’s a national issue. That’s why we’ve worked to retain as much expertise as possible in Skellefteå. What’s important here is that there are 3,000 people here who can build batteries. The combined expertise doesn’t exist anywhere else in Europe, and it would be a disaster if it is lost – if those working here scatter and return to their home countries.

– The third scenario must absolutely not happen. We are aiming for scenario one, and while we wait for things to improve, we must retain the workforce here, he adds.

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Lorents Burman (S), Skellefteå's mayor, hopes the government will launch major infrastructure projects to help former Northvolt employees find new jobs and remain in the area.

He feels he hasn't received an adequate response from the government on this, particularly regarding extending residence permits so former Northvolt employees have time to find new jobs.

– Starting the construction of the Norrbotniabanan also requires a lot of labour, as does the E4 bypass. In these cases, it is the state that bears the responsibility. We have not yet received a go-ahead for Norrbotniabanan, he says.

He adds that they are still in dialogue with the government. Just last week, he met with the state secretary and explained that this issue is not just a matter for Skellefteå, but a national and European issue.

One conclusion in the report is also that the follow-up effects on companies affected by the bankruptcy and restructuring are considered to be relatively limited.

However, the report warns of a risk of damaged trust in Northvolt or a new owner, as well as in companies involved in the green transition or other businesses in Skellefteå. Even Skellefteå as a municipality and Västerbotten as a region could suffer a loss of trust, the report suggests. Fewer people may want to move to the area or remain there because it is perceived as higher risk.

– Very many describe the green transition as a bunch of bubbles. Those bubbles only exist in their heads. The reality is that the entire world is moving towards this change. Asia and China are ten years ahead. What might happen if Northvolt goes bankrupt is that those who claim climate change doesn't exist will have more justification not to break fossil dependency, says Burman.

He adds:

– If Sweden doesn’t keep up with the green transition, the technological industry development here will be very outdated in just a few years. It will be devastating for the economy. If Northvolt fails, it may become harder in the future to attract investors to Europe.

Recommendations

Based on the conclusions, the authors of the report make a few recommendations to Region Västerbotten and Skellefteå municipality:

The municipality and the region must try to keep as many people as possible in Skellefteå during the restructuring.

The municipality, the region, and other parties should work to reduce the follow-up effects by supporting creditors affected by the bankruptcy or restructuring.

Trust can be strengthened through continued planning for future investments in the green transition.

The report also recommends ongoing dialogue with the government about the risk distribution between the state and municipality in large investment projects. When engaging in dialogue with the government, there should also be a high level of preparedness to handle a potential shutdown of the factory, according to the report's suggestions.