The boss of one of the UKโs large packaging specialists is urging Government to step in to help with spiralling energy and materials costs.
Billy Hutchinson, Managing Director of Lesters, believes his sector is often overlooked when it comes to support, yet finds itself faced with a potential 30% increase in paper prices in the next month.
A number of European mills have already shut their doors and this is going to magnify the focus on those that are left, causing inflation in charges and the possibility of instability of supply.
It comes after the Burntwood company has boosted its sales by 120% and taken on another 15 staff to cope with the rise in demand.
Perfect Storm
โThereโs a perfect storm about to hit and thereโs no way our sector can avoid it,โ explained Billy, who has worked in the packaging industry for more than 18 years.
โItโs a triple whammy of energy, fuel and material prices all rocketing at the same time and, just the prospect of this, is enough to make people think twice about spending and this is translating into a freeze in the economy.โ
He continued: โWeโre already looking at how we can mitigate some of the challenges in our own control and have invested heavily in new technology (which uses less energy) and switching to more solar power. This isnโt going to be a quick fix, more a long-term strategy.
โThe packaging sector is taken for granted. People just see boxes, but itโs how everything is transported and crucial to everyday life. Weโre going to need support and Government has a role to play in providing subsidies or tax cuts around energy usage.โ
The Lesters Outlook
Lesters, which has become a certified CarbonNeutralยฎ company, has become one of the major disruptors to the packaging sector.
More than ยฃ6m has been invested or in the process of being spent to ensure the firm can supply corrugated boxes, large format, heavy-duty cases and bespoke packaging to clients in the automotive, aerospace, bike manufacturing, mail order and third-party logistics space.
The business is also exploring a way of creating its own eco-system where it has full control over the whole of the packaging production process, from print ink and design, right through to distribution through Lesters Logistics in Nuneaton.
This was the first acquisition by the current management team, with plans in place to look at other complementary businesses that give it greater market share, access to new customers and wider geographic reach.
Government Support
Billy concluded: โOur fuel bills have gone up from ยฃ3k to ยฃ5k per week, material prices could hit a 30% increase and our fixed term electricity contract is up at the end of the year. There will be companies in our market where those agreements finish earlier, and they will be contending with the new prices very soon โ thatโs going to cause major distortion.
โWeโre not asking for something special, just to receive the same Government support which other sectors receive, such as aerospace and automotive. After all, without our boxes many industries would fail to operate.โ