UK plastics industry struck by COVID-19 staff absences as polymer prices surge
24 Jan 2022 --- The British Plastics Federation (BPF) has warned plastics companies are struggling with COVID-19-induced employee absences, which “could have a wider impact on the country’s economy if the situation does not improve.”
BPF’s survey found 78% of companies have staff absences due to the pandemic, with an average of 8% of their workforce unable to work. Moreover, only 6% say Brexit has proved positive for their business.
The plastics industry is the third-largest manufacturing sector in the UK, supplying a huge range of products crucial to many sectors, including packaging.
“Despite higher than normal staff absences caused by the pandemic, the industry has been able to maintain the supply of packaging by taking extra steps within businesses with minimal impact on the consumer,” Angela Fredericks, BPF’s Plastics and Flexible Packaging Group industrial issues manager, tells PackagingInsights.
Staff absences are one of the many issues facing the plastics industry. Businesses are also struggling with global material supply shortages and surging recycled plastic and energy costs.
Calling in sick
The troubling employee absentee statistic was reported as part of the BPF’s twice-yearly Business Conditions Survey, which quizzes the entire plastics supply chain, ranging from recyclers to machinery suppliers, on factors affecting their businesses.
The survey was conducted in January 2022 and completed by 88 companies from BPF’s membership. It found a quarter (24%) of companies have at least 10% of staff currently on sick leave, with the number of reported absences growing during the second week of the survey.
UK businesses are still struggling with diminished workforces despite 71% of the population being “fully vaccinated” (Our World In Data).
A third of companies (32%) have had to reduce production due to COVID-19’s impact on staffing levels. Moreover, a record number of companies (80%) are experiencing difficulty recruiting staff, with shop floor workers proving the hardest to hire.
The issue has become long-running. In July 2021, BPF published a members survey revealing 60% of plastics companies had staff absent due to being “pinged” by the NHS COVID-19 app, with an average of 7% of staff being requested to isolate.
Crippling costs
Higher labor costs and the rising price of raw material and energy are tightening profit margins. Some 40% of companies believe these financial strains will continue, while 35% expect them to decrease.
Meanwhile, more than a third of companies do not believe they can pass on the increased energy costs to their customers.
Staff absences are not the plastics industry’s only challenge amid much-publicized global material supply shortages. In April 2021, 97% of companies reported they were experiencing problems sourcing polymers. BPF indicates the situation has improved but remains “concerning,” with 60% still experiencing supply issues.
“The [staff absences] issue should improve with time, but we continue to monitor energy and material price rises, supporting our members as much as we can,” says Stephen Hunt, BPF’s membership service director.
“With the plastics industry being a major employer in the UK that is vital to almost every major sector, we hope the government takes note of this data and is prepared to provide support for businesses if it proves necessary. However, we know our members are doing everything they can to meet their customers’ demands.”
Only 6% of BPF’s members say Brexit has proved positive for their business.
“There is a limit to what government can do but, in the long-term, a strategic approach to assist the energy sector may be beneficial to provide better energy security and avoid sharp unexpected increases in tariffs and ensure the cost of energy to UK businesses is competitive with the rest of Europe,” adds Fredericks.
Plastics tax on the horizon
The impending UK Plastic Packaging Tax – which will see a £200 (US$270) per ton tax rate for plastic packaging with less than 30% recycled plastic produced or imported into the UK from April 2022 – has heightened concerns around the price and availability of recycled plastics.
The packaging industry has been hard hit, with the cost of recycled PET (rPET) rising 103% in the past year, according to data group ICIS. Last week, the price of rPET overtook that of virgin plastic in Europe despite additional collection and processing costs as well as soaring fossil fuel prices, ICIS found.
The UK’s tax is estimated to impact roughly 20,000 producers in the country.
By Joshua Poole
