Liquidity in times of crisis plastic packaging manufacturers in a tight sandwich position

The Russian invasion in Ukraine has catastrophic humanitarian consequences. At the same time, it also has far-reaching effects on the manufacturers of plastic packaging in Germany. Liquidity management is playing an increasingly important role here. The skyrocketing natural gas prices and the highly volatile electricity prices are directly making the production of plastic packaging and films more expensive. In addition, some raw material manufacturers have already announced drastic price increases for important raw materials such as polyamide and EVOH, which are irreplaceable for food packaging, for example. If at all, the costs can often only be passed on to the customer with a long delay.

This constellation currently poses liquidity problems for many medium-sized companies. While the raw material suppliers insist on payment within a week, our members’ customers often take several months to settle the bills, says Dr. Martin Engelmann, General Manager of the IK Industry Association for Plastic Packaging. “In the current crisis, this financing gap overwhelms the possibilities of many medium-sized manufacturers. We therefore appeal to both the raw material suppliers and the customers to adjust their payment terms at short notice, says Engelmann. Overall, from IK’s point of view, the market must react faster and more flexibly to the ever-new crises.

The consequences of the terrible war in Ukraine are exacerbating the situation of plastic packaging manufacturers, who have been suffering from raw material shortages and dramatically increased energy prices for a year now. Many medium-sized companies in the industry see their existence threatened,” explains Dr. Engelmann with reference to a current member survey. Almost 80% of the packaging manufacturers assess the current earnings situation as poor. If production is no longer worthwhile due to high energy and raw material costs and machines are switched off, important supply chains threaten to be torn apart, warns Engelmann, pointing out the importance of plastic packaging for supplying the population with food and medicines. During the corona pandemic, politicians recognized that packaging is systemically important. This insight also applies in the current crisis,” Engelmann demands and refers to concrete proposals from the Alliance for a Fair Energy Transition to politicians.