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Signing off with a look back at European trends

March 25, 2008

Signing off with a look back at European trends
After nine years or so, this is my final Europe column. Wearing my somewhat battered freelance hat, I will still be scribbling selectively on the labeling scene, but it’s now time to be doing other unrelated things. So, by way of a final sign off, let’s put things in context. Globally, it has certainly been a period of conspicuous change and remarkable growth. FINAT’s recent figures show that over 15,000 converters worldwide convert about 36 billion square meters of materials for all types of labels every year. European converters now account for roughly one third of this total. In terms of pressure sensitive label substrates, the European market has grown by 86 percent over the past decade. Growth in Eastern Europe over the same period averaged 17 to 22 percent each year. Led by Poland, Hungary and the Czech Republic, Eastern Europe had an estimated 7.80 percent share of global label sales in 2007. Combined with Western Europe’s 27 percent share, the expanded European label market is forecast to outpace North America’s 28.4 percent within a year.
Looking back, these Europe columns have tracked some important technical developments. For example, UV flexo is now established as a quality-led labeling and packaging process. Simultaneously, it has provided a platform for film-based PSA converters to move into flexible packaging territory. Based on so-called “engineered” films, they can produce stretch/shrink sleeves, wraparounds, sachets and pouches. Press manufacturers have responded by building wider web models incorporating automated servo driven controls for improved web handling and print registration, plus faster changeovers between jobs. Parallel to this is a strong trend towards using rotary or semi-rotary UV offset presses, either to complement UV flexo or replace it entirely in the high-end print sectors. The past decade has seen digital color printing begin to influence label production and change converters’ perceptions about the type of services they offer. The arrival of a practical method of four-color inkjet may provide further impetus.
Other developments include more energy efficient UV curing systems, the arrival of quick change sleeve/plate systems and the adoption of CTP platemaking within digital workflows. The product profile of the industry has also seen some high-tech changes. The obvious example is RFID technology for tags and labels, although it offers questionable benefits for all but the larger system integrators. Far better in a niche business sense are the growing number of “smart” labeling applications for the retail, brand protection and industrial sectors.
In retrospect it is easy to be impressed by the industry’s overall dynamism and willingness to change. I hope that that spirit of optimism has wittingly, or even unwittingly, been evident in these columns. But given how closely the labeling industry reflects economic and social trends, it would be surprising if a somewhat darker picture should begin to emerge. Eroded margins have begun to depress profitability for many European converters, hence the emphasis on practices that improve flexibility and productivity. Many are experiencing lower rates of returns on investments in the face of rising costs, especially for materials, consumables and energy. Meanwhile, end users capitalize on excess capacity to drive down prices.
Changing market conditions are bound to reflect consumer-led environmental pressures, already strong in Germany and Scandinavia. That means more end users will question their suppliers’ green credentials. They will focus more on using materials that are biodegradable and easily recycled. Finally, increased globalization and geopolitical changes that alter the balance of trade will govern the direction of many converters and affect the businesses of most suppliers. One growing consequence is the fact that many large international brand owners seek to buy their labels and packaging from single integrated suppliers. Like the major substrate manufacturers, some groups have set up well equipped plants in Eastern Europe, India, China and other parts of Asia to service the needs of regional manufacturing plants. Several European press manufacturers are beginning to follow this lead too.
Well, that’s a whistle-stop tour of some the issues that have figured in past Europe columns, with the editor’s kind indulgence. Now it is time to hand the baton