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STORY: In a way, Stiebel Eltron has never had it so good.

The heating manufacturer’s main factory is working 24 hours a day making the energy-efficient heat pumps that Germany needs to wean itself off Russian gas.

But it's also never had it so tough -- with supply bottlenecks, labor shortages, and surging energy costs making it impossible to meet nearly limitless demand.

Kai Schiefelbein is the company's chief operating officer:

“On the one hand, it is Germany's absolute strength as an industrial location that we have skilled workers. On the other hand, we need more.”

Thousands of medium-sized, family-owned companies like this one are the engine room of Germany's economy.

They account for half its output and some 40 million jobs.

Their ability to adapt will be the key test of whether Germany's prosperity, built on its manufacturing excellence, can survive.

Heat pumps are reverse refrigerators that suck heat out of the environment to warm houses through the winter using a quarter of the energy of a gas boiler,

They're in heavy demand as Germany prepares for a winter with less Russian gas.

But like many other medium-sized family owned companies, Stiebel Eltron is now struggling because of snarled-up global supply chains.

“We will produce around 80,000 heat pumps this year. That's decent growth. We're proud of that. Now we also have to be honest: it doesn't match what we could sell if we had unrestricted delivery capability."

Supply chains, already stretched by the health crisis, have been further frayed by the war in Ukraine, while the cost of raw materials has also soared.

Despite this, the surge in demand has been a bonanza for the company -- it sold 50,000 heat pumps last year and expects to sell 80,000 this year.