Schongauer UPM boss: "Waste paper prices have doubled, gas prices have quintupled"

Created: 02/11/2022, 12:00 p.m

By: Boris Forstner

UPM also suffers greatly from the increase in energy prices.

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Interview with Schongau's UPM plant manager Wolfgang Ohnesorg on the lack of raw materials and high energy costs.

Schongau

– The skyrocketing energy prices are hitting the paper manufacturer UPM and its Schongau plant, which is by far the largest consumer of electricity in the Weilheim-Schongau district, massively.

But the scarcity of resources is also an issue – even with our own product, paper.

We talked about it with plant manager Wolfgang Ohnesorg.

Mr. Ohnesorg, how have you gotten through Corona so far?

Quite well.

Of course we now have a few cases among the 550 employees, but they are spread across all possible departments throughout the plant.

Whole shifts never failed.

That's important because we have some critical areas like energy and sewage treatment where that would be a problem.

We also staggered the start of work so that not all employees come and go at the same time.

Do you require all employees to self-test, even if they are vaccinated?

We ask those who are not vaccinated to take a test, this is done under supervision and works well.

Even many who have been boosted and recovered use it, they just want to be on the safe side.

We always had enough tests there.

Wolfgang Ohnesorg is Plant Manager at UPM in Schongau.

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It was different with waste paper.

Explain to us why a paper manufacturer stopped receiving paper itself.

There was less waste paper in circulation last year because less paper was produced in 2020 due to Corona.

This was due to the lack of advertising supplements and thinner newspapers, and it hit us massively last year.

In addition, there was competition from the packaging industry because online trade had boomed.

Normally the raw materials of corrugated board and graphic paper for newspapers and magazines like the ones we manufacture are strictly separated.

But in view of the lack of supply of waste paper, the packaging industry has taken the waste paper raw material away from us.

And what ends up in the cycle of the packaging industry is lost for us and can no longer be used, we don't need cardboard boxes.

Waste paper prices have therefore doubled in the meantime.

They had to pass on the costs, but there were probably more inquiries from customers who wanted to order more paper.

Yes, we could have sold significantly more to our customers, such as printers, publishers and wholesalers.

But if there is no raw material, that is not possible.

Would you have had the opportunity to also switch to corrugated board?

UPM has long been a strong advocate of staying in the graphics sector.

This is our core business.

If so, it should have been done ten years ago.

There are now too many providers, so enormous overcapacities are building up.

Has the lack of raw materials affected you in other areas?

Naturally.

For example, we use chemicals and starch.

Various sister plants use binders for coated paper.

All this is much harder to get and only at higher prices.

The fact that the pea and potato harvest was not good due to the weather situation last year and starch has therefore become more expensive is also an issue.

The biggest problem is likely to be energy prices.

According to 2010 figures, UPM uses approximately twice as much electricity as all households in the county combined and 73 percent of the electricity used by all businesses in the county.

In fact, we could supply 200,000 households with our output.

You can imagine what that means for us if the price of gas has quintupled and the price of electricity quadrupled in one year.

Do you have long-term contracts that have somewhat contained inflation?

No, we have market prices because we buy electricity as we need it.

We have experts who consider all the possibilities that play a role in energy prices and then buy from the electricity exchange.

Do you now have a location disadvantage because of the high energy costs in Germany?

Electricity prices have also risen significantly in other countries, for example in Austria they are even higher than here.

But of course we are among the most expensive countries when it comes to energy, there is no such thing as the EEG surcharge anywhere else.

Without discounts for energy-intensive companies, there would no longer be a paper, chemical or metal processing industry in this country, it has to be said clearly.

We have already done a lot with our energy management and have received a lot of praise for it, but of course we are always optimizing it.

Together with the city, you recently had to accept harsh criticism because the district heating you produce has become 73 percent more expensive.

Many citizens will be surprised when they get their gas bill.

Because it will double in some cases, I'm sure of it.