A worker strike against a paper manufacturer in Europe is causing paper shortages for printers in the United States, an example of the supply chain problems plaguing a world economy that is struggling to leave the pandemic behind.
Thousands of workers at mills operated by UPM-Kymmene in Finland have been on strike since early January, and while there was hope that the matter would be resolved expeditiously, strike action was extended for a third time earlier this month until March 12 unless a deal is agreed upon. As the weeks pass, the situation is getting direr for printers and publishers around the world.
Henry Fry, chairman of the board of Fry Communications, has been in the paper business for more than 60 years. His Pennsylvania-based company, which employs some 750 people, has been feeling the sting from the strikes in Finland.
“A lot of paper that is used in the U.S. comes from Finland,” he told the Washington Examiner.
Fry said the strikes have devastated his company’s ability to furnish a certain very common type of printing paper that is used for magazines and catalogs.
“It’s a type of paper that magazines utilize — it’s the first choice of magazines,” he said.
The Washington Examiner uses the type of paper in question for its magazines and is now switching to a different grade of paper because of the shortages.
Because of too little paper chasing too much demand, Fry said he has had to make some difficult decisions, like asking customers to cut their usage of that type of paper by half.
“It’s not forever. It’s just during the strike period,” he said of the reduced quantity that is able to be printed.
Fry said even before the strike began that there were some problems with keeping supply moving for that type of paper. He explained that some mills have been shifting away from the production of printing paper in favor of other products, such as cardboard boxes and tissue paper, that have seen rising demand in the wake of the pandemic.
He said that while those factors have created an environment of scarcity for printing paper, it was still “navigable” for his company — but the strike is now towering over those concerns and creating major headaches for his business and those in the industry that rely on UPM as their paper supplier.
Across the pond in Europe, the paper shortages caused by the UPM strikes are causing big problems for European companies as well.
FINAT, which is an association representing the European self-adhesive label industry, has been pleading for a resolution to the UPM strikes and warning that the downstream effects of the matter could cause a “chain reaction” and end up hurting broader sectors of the economy, which has already been roiled by supply chain problems.
UPM, which is a member of FINAT, is a huge supplier of specialty papers used as the carrier material for self-adhesive roll labels and other grades of paper for packaging and label making.
Jules Lejeune, FINAT’s managing director, said it was a “perfect storm” for the label industry.
“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,” Lejeune told Packaging Insights earlier this month.
He noted that without labels, there would be “no packaging and no packaged goods to deliver to stores.”
A visceral example of the downstream effects of UPM’s strike is what happened recently to United Kingdom-based money managing giant abrdn. The firm was forced to delay a shareholder vote on a $2 billion takeover because of paper shortages.
British law requires that firms send out paper copies of documents related to takeovers to shareholders, which is a lot of paper in the case of abrdn, which boasts over a million retail investors. The company had intended to hold the vote before it announced its annual results, but now, voting is set to take place sometime next month.
“We would have liked to get the shareholder circular out a little earlier but have had to work around the paper supply problems as we are required to write to over a million shareholders,” an abrdn spokesman told Sky News.
Stateside, Fry and other printers are eagerly awaiting a resolution to UPM’s situation so they can resume providing the quantity of paper that publishers need to survive. He said some customers have the ability to have their products replaced with lower-grade paper, or in some cases higher-grade paper, but in most cases, the type of paper can’t be supplanted.
“If we could replace it, we wouldn’t have required a reduction of content,” he said.
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Given that UPM is a worldwide company, Fry said he has asked if there is any way to reallocate or shift resources to make up for the losses — but said that has not happened.
The Washington Examiner contacted UPM on several occasions but did not receive responses to the inquiries.
