A few months ago, we wrote about a supply chain challenge that has the potential to create significant problems for the adhesive labeling industry.
Pixelle Specialty Solutions, a giant in the specialty papers market, announced that it would close its paper mill in Jay, Maine, effective Q1 of 2023. The Pixelle mill is unique in that it supplies up to 30% of the release liner paper consumed by North American manufacturers of pressure sensitive labels. This news followed a UPM labor strike in Finland that shuttered one of the other main sources of liner paper for much of 2022.
The UPM strike eventually ended and the Pixelle closure was deferred a few months into 2023 to allow additional inventories to accumulate. However, the supply outlook for this vital raw material remains uncertain. Our latest blog will bring you up to date on the Pixelle situation and the outlook for label liner paper in the coming months.
Since the pending closure of the Pixelle mill was first announced, the outlook for label liner release paper has stabilized somewhat. The situation did not deteriorate in late 2022 and the extension of Pixelle’s operations further into 2023 was a welcome reprieve. Label manufacturers used that extra time to stockpile liner paper and to start forming contingency plans.
However, the extension essentially “kicked the can down the road” on the underlying issue. A significant source of label liner paper will soon disappear. While the outlook for 2023 may no longer seem quite so dire, the clock is ticking on 2024 and beyond.
Global supply chains constraints have shown signs of easing in Q1 of 2023. Unfortunately, the same cannot be said for the label release paper situation. No one has yet stepped forward as a viable buyer for the Pixelle mill. Without one, the supply of liner paper will soon be significantly reduced and prices can be expected to rise.
Likewise, the economy itself continues to be in an inflationary mode in 2023. Costs for raw materials such as paper pulp show signs of softening but remain comparatively high. Persistent volatility is also expected in oil prices as China’s economy reopens and the Russia/Ukraine conflict escalates.
A disproportionate share of the world’s supply of label liner release paper comes from a handful of production facilities – one of which will soon close. Events of the past two years offer a sobering reminder of what can happen when so many eggs are placed in such a small basket.
Pixelle’s woes first began in 2020 when a pulp digester at the Jay mill exploded and was never replaced. The 2022 UPM strike in Finland brought production to a standstill for months on end. These types of disruptions are a constant threat in the paper industry. A fire, labor strike, power grid failure, cyberattack or extreme weather event at any of the remaining label liner production facilities has the potential to shock the supply chain further in 2023.
Barring an eleventh-hour miracle, the Pixelle mill will close shortly and those who rely on adhesive labels will face a new reality for 2024. To minimize your supply chain risk going forward, we recommend that you partner with your label supplier to formulate a three-part raw materials contingency plan.
When printing labels, it is often possible to substitute one raw material SKU for another without noteworthy changes in production methods or label performance. If you have not already done so, make sure your label supplier has identified “drop-in” alternatives for label liners and other raw materials required for the production of your label stock.
Whenever one type of material becomes unavailable altogether, alternative materials must be sought. In the case of paper label liners, synthetic release liners are one such alternative. Ask your label supplier if certain synthetic types of liners – such as polyethylene terephthalate (PET) – may be viable alternatives for your label constructions.
There is more than one way to manufacture a label. As label liner release paper becomes hard to come by, technological innovations gain attention. Linerless labels are one such innovation. Linerless labels have a silicone coating on the face stock that prevents labels from sticking to the rest of the role. No liner paper is necessary, which creates the added benefit of eliminating liner waste from the label manufacturing process.
A leading provider of labeling solutions to customers nationwide, Taylor produces more than 50 billion labels each and every year. Our in-house materials science expertise and deep supply chain relationships enable us to sidestep supply chain challenges that bring many other label manufacturers to a halt.
Our Taylor Select Program is one example of this expertise. Through years of research and testing, Taylor has created a highly detailed decision tree for hundreds of types of label materials. Like planning moves on a chess board, we already know what drop-in vs. similar vs. alternate materials and processes are available to us should a certain raw material become unavailable.
We also use our proprietary Methodical Assessment of Printed Parts & Processes, known as MAP3, to study the fit, form and function of each label. The engineering recommendations that result allow us to deliver the most cost-effective, strategically sourced, highest-performing and process-friendly label possible. By combining the Taylor Select Program with MAP3, Taylor is uniquely positioned to help customers avoid line-down situations often caused by events like the Pixelle mill closure.
Looking for a predictable and dependable supply of custom labels? Contact Taylor to learn more about our expertise with durable labels.