Manish Desai of Mudrika Labels mentioned that print buyers strongly resist the price increases by expressing that there are other printers ready to supply at lower rates, however according to him they must be persistent as there is no other option. The possibility to downscale the product specification by lowering substrate grammages and adhesive coat weights to keep the prices stagnant is not the right step and will lead to inferior quality and rejections at the customer’s quality control. Moreover, since many print buyers are now mentioning the standard brand labelstock usage in labels supplied to them, printers do not have the option to consider alternate suppliers. He suggested to the labelstock manufacturers that since they interact with print buyers to get their materials approved, they should in turn also impress upon to approve price increases in tune with raw material price escalations. It would also be prudent for labelstock manufacturers to make forward contracts with raw material suppliers such that they in turn can give some breathing time for printers to settle down with new prices. Price rise is an ongoing process in growing economies and eventually the industry settles down with it in 3-4 months, unfortunately now it is at a challenging time and too frequent. He further added that amongst their customers, with privately owned companies it is easy to get price approvals as one can deal directly with senior management and justify the need for higher prices. Contrary to this, it takes 3 to 6 months to get approval from multinational companies as they have multiple layers of management and the price approval is a long-drawn process and by the time the approval comes, the prices may already have increased some more.
Saurabh Agarwal of Avery Dennison mentioned “'The significant increase in demand post the improvement in pandemic impact, especially in the large economies of the world, while the supply environment continuing to remain constrained has been the single biggest reason for the serious inflationary pressures. The rising oil and energy prices and the prevailing ocean freight crisis intensifies the impact and is now impacting almost every region. At Avery Dennison, all our efforts are geared to continue serving our customers in the best possible way during these volatile times, while at the same time keeping them informed of the prevailing situation.”
Prashanth Raveendran of Seljegat Printers was more focused stating that they have reached a level of success by continuously investing in the finest equipment to manufacture labels to international standards and creating innovative products. He said, not getting the appropriate and remunerative price for their products will hamper their growth and not justify their huge investments. He stressed that if some print buyers do not understand the situation and do not agree to give the right prices, unfortunately and sadly we will have to forego such orders. After all, we have to service our financial commitments.
Anuj Bhargava of Kumar labels asserts that the price increase must be passed on and it is an imperative for survival. Another point he mentioned is that the industry is not realizing that people are a necessity in a company to work efficiently and the cost of people has dramatically increased post covid. So that cost combined with the enhanced raw material costs is a “Killer.” If label printers do not pass on the impact of the combined cost increase, then definitely it is a formula for suicide.
The PSA or self-adhesive labels industry is already at crossroads whereby evolution is leading to a lot of demand growth going off to different evolving technologies like shrink sleeves, inmold labels, wraparound labels and direct on product digital printing. Expansion in capacities coupled with commercial and other offset printers, facing pressure from the online communication, also investing in label manufacturing is bringing about intense competition and pressure on profit margins. Label manufacturing also has another challenge which is becoming a matter of concern and that is the waste management. Adhesive coated waste matrix and the release liner that form more than 50% of the laminate is either going to landfills or being incinerated. Facing pollution controls and attending to environmental concerns the printers must now invest in measures that support sustainable and environmentally safe production processes. At such a time when input prices are going up putting margins under pressure, their woes keep on escalating, prompting them to get together as an industry and ponder over workable solutions to counter the concerns that are arising. The positive side is that in a large country India with a huge young population, the growth is evident and there will be enough for all label manufacturing technologies.
Written by Harveer Sahni Chairman Weldon Celloplast Limited New Delhi November 2021
Printweek India's edited version of this article is also available at; https://www.printweek.in/Features/label-printers%E2%80%99-woes,-price-increases-and-shortage-of-inputs-55396