European label emergency: Nordic labor strike will wreck economy without quick resolution, warns FINAT
Union strikes in Nordic countries, compounded by years of COVID-19 disruptions, are decimating label production for the F&B, pharmaceutical and personal care industries throughout Europe. Reports suggest that lead times for label materials have increased up to three months or more.
The European association for the self-adhesive label and narrow web packaging industry (FINAT) is warning if strikes continue and label production is not put back on track, there could be serious ramifications for FMCGs across the continent.
Speaking to PackagingInsights, Jules Lejeune, FINAT’s managing director, explains a recent history of unavoidable disruptions like COVID-19 and energy shortages, coupled with union demands, has created a “perfect storm” in the labeling industry.
“The world economy has been facing shortages of almost everything: energy, chemicals, pulp, (waste) paper, plastic, inks, transport, laminates, chips, components and people. This has led to a combination of shortages in availability, increases in delivery times, and steep raw materials price increases in all segments of the supply chain,” he says.
“On top of this general disruption of supply chains across the globe, the labels and narrow-web packaging sector is now being faced with shortages of labels and packaging papers due to a prolonged strike at the UPM Raflatac (UPM) paper mills in Finland since the beginning of this year.”
Workers on strike
UPM, a member of FINAT, is a central supplier of specialty papers used as the carrier material for self-adhesive roll labels and other paper grades for manufacturing labels and packaging, explains Lejeune.
“Without these raw materials, there is no possibility to print and apply labels, and labels are an essential component of the critical supply chain, as we have seen during the COVID-19 crisis when demand in the labels and packaging sector peaked at all-time records.”
A dispute between UPM and its worker’s union Paperiliitto has caused a shutdown of production since last year, with the strike now set to continue until February 19.
“Label printing companies are now running out of stock, and if this strike is continued even beyond February 19, it will be only a matter of time before FMCG and other sectors will be faced with excessive lead times or even the unavailability of labels to get their goods packaged and labeled,” stresses Lejeune.
“Given the present lead times, it is now likely that we could face these shortages for a prolonged term, with far-reaching consequences for the general economy.”
A plea for resolution
FINAT is urging all parties involved to reach an agreement over the issues and get label production moving again as fast as possible. Lejeune says that even if a settlement was achieved tomorrow, the damage to industry and the general economy is already severe.
“As stated before, with no labels, there will be no packaging and no packaged goods to deliver to stores. In Europe, annually some 8 billion square meters of self-adhesive labels are being consumed, or almost 10 square meters of labels per head of the population.”
“Assuming an average of 10 cm2 per label, this corresponds with 20 billion labels a month. It is not hard to imagine what impact this may have.”
“We are making an urgent appeal to the parties concerned to resolve their dispute without delay, as the general economic rebound is hit, societies will suffer, and an entire sector will be suffering structural financial, social and reputation damage,” he concludes.
By Louis Gore-Langton