PACCOR, the leading European manufacturer of rigid plastic food packaging, is taking measures to face the challenge of sharply rising raw material costs.

The company, despite recent multi-million pound investment in its Dutch operation to remain sustainable and to safeguard the future, says it has no alternative if it wants to survive the continuous and unpredictable significant increases in the market.

Chris Hart, the managing director of PACCOR’s Food Service Europe division, said the decision to increase prices for polystyrene vending and drinking cups had been taken “with very deep regret.”

Mr Hart explained: “This is an extremely difficult and serious situation. The last things we want to do is to pass on increased costs to our valued customers. But there is simply no alternative if we want to continue to run a viable business. We have kept our prices as low as we can for a number of years, but we cannot continue to do so. Our business is hurting.

“Here are the stark facts. Since December, the cost of polystyrene (PS) material has increased by some €250 per tonne. We have faced similar increases when purchasing polypropylene (PP) and polyethylene terephthalate (PET) of €145 and €150 respectively.

“These are by far the largest contributors to the costs of our products. There are further increases forecast in polymer prices in the coming months, which are expected to be in the range of 10 to 15%. The price of oil has now risen to $120 a barrel, a 10% increase in this year alone. “In addition, the Euro to Dollar exchange rate has weakened and is predicted to stay at its current level, or lower, for some time and this too has led to considerable upwards pressure on our costs.

Faced with these spiralling costs, we simply cannot keep our own prices down”.

Mr Hart explained that the significant investment in PACCOR’s Dutch operation by the PACCOR Group was to minimise its cost base of its European vending and drinking cup business, improve its competitiveness, creative environmentally-friendly packaging and safeguard its future.

“We cannot stand still. Major Competitors have already pulled capacities out of central Europe because of increased costs and lower or non existent margins, which underlines the gravity of the situation. We have already had to close our Veriplast plant in County Durham, England and we will continue to monitor the situation very closely indeed, and adjust our business when and where necessary” said Mr Hart.

“We value our trading relationship with clients and remain totally committed to them. We will continue to provide them with the finest market-leading products and services and trust they understand the challenging situation in which we are in,” explained Mr Hart.

“We believe that if we can weather this storm and keep the new prices stable over a five-year period, the market will stabilise and we can remain sustainable,” he added. “We wish to invest in the future, producing quality and innovative solutions for the packaging industry. Our goal is to become the number one supplier of plastic packaging solutions across Europe.”