Strike at paper manufacturer UPM causes the bottle neck of materials
The pricing situation as well as the material availability should actually relax little by little in the new year. Now again delivery problems for raw materials and price increases in many areas arise. The price increases are the offshoots of the pricing spirals which are caused by numerous corona effects and aftermath. The delivery problems of paper are mostly based on the massive strikes at UPM in Finland. Furthermore, the strike will be supported by the Finnish trade union of transport workers by a port blockade for UPM products at all Finnish ports.
UPM strike impacts the whole market
Even if UPM is not the main supplier of robos-labels, the strike massively affects the material availability. This is caused by UPM being the worldwide biggest manufacturer of cellulose and hence supplying significant parts for the cover paper to all other material manufacturers. Thus this strike directly impacts the whole labeling industry and it will take many weeks for the paper production to run again after the end of strike. Therefore, the UPM customers switch to other suppliers so that these are already overloaded. The delivery time for paper of all manufacturers are prolonged from former 1 to 3 weeks to now 6 to 8 weeks.
The tension release is not in sight
The former reason for the delivery problems was especially the non-availability of glassine (siliconized carrier paper). This bottle neck will be massively aggravated by the UPM strike. It can be assumed that the strikes at UPM will cause delivery problems for at least further 6 months after they are over. Here robos-labels prepared for the longer delivery time and considered it during the planning with customers. Up till now all materials are available, even if much later.
Plan and order ahead
Robos-labels suggests its customers to expect delivery time of 8 to 10 weeks for labels and to order early. Many materials are in stock, this is why some labeling products can be delivered fast. Though the delivery of some materials can take very long, which additionally causes the production bottlenecks.
Again supplier price increases
In the year 2021 the prices for raw materials rose in unprecedented dimensions, which is why for the year 2022 we expected a price stabilization or even a price decrease. Unfortunately, the opposite is the case. During January again robos-labels received from its suppliers price increases in all areas: inks (approx. 12%), all films and paper (5-12%), transportation costs (approx. 5%), packaging materials (approx. 20%). Additionally, the prices for roll cores (made of paper) have doubled within a year. Furthermore, there are exploding energy prices, which also must be calculated in the cost estimate.
Hence robos-labels had to re-adjust the prices to the current developments in December 2021. The reoccurring price increases, which reached the company starting mid-January of 2022, were unpredictable. Partially despite the promises of manufacturers who ensured the price stability for the first quarter.
Possible further price adjustments necessary
Robos-labels has now to examine how do the UPM strikes in Finland and the announced price increases effect the supply situation and the current pricing structure. Additionally, some suppliers do not stick to the pricing agreements or terminate them with reference to “force majeure”, which again has great impact on the production costs at robos-labels.
Therefore, we reserve the right to forward the current developments pro rata accordingly. We are aware that this is an extremely difficult overall situation for all participants and on that basis neither mid-term nor long-term planning is possible. But for the benefit of our customers we have to ensure the delivery capability, what again can be only warranted in regard to the current purchasing prices.
About robos-labels
Robos-labels is a leading German manufacturer for labeling products at the gates of Stuttgart. As a family company with customers in over 30 countries the company focuses on the labels for technical and chemical industry as well as medical technology and automotive industry since 1960. The team develops tailored product solutions for its customers, often for complex technical labeling products like functional labels and precise blanked parts.
Press contact:
Christine Hartmann
marketing/communication
christine.hartmann@robos-labels.com
