Supply chain | 91AWA event puts spotlight on supply chain disruptionAWA gathered speakers from across the industry to talk about the supply chain disruptions, paper mill strikes, and their impact on the global market. Luis Rodriguez reportslexander Watson Associates (AWA) held a Global Release “When this demand acceleration Liner Pre-Conference Forum virtually in March, covering Athe state of the global pressure-sensitive and release liner happened, the demand-supply market and the supply chain challenges, subsequent shortages, and long-term effects of the ongoing disruption.balance was already very tight, With perspectives from speakers across the industry, from particularly in paper”supplier to converter to the associations, the ongoing materials shortages and the Finnish Paperworkers’ Union strike were talking points throughout the Forum. and maintaining talent, and, ultimately, the paper shortages have ‘Since Europe is, at the moment, in the spotlight, I would put mounting pressure on both suppliers and converters across the characterize it as a sentiment of growing frustration. And not only supply chain, making the challenges diffcult to keep up with.in the timing, but also the duration of the strike,’ said Jules Lejeune, As the shortages have recently made paper much more diffcult managing director of Finat, while in a panel discussion with Linnea to acquire, the possibility of some converters searching for Keen, president of TLMI, and Corey Reardon, president and CEO of alternatives has been looking much more likely, according to Keen. AWA. This sentiment was echoed by others during the Forum. ‘This industry, while it’s resilient, is also innovative,’ said Keen. Jeroen Diderich, vice president and general manager of Avery ‘They’re going to come up with other solutions. Some of it will Dennison, said, ‘Particularly after the last two challenging years, divert away from label and some of it will divert away from paper. we were aiming for a little more of a stable environment. And we And there’s a chance they won’t come back.’were expecting that, by the middle of this year, we would get back Apperson had a similar point of view in a later session, saying, to normal lead times and more normalized status, we were clearly ‘Right now, if we’re going to have anything to sell so we can get very disappointed.’ products on the shelves, we’re going to have to move things to PET. Keen, during the panel discussion, spoke about how lead times I think, long term, that’s going to be a loss for paper. When people have recently been extended across the market to a point unseen convert to PET, it’s oftentimes a one-way street.’before. ‘The lead times from the suppliers almost now in every At Avery Dennison, Diderich says it has already begun leveraging single category – from small, mid-size, medium, and large – is three the products that are more readily available for its customers, weeks or more. We have not seen that yet ever before,’ said Keen. securing a steady supply of PET liner and assisting customers ‘So, it is showing that the four-, eight-, or twelve-week lead times in switching over and managing the orders to ensure that the are certainly out of sync with their customers.’ over-purchasing of product is limited to keep the supply steady According to Lejeune, these lead times are much longer in for its base.Europe, with some fgures reaching three-to-four months. And Avery Dennison also recently acquired the linerless label these lead times have extended across the industry, to all substrates technology developed by UK-based company, Catchpoint. Diderich and formats. said the company hopes to provide a linerless product to its customers in the future, but does not believe that the technology Multiple factors will be a replacement for the traditional pressure-sensitive label.These shortages and increased lead-times, however, didn’t happen Reardon added that though the linerless label market is an area in a bubble. According to Diderich, several years’ worth of increased that AWA has seen growth and says is an area companies should consumer demand, lack of investment on the supplier side, and watch, it won’t disrupt the whole pressure-sensitive label market.unpredictability over the past few years, especially during the peak As for when the industry can expect the disruption to end, the of the pandemic, have added to the shortages the industry has answer is unclear.recently been facing. ‘Month by month, you saw a light at the end of the tunnel, ‘When this demand acceleration happened, the demand-supply with more and more suppliers getting out of force majeure status. balance was already very tight, particularly in paper and in North So, the outlook was hopeful,’ said Diderich. ‘Now with the paper America,’ said Diderich. ‘Although the industry is very healthy, we situation, we are unfortunately not at that stage anymore, it’s hard have seen a lack of investment in our supplier base for a number to see the light at the end of that tunnel.’of years. In Europe, we saw that several papermills were able to Regarding the ongoing strikes and the effects on not just the allocate their capacity to either face paper or liner, but in North label industry but across other global markets as well, Lejeune America, that did not happen. said. ‘Our members are working hard to make sure that they can ‘In 2018, we saw the frst plants moving capacity over to other provide the necessary supplies and they are innovative and creative packaging materials and we saw some plant closure. But the in fnding solutions, but this cannot last much longer. And even if industry was just not prepared for this 20 percent growth.’ this would end now, it would take months for things to get back Mike Apperson, CEO of Resource Label Group, during a discussion to normal.’with Reardon, also spoke of the rapidly increasing demand seen over the past few years, saying, ‘Covid threw all the traditional As L&L went to press, it was announced that the Finnish demand patterns into a frenzy.’ forestry strike had ended in a negotiated settlementApperson added that infationary pressure, diffculties of fnding Apr - Jun 2022