Ongoing Finnish mill strikes threaten “severe” consequences as post-pandemic paper demand surges

21 Feb 2022 --- The paper packaging industry remains under pressure as strikes at Finnish mills continue to disrupt supply chains throughout Europe. Intergraf, the European federation for print and digital communication, is urging the European Commission (EC) to prioritize and expand the continent’s forestry capacity under the threat of price rises and job losses.

Speaking to PackagingInsights, Beatrice Klose, secretary-general of Intergraf, warns it is likely industry mistakenly believed that paper supply and printing – which took a huge hit during the COVID-19 pandemic, as digitalization took over many sectors due to lockdown restrictions – would never fully recover. 

However, with restrictions now beginning to lift throughout the bloc, demand is rising sharply and placing pressure on packagers who have had relatively easy access to paper-based materials for labeling and e-commerce products. 

“I believe the paper industry thought the printing industry would never recover to pre-covid levels, but it is, as we are happy to see, and people are seeing the effectiveness of print and are fatigued by digitalization,” says Klose. 

The unexpected rise in demand, coupled with ongoing union strikes by thousands of workers at one of Europe’s largest paper companies UPM, is creating dramatic disruption for FMCG companies around the continent. The strikes have now been further extended beyond a previous deadline of February 19, making it the longest strike in the history of the Finnish paper industry. 

Catch-22 for paper 
The UPM strikes, which are apparently caused by unionizers demanding they remain as a single collective while the company breaks into several business units, are only a part of the problem. 

Intergraf says feedback from its members shows 40% of paper needed from mid-February onwards cannot be obtained.A general shortage of paper supply and printing is also due to the reduction in capacity seen in the past two years. “Industry has intentionally reduced production for graphic paper in particular due to decreasing demand,” reiterates Klose. “But this drop in demand is not at the rate we see now, and this is causing friction.” 

Moreover, industry has been moving toward recyclable solutions for some time, anticipating tightening anti-plastic legislation like the Single Use Plastics Directive and UK Plastic Packaging Tax. 

“I applaud this movement. However, it puts much more strain on our industry,” says Klose.

An unanswered letter
Intergraf has written a letter to UPM requesting they settle scores with its workers as soon as possible to avoid further market calamity, but received no reply, Klose continues. 

“I hope their lack of response is a sign of continuing negotiations between UPM and strikers. However, I could not say that if UPM came back into the market, everything would be ok.” 

Klose warns of price rises for paper packaging, with the biggest threat to paper and cardboard packaging being a short-term lack of labels and material, “but this should settle down in the next few months,” she says. Shortages of many printed goods are expected due to continued industry disruptions.

“It’s a chain of consequences, and we are all paying the consequences. Normally this wouldn’t be so severe, but in the current circumstances, it is,” she adds. 

Calling on the European Commission 
Europe’s roughly 600 paper suppliers number far lower than its approximately 110,000 printers. Medium and lightweight coated paper and release papers for labels are the materials most under threat for the packaging sector.

“That needs to happen is that both parties must find a solution for the blockage as soon as possible,” stresses Klose. 

“The worst-case scenario is a reduction of certain products, “which is already slowly happening, and industry players are already planning week by week what they can produce.”

“This means constant negotiation between printers, paper suppliers and customers. No guarantees can be made within industry at the moment, but so far, this is working relatively well.” 

Klose says Intergraf is alerting the EC to the problems its sector could have if these problems are not resolved. 

“The EC could have placed more priority on the environmentally sustainable production of forestry for paper – they need to make sure there is industrial production of forests for the paper industry, especially considering that all forests in Europe are already sustainably managed.”

“Planting more of these forests and a respect for their uses in industry is an answer,” she concludes. 

By Louis Gore-Langton