Label Suppliers Move Forward After a Year of Ongoing Material Issues
After two years in which printers juggled staff turnover, price increases and inventory depletion, 2022 was supposed to be a return to something like normal. But many issues from 2021 carried over, with paper and raw materials topping a list of concerns for label suppliers across the country — more specifically, where to find them. In January 2022, the strike at UPM mills in Finland exacerbated already existing shortages of liner stock and semi-gloss face stock in the U.S. When the nearly four-month strike ended, as much as 25% of the U.S. liner supply had been affected.
Hostile market conditions have challenged the paper industry long before the pandemic dried up supplies. In 2019, Georgia-Pacific, a mill that had built a reputation as one of the world’s leading makers of tissue, pulp, packaging, building products and related chemicals, announced that it was exiting the communication papers business, taking off the table 650,000 tons (or 8%) of uncoated paper and roughly 650 jobs at its Port Hudson, Louisiana facility.
After a brief slowdown at the onset of COVID-19, consolidations picked up in 2021. Of note, Pixelle Specialty Solutions LLC purchased Appvion Operations Inc.’s carbonless rolls and security papers business, and BillerudKorsnäs acquired Verso Corp.
Stories like these, where producers shut down capacity with relatively little forewarning, coupled with the rising cost of materials to make pulp, resulted in the discontinuation of certain paper grades, a push for allocation and sweeping price increases worldwide for the paper industry. The pandemic certainly hasn’t done the industry any favors in that regard. In fact, PaperMoney’s 2022 Closures and Cutbacks article is just as long as the 2021 version, highlighting a sobering reality.
Perhaps one of the biggest shocks came in September 2022 when Pixelle Specialty Solutions again made headlines after revealing plans to shutter its Androscoggin mill in Jay, Maine, in the first quarter of 2023. To provide perspective, in a statement to Mainebiz, Dana Doran, executive director of Professional Logging Contractors of Maine, says the Jay mill represented about 23% of the pulp market of the state of Maine before the April 2020 rupture of a pulp digester that was never rebuilt.
But hope came a few weeks later, when Pixelle said it was going to restart a paper machine in the Chillicothe, Ohio facility. According to a press release, the company is investing $21 million to upgrade and restart the #24 paper machine (PM24) and intends to hire 52 full-time employees to operate and maintain it.
It’s important to acknowledge the struggles — it makes the victories more special. In our sector of the print world, label suppliers refocused their efforts on taking care of current customers versus prospecting for new business. In the process, they got more creative. At Diversified Labeling Solutions (DLS), Itasca, Illinois, that started with finding alternatives for hard-to-get materials. These substitutes included rethinking material configurations — for example, changing from paper liner to polyester liner, or gloss varnishing matte face stock to replace semi-gloss face stock. Business conditions also required DLS to look internationally for materials that were no longer available domestically, rebalance its inventories of raw materials and modify the size of labels to increase overall yields.
“There is no doubt that the past few years have been rewarding and challenging at the same time,” says James Cirigliano, vice president of marketing for DLS. “Like other suppliers, we did see our lead times increase, but we made sure we communicated with our customers what the market conditions were so they could plan accordingly with their end-user accounts. It has been a challenge to keep everyone happy in this environment, but with communication and strong supplier partnerships, we did our best to meet all our customers’ needs.”
Some of those needs were driven by Walmart’s mandate requiring suppliers in certain departments (e.g., home, entertainment or hardline) to begin providing RFID tags. Being an RFID label supplier, DLS saw a significant increase in requests for these labels, and Cirigliano expects demand for this segment to grow faster than the general label market in 2023.
Linerless labels for new linerless desktop and mobile printers presented another opportunity. “Since our parent company, TSC Auto ID Technology, manufactures both RFID and linerless printers as part of its extensive TT and DT printer lines, we are experienced in these label product categories and [are] sought out by distributors seeking to enter the RFID and linerless markets,” Cirigliano says.
He adds that distributors should look at the industrial label market, which covers transportation, automotive, construction, consumer durables and others. The introduction of RFID technology has boosted growth by preventing counterfeit of products. Industrial labels also facilitate supply chain management.
