Citing economic conditions beyond their control, label stock suppliers recently implemented the latest in a series of price increases. Increases generally hovered around 6 to 7 percent across the board, and many went into effect this month. For some companies, the latest increase marks the second or third in a year.
Factors contributing to the price pressures include rising energy and transportation costs, the latter exacerbated by a recent federal rule that regulates a truck driver's work day, potentially limiting the time a driver can be on the road. Also cited by the suppliers are inflated raw material prices.
Most notable is the global shortage of acrylic acid, which has caused adhesive prices to rise substantially. In a November 3 customer presentation given by Avery Dennison, the company reported that adhesive prices have increased more than 30 percent. The company also cited price increases for silicone above 15 percent, for paper between 25 and 30 percent; for films 15 to 20 percent; and for production costs, energy and oil more than 43 percent.
Relief from these numerous price pressures, the suppliers report, is not expected to come soon.
"Because of the capacity issues in the marketplace, we don't expect these inflationary pressures to loosen up in the short term, and in fact the trends that we follow forecast pressures to continue throughout 2005. We will, of course, do everything possible to minimize the impact on our customers," said Rick Olszewski, VP/GM of Fasson Roll North America in Painesville, OH, USA.
"I think the increases are going to be continuing from the supplier base, primarily through the adhesive side in the next year because of the capacity shortage and strong demand for their product. As far as liners and facers, petroleum based products, I would expect that [these prices] will continue to increase," said Paul J. Hasemeyer, senior vice president for Green Bay Packaging, Coated Products Operations in Green Bay, WI, USA.
Several label stock companies have also chosen to implement a freight surcharge to defray the rising costs of transportation. Spinnaker Coating, for instance, notified customers of a surcharge of $.001 per MSI in June. In November, Raflatac announced a shipping fee of $75 for orders below 9 million MSI.
Avery Dennison announced a $.001/MSI fuel surcharge in...