The largest of all mergers of course has been the one involving Avery Dennison and Jackstädt. Now that the deal has received the official green light, both companies will begin the massive global task of overhauling two substantial sales, marketing and distribution networks. It is already clear that Jac’s headquarters in Wuppertal, Germany, will become the group’s European headquarters.
Meanwhile, demand for self-adhesive label stock is expected to grow modestly in western European markets, but at levels far below total production capacity. Competitive pressures will continue to squeeze margins and place high expectations on delivery times.
All this can take place when a country’s economy is relatively benign. Take the UK for example. Inflation is at an all-time low and unemployment is containable. Strong consumer demand has led to low and stable interest rates (although high street retailers have begun to report a weakening in consumer demand). The big problem for manufacturers, especially exporters, has been the continuing strength of the pound sterling against the euro and, more lately, the fluctuating US dollar.
Currency problems, plus a tightening of credit terms, were cited by Samuel Jones Panoval (SJP) as prime reasons why its label stock business nose-dived into administration. The UK company’s headquarters in St. Neots, near Cambridge, employs some 220 staff and in 2001 had a turnover of approximately $60 million. A total of 39 employees immediately lost their jobs, although the appointed administrator was optimistic about selling the business as a going concern to secure the company’s future.
SJP was born out of the Samuel Jones gummed papers (and, much later, self-adhesive) business dating back to 1810. Current products include electronic data, form/label and prime/product labeling applications, complemented by other converting and printing operations. The other group operating companies — SJP (Suisse), formerly Panoval based in Switzerland; Wasch Etiketten, acquired in July 1999 and based in Germany; and Hovat, based in Kent in southeast England — are not affected by the administration order.
SJP’s troubles find an echo in the demise of Smith & McLaurin of Kilbarchan, near Glasgow. As another venerable label stock laminator, it too had come through many decades of ups and downs, but eventually went into liquidation last May. It also specialized in making added-value film and paper label stocks, including metalized and thermal grades. During the 1990s it was part of the large international Rexam group, which sold the company to its management in March 1998 after diversifying into other packaging markets. Two years later Schleipen & Erkens, another specialized substrate coater, bought the company to join X-Film in its lamination division. However, this did not work out as expected and in May the German group closed the bulk of S&M’s coating capacity and sold other facilities to 3M’s label stock division.
There might be a happy ending for S&M, however. In late July the company was bought by two local businessmen: Ian Mackay, now managing director, and Gary Kennedy. They have retained 70 staff members, about two-thirds of the previous workforce. As financial controller, Kennedy said the annual turnover would fall to a sum equal to $18million instead of $30 million, but that the company would benefit from reduced costs and higher-margin customers, enabling it to be profitable. Perhaps it’s a sustainable ray of hope for the Kilbarchan folk.