“The industrial labels market is projected to be worth $94.52 billion by 2030, registering a CAGR of 7.60% during the forecast period (2021-2030),” Cirigliano says.
Sharon Menssen, marketing manager for Label Works, North Mankato, Minnesota, has seen projects that run across all spectrums and verticals, though she pointed to the DIY market as an untapped opportunity.
“Since the pandemic, there seems to be a rise of homemakers and DIY crafters and bakers popping up and needing to brand and promote their products,” she says. “Whether they need flexible packaging or a sticker on a stock pouch or a label on their bag, box, or container, we are here to help out.”
The Pros of Digital
At the eighth annual Digital Packaging Summit, sponsored by Packaging Impressions, the sister brand of Print+Promo Marketing, Conference Co-Chair Marco Boer, vice president of IT Strategies, delivered a keynote presentation, “State of the Industry, Trends & New Developments to watch as we exit COVID.” He offered one piece of advice for these complicated times: “It’s all about resiliency.”
Boer then explained that digital printing equipment is all about flexibility because it can achieve things beyond conventional printing’s capabilities. Our experts share the sentiment.
“Digital printing allows you to do low minimums and are usually a quick turn,” Menssen says. “Digital also gives you the ability to use increased customization with enhancements like Color-Logic and Mosaic.”
Cirigliano believes many things make digital an attractive option. Copy can change on the fly, allowing for many versions of a product to be promoted at one time without having to produce large runs to make the labels cost-effective. Because digital printing can produce variable copy, marketing messages on labels can be targeted to specific audiences. Furthermore, with laser die-cutting options, digital printing allows brand owners to get creative with label design without worrying about expensive die costs and die changeovers.
“Another important feature is that digital presses on the market today do an excellent job of producing very fine print, precise colors and striking graphics,” Cirigliano says. “This offers the brand owner an opportunity to create very unique designs to better promote their products and brands.”
What You Know
When selling labels, there are many factors to consider: design, adhesion, turnaround times, etc. Cirigliano wants distributors to understand the full lifecycle of the label. “It is so easy to focus on one thing, such as what the label is being applied to, and forget to understand other areas such as the storage conditions of the label prior to use, how the label is applied to a package, what the conditions are like both during application and post-application — i.e., cold, hot, damp, wet, freezing, abrasion, exposure to chemicals, sunlight, etc.,” he says.
Distributors are encouraged to lean on suppliers to make their label dreams — even the less flashy ones — a reality. “Recently, we worked with a distributor and their customer, a major beverage company, to come up with a carton label that was printed and applied to cartons during a moist production process,” Cirigliano recalls. “Initially, there were significant concerns about the labels not adhering to the moist cartons during the high-speed application process. It was only through a combined effort between us and the end-user’s print and apply equipment manufacturer that we came up with the best material and adhesive combination.
“While this was not a promotional label or a unique construction, the fact that the end-user needed millions of labels to keep its automated production lines running made this a very important project for them,” he continues. “With the success of this pilot project, the program was rolled out to dozens of beverage production centers around the U.S.”
As for what lies ahead for the label market in 2023, it’s too soon to tell. But Cirigliano has begun to see a relaxation of allocations, improved lead times and availability of materials that have been hard to find previously. One thing is certain, the DLS team will be following paper availability.
“We are working closely with our suppliers to understand what they will be able to deliver, and when,” Cirigliano says. “We are also engaged in working with alternative materials, such as PET films and glassine stock, as alternatives to our standard super calendared kraft (SCK) liner stock, which has been an industry standard for decades.”
Menssen says Label Works plans to focus on sustainability and how the company can provide more environmentally friendly label substrates and adhesives. Stock availability on custom substrates remains tough; however, Label Works was able to buy deep in its most common stocks.
If Menssen could give distributors a final piece of advice to carry into the new year, it’s this: “Just understand that labels, stickers and decals are everywhere. They cross all vertical markets and provide multiple solutions. ... Make sure you mention it each and every time you talk to your customers that you can provide them with labels, stickers and decals.”