Paper mill strike extension could force food and pharma toward filmic materials, warns FINAT

01 Mar 2022 --- Labeling association representatives are warning disaster is looming for the paper packaging industry and its food and pharmaceutical customers as union strikes continue at one of Europe’s largest paper mills. The trade associations had called for a quick resolution at the UPM Finnish mill but strikes now look set to continue until at least April 6.

Speaking to PackagingInsights, Jules Lejeune, managing director of FINAT, the European association for the self-adhesive label and narrow web packaging industry, explains that failure to settle disputes combined with decades of industry consolidation has rendered consumers vulnerable to supply chain disruptions.

“These material shortages risk feeding through to end-user customers soon, possibly endangering goods with a short shelf life (food and pharmaceuticals). If alternatives like filmics are not possible, this will have serious repercussions for consumers. For the labels and packaging sector, it will not be so easy to change to other methods of product decoration and identification overnight but there are alternatives available at the short term like switching to filmic liner materials.”

“Ultimately, going forward, an industry-wide debate would be useful to see how industries (not just restricted to our sector as this applies to many other sectors) can reduce their dependence on a limited number of suppliers.”

“As we have seen during the COVID-19 pandemic already, the process of ongoing globalization and consolidation during the past two to three decades has had tremendous advantages of scale, availability, efficiency and convenience.”

The food industry is similarly dependent on several massive companies that control the supply of various goods – something that has also rendered consumers and small producers vulnerable to systemic shocks.

Lean supply chains
Lejeune says that during the post-pandemic recovery, industry is continuing to see consolidation.

The labeling industry is under threat by continued strikes.“Supply chains have become leaner and leaner, and we have become used to just in time and on-demand delivery of goods and services. Also, in our daily lives, ‘click and order before midnight, next day delivery on your doorstep’ has become the norm,” he explains.

“In doing so, we may have ignored the growing risk of unexpected events like a virus in China, a container vessel blocking the Suez Canal or a strike at a leading raw materials supplier that provides more than 20% of a critical raw material.”

The risk of force majeure heightens the more consolidated an industry becomes, and with the current strikes paralyzing paper production in Finland, packagers and labelers face bleak outcomes. This, in turn, has knock-on effects for the products they contain, often essential foods and medicines.

With the recent invasion of Ukraine, Lejeune says the “war will aggravate matters even further because of social unrest and the uncertainty it creates.” Putin has even made direct threats against Finland, elevating fears of increased disruption.

Ending the strikes
Lejeune says Finland has assigned a national mediator to try and find a solution to settle the dispute, “but the rest of industry remains in the dark about the possible timeline.” Intergraf is urging the European Commission to help resolve industry disputes.

“We sincerely hope the messages that Intergraf and FINAT have been spreading around business and mainstream media over Europe will have reached all parties concerned. This is no longer an internal labor dispute within a single company or even a national matter for Finland. It is affecting an entire downstream customer base all over Europe.”

Last week, Intergraf’s secretary-general Beatrice Klose spoke to PackagingInsights about the need for the European Commission to step in and help resolve matters, warning of severe consequences for Europe’s 600 paper suppliers and approximately 110,000 printers.

“We are fully aligned about the need to end this strike at the shortest notice possible, although we come from different backgrounds,” says Lejeune. “For the commercial printing industry, there are serious concerns about the impact of the strike on the future of printed media. For the labels and packaging sector, it will not be so easy to change to other methods of product decoration and identification overnight.”

He explains that there are alternatives available in the short term, like switching to filmic materials. Still, even if the strike were to end today, it would take at least two months to fill the backlogs, and certain companies may be inclined to start looking for alternative solutions to spread their risk in the longer term.

“This [alternative solutions] could also backfire against the origin of the strike,” concludes Lejeune.

By Louis Gore-Langton

To contact our editorial team please email us at editorial@cnsmedia.com