Buoyant Business
Despite rising raw material costs, flexible packaging is a bright spot in the industry.
March 2007 by Tom Polischuk
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There’s a lot of the action in the package-printing industry coming from the flexible packaging sector. You can’t go into a supermarket these days and not see some new packaging configuration for products that previously had been packaged in a different form—tuna fish in a flat pouch, drinks in stand-up pouches, frozen foods in plastic bags—just to mention a few.
From a printing and converting standpoint, even some of the more trendy labeling applications require press and converting capabilities geared toward the processing of flexible, unsupported materials. These include shrink sleeve labeling, in-mold labeling, and even pressure-sensitive film labels.
It is not surprising that flexible materials and flexible packaging are in the spotlight. So much so that virtually any new press coming out on the market is being specifically designed to handle these materials.
As always, however, there’s no “gravy” markets in today’s competitive landscape. Although flexible packaging offers a fair share of opportunity, package printers are having to scratch and claw for everything they get.
2006/2007
One of the major concerns over the past year—and most likely to continue for some time—is the high costs of raw materials. Higher material costs were driven by fluctuating, but generally higher, energy prices, says Marla Donahue, president of the Flexible Packaging Association (FPA). “With these volatile resin prices, some converters indicated periods of material shortages caused by tight global supply. This resulted in difficulty for converters passing along rising costs in flexible packaging product (sales) prices. The overall impact on converters was pressure on margins and profitability in 2006,” she reports.
Corey Reardon, president and CEO of AWA Alexander Watson Associates, agrees with the assessment concerning the pressure on margins from rising petrochemical costs. These conditions not only impacted the flexible packaging sector, but all package-printing segments, along with their respective value chains. However, Reardon sees enough positive factors to say “the flexible packaging industry is buoyant in North America, with continuing room for growth.”
Despite the increases in material costs, Steve Mogensen, president of packaging consultant Allied Development Corp., saw positive growth for flexible packaging in 2006 and sees more of the same. “We expect the global economy to continue to do well in 2007,” he says. “The potential for a recession was building during the latter part of 2006, but has resolved into a healthy slowdown without recession. From here, we expect economic growth to pick up and remain positive at least through 2008.”
From a printing and converting standpoint, even some of the more trendy labeling applications require press and converting capabilities geared toward the processing of flexible, unsupported materials. These include shrink sleeve labeling, in-mold labeling, and even pressure-sensitive film labels.
It is not surprising that flexible materials and flexible packaging are in the spotlight. So much so that virtually any new press coming out on the market is being specifically designed to handle these materials.
As always, however, there’s no “gravy” markets in today’s competitive landscape. Although flexible packaging offers a fair share of opportunity, package printers are having to scratch and claw for everything they get.
2006/2007
One of the major concerns over the past year—and most likely to continue for some time—is the high costs of raw materials. Higher material costs were driven by fluctuating, but generally higher, energy prices, says Marla Donahue, president of the Flexible Packaging Association (FPA). “With these volatile resin prices, some converters indicated periods of material shortages caused by tight global supply. This resulted in difficulty for converters passing along rising costs in flexible packaging product (sales) prices. The overall impact on converters was pressure on margins and profitability in 2006,” she reports.
Corey Reardon, president and CEO of AWA Alexander Watson Associates, agrees with the assessment concerning the pressure on margins from rising petrochemical costs. These conditions not only impacted the flexible packaging sector, but all package-printing segments, along with their respective value chains. However, Reardon sees enough positive factors to say “the flexible packaging industry is buoyant in North America, with continuing room for growth.”
Despite the increases in material costs, Steve Mogensen, president of packaging consultant Allied Development Corp., saw positive growth for flexible packaging in 2006 and sees more of the same. “We expect the global economy to continue to do well in 2007,” he says. “The potential for a recession was building during the latter part of 2006, but has resolved into a healthy slowdown without recession. From here, we expect economic growth to pick up and remain positive at least through 2008.”
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