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Simon Creasey Consumer Markets Analyst
TISSUE COMPANIES WERE NOT IMMUNE FROM THE SHORTAGE ISSUE. BUT JUST HOW BAD DID THE PROBLEM GET FOR THE INDUSTRY, WHAT IMPACT DID IT HAVE ON THE ABILITY OF COMPANIES TO PRODUCE TISSUE AND TOWEL PRODUCTS AS THEY WOULD NORMALLY, AND HOW DID THESE COMPANIES DEAL WITH THE FALLOUT?
ast year talk of ‘shortages’ dominated the news headlines. There was a shortage of truck drivers that led to shortages at the petrol pumps and of goods stocked on supermarket shelves. There was a shortage of workers to fulfil numerous different tasks, from picking fruit and vegetables on farms to working in meat processing plants, due in part to issues like the Covid-19 pandemic. In some countries there was also a shortage of energy, which had a major impact on individuals and on businesses, as prices soared and many energy companies went under. While these shortages attracted widespread media attention, other shortages that are slightly more hidden from the view of the general public sailed under the radar. In addition to the well documented shortage of labour, there was a shortage of equipment and machinery parts for some industries and there was a shortage of the raw materials needed to make products. Tissue companies were not immune from the shortage issue. But just how bad did the problem get for the industry, what impact did it have on the ability of companies to produce tissue and towel products as they would normally, and how did these companies deal with the fallout? Most European tissue companies were affected by the shortage of labour and HGV drivers, but the issue was more acute for businesses located in the UK following Brexit, which was dealing with the fallout of many skilled EU workers returning to their home countries or other EU member states. As Oday Abbosh, Founder and Chief Executive at UK-based Better All Round, explains: “It is no secret that the labour market in general has been more challenging than at any time in recent history, whether that is specifically for HGV drivers or more general labour supply. We are seeing the impact of Brexit filter through in this regard.” It is a view shared by Armindo Marques, Director at UK-based Poppies Europe. “The UK benefitted for many years from a constant inflow of European workers into the labour market,” he says. “Since the end
of the Brexit transition period in December 2020 this pool of workers dramatically reduced.” Another major challenge Abbosh reports surrounds the availability of raw materials. He says that “pretty much anything” related to fibre has had unprecedented demand, restricted availability and increasing prices over the last 12 months or so. “For example, the pandemic and the resultant working from home directives have impacted how much paper is available for recycling impacting recycled tissue paper availability and pricing. At a time when most manufacturers are looking to make their product portfolio more sustainable, it’s no surprise that we are seeing demand impact supply.” Marques says his businesses’ operations have also been affected by supply chain issues surrounding the sourcing of raw materials. “Packaging has been a real struggle to source,” he says. “Even the simplest of the cardboard boxes has become a problem with some board grades just impossible to find and the lead times five times longer than normal. Plastics have seen the same trend, especially polypropylene.” Also in high demand and short supply are all-important machinery parts. Abbosh says the company has experienced “significantly longer lead times and shipping/container costs at unprecedented highs from the Far East”. Not all companies in the sector have been adversely affected by the shortages, which appear to have blighted some countries more than others. Pau Vila, Transformation Manager at Spain-based LC Paper Group, says there have been no real issues in his country relating to the availability of pulp as the pulp his company uses comes mostly from Spain, but there have been some problems surrounding the availability of certain chemical products. “Some of them are very specific and just a few suppliers carry them, so a failure in the supply chain of a certain supplier of key chemical products can result in the inability to source that essential product for tissue paper manufacturing,” says Vila.
Tissue World Magazine | January/February 2022
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ExitIssues
Spiraling energy costs, rising inflation, changing labour market forces, and Brexit regulations adding to pandemic restrictions have created issues “we have never faced before at such high levels.” Consumer Markets Analyst Simon Creasey reports on the industry’s response.
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SUPPLY CHAIN CHALLENGES IN UK HOME AND INTERNATIONAL MARKETS AT UNPRECEDENTED LEVELS
