With the country still struggling to free it’s self from the grips of recession, the cleaning industry looks set to face another round of paper price increases.
A number of my blogs over the last year have been about the continuing rise in paper prices imposed by large manufacturers and the inability of distributors to have any effect on the situation.
SCA are not alone in seeking price increases. Georgia Pacific best known as manufacturers of the Lotus and Smart One brands have indicated price increase from the 1st September 2011. Kimberly Clark you will remember implemented an increase a couple of months ago.
Quoting increases in raw material, energy and packaging, GP claim that raw material fibre prices are up some 10 to 30% since January. Other factors are, increased energy prices in Europe up 15%, the recent turmoil in the Middle East and the Earth Quake in Japan.
The problem facing many cleaning contractors is they are tied in to certain brands and systems that their clients have chosen and have absolutely no control of manufacturer/distributors increases. Quite often the contractor has had to enter into an agreement with his client that prohibits any increase what so ever.
The one brand that was able to buck this trend is Jangro. The buying power of this consortium and its relentless growth has forced manufacturers to reassess Jangro’s position in the market. The amount of interest shown in last years Jangro paper tender was unprecedented, with companies like Metsa Tissue (Katrin), SCA and Peter Grant intensely competing for this contract.
There is still great instability in the paper market with some experts predicting another rise this year. I would recommend you try to get a fixed one year contract in place before the end of July, because without a supply contract in place, your distributor will be at the mercy of the market.