One of the country’s most famous toilet paper manufacturers, Hakle, is now struggling to survive. The sector is bearing the full brunt of rising gas and transport prices.
Toilet paper could be running out in Germany. The German paper industry warns of possible bottlenecks in the supply of this essential product for all households. The main cause of this concern is to be found in the drop in Russian gas deliveries to Germany.
“In the event of a gas shortage, it would no longer be possible to produce enough toilet paper“, clearly warns Martin Krengel, vice-president of the association “The paper industry“, explaining to the German weekly Focus that “a lot of gas is needed to produce it“. Energy represents 30% of the production cost of this product. Germany had already experienced a shortage of toilet paper at the start of the Covid-19 health crisis, and faced with the rush on this product, distributors had been forced to ration its sale, with the possibility of buying a one package per person.
Read alsoThe German Uniper, the first victim of the Russian gas crisis
The famous German toilet paper manufacturer Hakle is today the first victim of the sector. The nearly 100-year-old Düsseldorf company applied in early September to go through self-administered insolvency proceedings. In question, the sharp rise in the prices of raw materials and energy. The company points out thatthe massive increase in the cost of raw materials and energy supply as well as transportwas not sufficiently passed on to consumers’ prices in supermarkets or pharmacies. Beyond the concern about a possible shortage of gas, the explosion in its price is therefore already weighing on the sector, with the difficulty for players to pass on this cost to the end consumer. Added to this is the explosion in the price of paper pulp and transport.
“Enormous cost pressure”
Since March, the paper industry has been sounding the alarm over this delicate situation. “The entire paper industry is under enormous cost pressuresaid Gregor Geiger, chief executive of the paper industry association. “In this situation, it is important that paper manufacturers can pass on their increased costs to retailers.“, he warns, adding that manufacturers have regularly temporarily stopped production in recent months since “production no longer paid“.
As far as Hakle is concerned, with the implementation of this procedure, the management of the company remains on board but is temporarily supported by restructuring experts. The general manager of the company Volker Jung wished to be confident, in an exchange with the German newspaper Lebensmittelzeitung: “Self-administration gives us the flexibility and speed needed to sustainably reorganize our business and reposition it entirely in the interests of our employees, customers and creditors. We are convinced that this repositioning will succeed in this difficult situation of energy crisis that can be described as historic. “. The salaries of the 225 employees are covered by the insolvency allowance of the Federal Employment Agency for the months of September to November 2022 inclusive. Important customers and partners of the company have already shown their support.
In terms of company size, Hakle, with its recent annual turnover of almost 80 million euros, is behind other big suppliers such as Wepa, Essity or Kimberly-Clark. In total, there are almost ten manufacturers in Germany who produce around 750,000 tonnes of toilet paper per year across the country, reports the Paper Industry Association.
Read alsoWhy toilet paper prices are skyrocketing
In France, the situation does not seem much more encouraging. Toilet paper has been among the most inflationary products for several months. In August, the price of this product increased by 12.43% compared to August 2021. Paul-Antoine Lacour, general delegate of the French Union of Cardboard, Paper and Cellulose Industries (Copacel), already warned, mid- June, on the threat of a shortage of toilet paper, but also paper towels and tissues. “For lack of sufficient energy, the factories would then have to stop producing”he warned.