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Recession recedes, sales still stagnate

March 15, 2010

Despite competition from the Super Bowl and the Winter Olympics, it will not have escaped L&NW’s readers that all was not well with Europe’s economies at the start of 2010. The Euro went down against the dollar, which pleased Europe’s exporters, but some countries’ budget deficits reached alarming proportions. Spain, Ireland and Portugal are all in a bad way. Worst of the Bad Boys is, however, Greece, whose (previous) government apparently indulged in a little creative accounting to gloss over a budget deficit now reckoned at 13 percent of GDP (the “official” limit for Euro area countries is 3 percent). The British government was particularly vehement in castigating the free-spending Greeks, whose chances of getting the Elgin Marbles back have now receded even further into the distance.

All sectors of the printing and converting industries have been hit by the downturn, and Intergraf, the Brussels-based Confederation of Printing Industries, is leading an EU-funded project researching the socially responsible restructuring of printing companies. Restructuring is of course generally the code word for cutting staff and closing plants, and Intergraf’s secretary general is keen to emphasize the positive aspects of the study. “Overcapacity is certainly one of the continuous problems of our industry, but the project does not only address the problem of how to cope with the current crisis and the lack of orders. We also want to address the restructuring of the companies in the sense of ‘reorientation’. This means, for instance, finding new services to satisfy customers. The project will assess development of training, re-training and conversion possibilities for employees.” A workshop for small and medium-sized printing and converting companies will be held in April 2010, and several label converters have already signed up.

A conference in Brussels in November 2010 will present the findings of the study and of the workshop.
And has all this talk of restructuring brought despondency to Europe’s label sector? Strangely, it seems not. Two major paper manufacturers, Stora Enso and UPM Raflatac, both producing label papers, announced a return to profitability in the fourth quarter of 2009. Sales, however, were still sharply down from the corresponding quarter of 2008, and both companies have seen staff reductions and other cost-cutting measures.

Cost-cutting measures are also at the heart of several major brand owners’ strategies for dealing with the downturn. One of the countries benefiting from these moves is Poland; GlaxoSmithKline (GSK) has just announced plans to shift part of its European production from France to Poznan in Poland. GSK has already invested just over €100 million in the Poznan plant since acquiring it in 1998. Moves like this have kept Poland’s label presses turning throughout 2009.

From Poland also comes news of a major new combination press installation manufactured by Nuova Gidue, and supplied to Poland’s Colorpress, a converter of wine and vodka labels. The new press combines six offset units with nearly all the possible printing technologies (flexo, screen, hot stamping, embossing…). This is not the first press sold by the Italian manufacturer’s new structure built on the rubble of the now-liquidated Gidue. It is however further evidence that Federico d’Annunzio, Nuova Gidue’s unsinkable CEO, is back in the game.

Elsewhere in Eastern and Central Europe the recovery is patchy, at best. Avery Dennison’s area manager, Josef Hayek, who knows the region’s label sector intimately, told your correspondent, “Eastern Europe has not bottomed out yet, except perhaps in Poland where there are encouraging signs – and despite that country’s high unemployment we saw lots of Polish visitors to Labelexpo Europe last year. The Russian market, which grew fastest between 2000 and 2007, has been hardest hit. Throughout the Eastern half of Europe, boom-to-slump swings have been more dramatic than in Western Europe, but their recovery is likely to be equally dramatic.”

Global Cooling

One of the more arcane side-effects of the recent cold weather in Europe has been to sweep global warming out of the headlines. “Green” issues, however, are probably here to stay, and nowhere more than in the label industry, squeezed as it is between the hammer of consumer action groups and the anvil of European emissions-cutting legislation. Belgium-based Xeikon, which modestly describes itself as the World’s Greenest Manufacturer of Printing Equipment, is still riding the eco-bandwagon. “Many people think that sustainability begins and ends with recyclable substrates, but that’s not so,” says Xeikon’s Lode Deprez. “The printing process must conserve water and use no VOCs, and the energy use and production of waste must be drastically reduced.” Xeikon’s toner-based digital label presses certainly use no water and produce no VOCs, so there is no disputing their environmental credentials for these criteria. Xeikon says its presses consume less energy, and that any printed waste can be easily de-inked for recycling. Since January 2010, Xeikon has utilized 100 percent green power from renewable energy in its toner manufacturing operations based in Heultje, Belgium.

