Blog Are soaring energy prices and input costs about to halt the UK paper market? - Plimsoll Publishing UK

Leading figures in the paper and board market are increasingly concerned about being able to continue production in the UK as the energy costs and the price of timber remain impossibly high. Andrew Large, director-general of the Confederation of the Paper Industries, recently warned the government that without urgent action a ‘nightmare scenario’ of factory stoppages is a real possibility.

Despite the effects a shutdown of domestic paper production would have on the wider economy, including food and medicine, there is a growing sense of dismay at government inaction. The consequences are already being felt with paper shortages already being reported in the run-up to Christmas.  

While UK consumers are, temporarily at least, insulated from soaring energy prices, businesses are not and the energy-intensive nature of paper production leaves the UK market ill-equipped to absorb soaring costs. The explosion in other input costs such as shipping and timber are placing further pressure across the market. New research from Plimsoll shows how little scope there is to continue profitable production in the face of cost inflation on such an unprecedented scale. 

The new Plimsoll Analysis has vetted the financial health and outlook of the UK’s 555 leading paper companies. Based on the latest data, this interactive analysis of the UK market shows:

• 161 companies were rated as Danger or Caution, over a third of the market
• Profit margins have averaged around 3% for each of the last 5 years
• Sales per employee are at a healthy level but has fallen to £199,000
• Growth in the market continues to fall and is down to around 1% 
• 174 companies have seen their debt position deteriorate in the latest year

The Plimsoll Analysis provides an instant assessment of the health and sustainability of the UK’s leading paper companies. It provides advanced warning of who is most likely to survive the supply crisis and who could fail. 

For paper companies, it provides an instant benchmark of your performance against the rest of the UK market and the insight you need to develop your strategy. For observers and suppliers in the market, it will show you which companies are in a weakened position and most at risk of failure. 

The UK’s paper and board production companies are right to be drawing up plans to cease production. The economic case for production in the UK is being sorely tested by a perfect storm of massive cost inflation and the impact of Brexit. The Plimsoll Analysis reveals the companies most likely to be standing at the end of what could be a very difficult winter.

More information about the Plimsoll Analysis on the UK paper market is available here.