US label industry braces for Covid-19 impact

The latest figures from the CDC report 44,183 Americans have the virus and 544 people have died from complications after contracting it. 

In the US, the government response varies from state to state. From coast to coast, bars, restaurants, churches and other ‘non essential’ businesses have temporarily closed. More than 100 million Americans live under ‘shelter in place’ or ‘stay at home’ orders from state governments in an attempt to stop the rapid spread of coronavirus.

This means that only essential businesses, such as grocery stores, pharmacies, food producers and hospitals will remain open.  As suppliers to these critical industries, many label converters are exempt from these stay at home orders. 

Coast Label Company is located in California, which was one of the first states to ask its residents to stay home. A lot of Coast Label customers are in the medical device industry. 

‘We are trying to balance keeping our employees and their families safe while serving our customers at the same time,’ said Coast Label president Craig Moreland. ‘We have customers that manufacture medical devices, ventilators, sterilization equipment and medical lab equipment and reagents to just name a few. We need to keep them supplied.’

Economic outlook

For many business owners, the economic impact is just as nerve wracking as is contracting the virus.

Industry Insights, a research and analytics company conducted a survey on how manufacturers, distributors, retailers and professional service organizations are responding to Covid-19. 

The report included TLMI member responses and figures specific to the label industry. The survey was conducted March 16-18 and had more than 2,500 respondents.

Of the TLMI members who responded, there were no reported cases of Covid-19 in employees, but about 10 percent have reported that employees have had contact with a person who has tested positive for coronavirus.

Given the highly contagious nature of the virus, this is concerning for many employers.

Thomas Dahbura, president of Maryland-based Hub Labels said: ‘We are working hard to reinforce good hygiene here at work, but what I’m seeing is that there is a threat from the outside that we have no control over. What people do at home is impacting what we do here. My goal is to communicate with our team that we are working for a higher purpose now - we have an important role to play. This is not a time to fear, but to be aware, prepared and informed. We will work slow, deliberate and avoid knee jerk reactions to the news that is coming available.’

At the time of the survey, about 30 percent of TLMI respondents reported a negative financial impact as a result of the pandemic, but 80 percent are preparing for a somewhat to very negative impact this year. 

A smaller subset, 11 percent, said the pandemic could have a positive impact, which is likely from those providing labels and packaging to the food and beverage industries as more consumers are staying indoors.

'We are trying to figure out which of our customers are going to benefit from this and which ones will suffer,’ Moreland said. ‘We do very little food and beverage, which is doing well right now.  Time will tell how the rest of our vertical markets will do.'

Industry events 

Many highly anticipated industry events in the US, such as FTA Forum and Infoflex, Dscoop and Esko World are being canceled or postponed. 

However, the label industry’s biggest event, Labelexpo Americas and Brand Print Americas, will continue as planned this fall. In a message on its website, event organizers say they are working with its venue, the Donald E Stephens Convention Center, to ensure ‘the most stringent health measures will be in place.’

‘We are very mindful of the impact caused by the ongoing Covid-19 situation, however given that the events are still a number of months away, for now we remain focused on planning and delivering events that will rebuild pipelines and help get the industry back on track,’ the statement reads. ‘The health and safety of our exhibitors, visitors and staff will always be our top priority – we will continue to closely monitor the Covid-19 situation and adhere to the recommendations of the CDC in the lead-up to the shows.’

Industry response

Nearly all companies have taken some new actions due to the coronavirus. 

Many have increased hand sanitizer and canceled large group events. They are also distancing employees and implementing daily office cleanings and sanitizations. 

Hub Labels, Coast Label and Dallas, Texas-based Abbott Labels are restricting who comes into their buildings. Abbott Labels’ manufacturing sites in Texas, Georgia, California and Illinois will remain open with additional precautions including disinfecting production equipment between jobs and shifts and workstations daily, no visits to the plans, eliminating travel and meeting with more than two people at a time.

‘As an essential business our goal is to work so that we can continue to serve and supply customers with labels and tags,’ president John Abbott said. ‘In an effort to do that, Abbott Label is taking extra precautions to ensure the health and safety of our people.’ 

Hub Labels is experimenting with work-from-home scenarios for some employees. According to the Industry Insights survey, Hub is joined by 43 percent of other companies who are responding that way. However, remote work is just not a luxury that can’t be afforded to those on the production floor. 

‘We are planning with our IT, customer service, estimating, purchasing, and finance teams to have laptops so that if the need would arise those team members could work from home,’ Dahbura said. ‘Beginning next week, customer account managers will be testing work from home scenarios to see how it will work and what requirements we need at Hub to continue operations effectively if our staff were to need to work remotely.’

Managing crisis

A crisis management plan can prove to be critical as business leaders balancing the needs of their customers, and potential threats to their business moving forward. Employers should consider a plan for major disruptions such as employee absenteeism, extended sick pay, finding alternative suppliers, prioritizing customers or having to suspend operations. According the Industry Insights survey, 27 percent of TLMI members have no formal plan for these scenarios.   

TLMI has written members of the US House of Representatives and US Senate asking them for clarity on essential business designations, and to urging federal government leaders to support designating label manufacturers as critical suppliers. 

‘The bulk of our member companies’ businesses are in supply and service to numerous ‘essential’ operations, including the food, beverage, medicine, pharmaceutical, medical equipment and numerous in-demand products for consumers and businesses,’ TLMI president Dan Muenzer wrote in the letter. ‘The labels provided by TLMI member companies provide approved and often required warnings, advisories, ingredient and allergen information, for a large swath of consumer and industrial products. Simply put, TLMI member companies operating in these supply channels need the ability and assurance to operate and be as fully functioning as possible.’

Muenzer echoed the frustrations of label companies across the country who are managing conflicting messaging on what is considered and ‘essential business.’ Federal guidelines give state and local authorities leeway in what is considered essential businesses during an emergency, meaning the rules vary state to state.

‘TLMI member companies are currently contending with varying, conflicting and often ambiguous local and state government business restriction orders, as local governments continue their efforts to respond to the COVID-19 outbreak,’ Muenzer said. ‘While the Dept. of Homeland Security’s current non-binding guidance is helpful in identifying a broad set of critical industries and infrastructure, it can and should  be strengthened, by highlighting the role that these industries’ supply chain partners play in supporting essential consumer and business marketplaces.’