Lesters boss predicts a triple whammy of spiralling fuel, energy and material costs for the packaging sector
The managing director of one of the UK’s 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.
“There’s a perfect storm about to hit and there’s no way our sector can avoid it,” explained Mr Hutchinson, who has worked in the packaging industry for more than 18 years. It’s 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.”
He continued: “We’re already looking at how we can mitigate some of the challenges in our control and have invested heavily in new technology (which uses less energy) and switching to more solar power. This isn’t going to be a quick fix, more a long-term strategy. The packaging sector is taken for granted. People just see boxes, but it’s how everything is transported and crucial to everyday life. We’re going to need support and Government has a role to play in providing subsidies or tax cuts around energy usage.”
Lesters, which has become a certified CarbonNeutral company, has become one of the major disruptors to the packaging sector.
More than £6m 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.
Mr Hutchinson concluded: “Our fuel bills have gone up from £3k to £5k 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 – that’s going to cause major distortion.
“We’re 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.”