On April 22, 2022, UPM announced its agreement with the Paperworkers Union on business-specific collective labor agreements for five UPM businesses. The resolution allowed for employees to return to work at five UPM mills in Finland, including UPM Raflatac.

With the news that customer deliveries will resume as soon as possible, L&NW sat down with Tim Kirchen, senior vice president, Americas region, UPM Raflatac, to explore the ramifications of the strike and the future outlook for the label and package printing industry.

L&NW: What precipitated the end of the Finnish Paperworkers Strike, and what does that mean going forward?
TK: The details of the strike negotiations were kept confidential, but we are of course very happy that the parties involved have found a long-term resolution that included five business-specific agreements that will benefit our customers, our employees, and our industry overall. The business-specific agreements mean that the parties were able to agree on terms of employment that take the needs and special features of each business into account.

For UPM Raflatac, this means enhanced productivity and competitiveness, improved supply security, and more flexible working hours arrangements. This all will benefit our customers and the pressure sensitive label industry in the long run.

L&NW: How would you describe the last four months and the challenges you’ve encountered?
TK: Not only the last four months, but also the last two years have required a tremendous amount of agility and resilience from our employees, customers, end users, and supplier partners. Our industry has been facing unprecedented supply, staffing and logistical challenges, and, at the same time, demand for our products has risen to unprecedented levels. This, of course, has put a tremendous amount of pressure and stress on our supply chains.

For us, the biggest challenge has been to respond to the supply constrains with very little forward visibility and to proactively manage customers’ expectations. Our system relies on a balance of supply, production capacity and reliable logistics. It is fair to say that for most of the last two years, the system was not in balance. However, having the strike resolved now will help to alleviate some of the domestic supply pressures we have seen in the paper face- and liner raw materials.

I do want to thank our customers and supply partners for all their support and flexibility in the last two years as we tackled these industry challenges together.

L&NW: What can we expect for domestic paper supply in North America – both in the short and long term?
TK: What got lost a bit in the news about the Finnish Paperworkers Union strike was that in North America, we are facing a structural supply shortage when it comes to paper materials. Currently, there is not enough paper material made in North America to fulfill all the demand for paper materials, especially if we look at packaging, graphics, and label-related paper raw materials. Just in the last two years, we have seen a reduction of 3.5 million tons of coated and uncoated paper capacity locally due to mill closers and production diversion. At the same time, we have seen unprecedented growth in our industry.

So, it is good that the strike is settled now and we can start sourcing materials from the Finnish paper mills. It will take roughly 8- 12 weeks for materials to arrive in North America. That will then help to take some pressure from the supply market. However, the core problem of insufficient domestic paper supply will remain, and we must be honest with our customers about that. In the short- and mid-term, North America will become increasingly reliant on imports to meet the demand for paper face and liner materials for our industry.

In that context, it is great that we now have the perspective of long-term stability of supply from UPM in Europe. Domestic paper suppliers will also have to reevaluate their capacity strategies and open additional capacity to facilitate further growth in the industry.

L&NW: What has communication been like with your customers?
TK: It is always a top priority for our team to be transparent and proactive in communicating with our customers. We have been forthcoming about any challenge in supply with our customers and then proactively propose alternative options. I do believe that open, honest and collaborative communication is key to respond to the industry challenges.

There are misconceptions about the Finnish Paperworkers strike and its impact on the North American pressure sensitive label industry. The fact is that we are facing a domestic supply crisis that our industry must address to ensure sustainable growth. In my opinion, that can only happen if the industry, including end users, acknowledges the issue. We are committed to actively participating in and leading these collaborations to ensure our industry’s continued growth and success. And, of course, these collaborations need to happen through the entire value chain, including suppliers, customers, end users and industry groups.

L&NW: What can you say about the expected security of the supply chain for the label industry?
TK: It is fair to say that our industry has learned a lot over the last two years, especially when it comes to supply security. I think we need to challenge conventional thinking around end-user material specifications without backup or overreliance on single sourcing. Over the last two years, like many other industries, we have been facing supply chains that have been fragile, out of balance, and unable to fully recover. We are now rebuilding supply chains together with our customers and our supplier partners, and I am very optimistic that future supply chains can be more robust.

L&NW: What is UPM Raflatac currently doing to support customers as the situation stabilizes?
TK: We are working proactively on two fronts. First, for the products impacted by the Finnish Paperworkers Unions strike, we will see a gradual stabilization of supply over the course of the next three months. In the meantime, we will carefully manage and communicate stock-outs as they occur and propose alternative materials that can work with the applications.

Second, for products that are impacted due to domestic tightness of supply, we will continue to work tirelessly with our domestic and global suppliers to secure materials necessary to respond to the structural demand growth in our industry. But, it is fair to say, it will take several months for supply chains to stabilize, absent any other unforeseen impacts.