Ralf Thiemann Reports on the Current Market Situation in Packaging Tapes

In a monta news article (2/2010), I risked a prediction for the year 2011. From an economical point of view I was surely right; i.e., the economic growth will, after the corrections of this year, show an increase of probably 3.6% with unemployment below 3 million and the economic performance catapulting to dizzying heights. The result is that 2011 could be one of the best years for the German export economy in a long time. This success can only be slowed down by a striking lack of specialised workers.

But what is happening in our industrial sector?

In the tape producing industry a certain market adjustment is apparent. One hears of production slow-downs, reduction of capacity because of partial shutdowns or even production units closing altogether. And all of this relates to a lack of raw material availability because of missing liquidity.

These circumstances cause supply bottlenecks which, of course, increase the demand for these suppliers, who have built up a solid financial basis and therefore a secure raw material supply chain.

Without a doubt we also have to fight higher raw material prices. Supply bottlenecks of international raw materials could, however, be avoided by timely dispositions and an early building up of stock.

The market adjustment leads inevitably to an increased demand and incoming orders for the remaining players. This again results in longer lead times and we have been compensating by operating a continuous six-day production since the beginning of the year.

During the last few weeks, lead times for production and shipment have been extended due to our rapidly increasing backlog. We now offer a confirmed lead time for each order, which you are normally not used to from our side.

Because of these extended delivery times we have decided, after due consideration, to address the implementation of seven-day continuous production. While the application to the authorities is completed and approved, the additional day of production is now dependent on the hiring of the necessary specialised staff. This could become a difficult task as our region is suffering from a lack of skilled personnel. Add to that the additionally needed raw material quantities for another day of production and we are presented with quite a challenge.

Raw materials and energy are, as everybody knows, expensive and limited. Backings and hydrocarbon resin prices are high and still rising. Natural rubber ranks highest price-wise but the continual increase has currently slowed down.

So the order books are full; the demand for quotation is rock solid. What should be a comfortable situation is unsettled by the bitter pill of increased costs in all areas. Can the market absorb further cost corrections because of unavoidable price increases? Or are market players, as in the past, working against margins, which is not at all practical?

While we will have to wait and see what the second half of 2011 will bring, we will surely not escape some exciting surprises and tasks.

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