HP Indigo too has not been shy in publishing its “green” credentials: A recent initiative in Britain offers converters a free used-components collection service for ink developer parts, empty ink cartridges, and used imaging oil (though nothing, as yet, for used liner). It aims to reduce the impact of HP Indigo print operations on the environment and to help customers to ensure that used materials are being disposed of in an environmentally sound way, according to program manager Cecile Mesmain.

A hard pill to swallow

You’ve heard of the smart label – now meet the smart pill. Swiss pharmaceutical giant Novartis, which recently acquired the American eye-care firm Alcon, has bought licenses on drug delivery technology developed by Proteus Biomedical, a small California startup. The sci-fi idea from Proteus is that when a pill is taken, stomach fluids activate a microchip which sends a signal to a smart RFID label stuck to the patient’s body. From there the information can be transferred by mobile phone or internet to a doctor. The idea may sound fantastic, but a recent study has shown that pills taken wrongly or not at all are costing $100 billion a year in the USA alone. Philips, the Dutch electronics giant, is also working on micro-chip-enabled pills. With Europe’s governmental and private health insurers insisting on proof of a drug’s effectiveness, pharmaceutical companies could well conclude that the advantages of the smart pill outweigh its costs. At least one major European label converter is said to be working with biomedical laboratories on the smart label part of this technology.

Sugaring the pill has of course long been the way of making people swallow unpalatable medicines, but Spain’s Azucarera Ebro Guadalete, said to be the world’s second biggest sugar producer, has also turned to RFID labels to ensure traceability and increase productivity at its huge plant in Jerez. So far only shipments out of the plant are RFID-controlled. According to Belgium’s Zetes, who developed and installed the system, when the second phase is completed, RFID will make it possible to ascertain and record the origin and weight of raw materials and full details of every pallet shipped, thus ensuring optimal traceability of its entire logistical chain.

Wine labeling…

Visitors to Europe will have noticed the intimate details shown on the labels of most of the products that go down European throats – sugar and salt content, calories, allergy indications, you name it. Some countries even have “traffic light” labels to indicate whether certain things are good or bad for you.

There’s just one exception to all this: alcoholic beverages, which need only state on the label the volume and the degrees of alcohol. This state of innocence, known in France as the “exception viticole,” was craftily written into a European directive dating back to 2000. However, the end of the exception may be in sight as Europe gears up to review all its labeling regulations. Several EU countries, including Britain, Finland, Denmark, and Holland, are fiercely opposed to letting wines and spirits off the hook. As for the French, Italians and Spanish … well, you’ve guessed. The World Health Organization wants all labels to carry “Daily Nutritional Requirements,” and the wine growers’ lobby suspects, not without reason, that the WHO’s idea of optimal daily wine intake may be different from theirs. The matter is of some urgency as the draft directive will be up for debate by the European Parliament in May of this year.

…and pricing

The name of Franck Benoist-Gironière is not widely known in the printing and converting business, but he has won modest notoriety for his study relating the cost of printing ink to that of fine wines. An average black ink for an office printer, according to Monsieur Benoist-Gironière, works out at €1,587 per liter; color inks top the €2,000 mark. Against that, a bottle of Saint Emilion Cheval Blanc 1999 can be had for a mere €360. So you can get nearly five glasses of the finest Bordeaux Grand Cru for less than the cost of one glass of ink.

If that doesn’t distress you, maybe you’re in the wrong business.