Staying on track

18 May 2009



No recession depression for converters in the Benelux region, Keith Nuthall reports


The Belgian and Netherlands markets are a good place to take Europe’s converting industry temperature as it rides the recession this year. There is no denying that business is down in this key European region, but there are certainly no signs of melt-down, and converters in these countries appear well positioned to exploit an economic recovery, when it comes.

Times are likely to be tough this year in Belgium. Geert Scheys, of the Belgian Association of Manufacturers of Plastic and Rubber Products, says the estimate of Belgian plastics packaging manufacturers regarding the current economic situation is “one third satisfactory, two thirds bad”. For this year’s second quarter, he adds: “One tenth expect a better turnover, one tenth similar and eight tenths worse.”

However, he stresses, “the situation will vary depending on the market. The capacity utilisation rate of the food industry is stable, so companies working for this market will have normal activity, but with increased pressure on the prices.” The situation “will certainly be different for manufacturers of flexible packaging in other markets,” he continues, noting that the capacity utilisation rate of Belgium’s manufacturing industry fell by 13.6 per cent compared with April 2008.

Improvement

In The Netherlands, however, there is more optimism in the flexible packaging conversion sector. Harry Lucas, director of the Dutch Rubber and Plastics Federation, says in comparison to the first quarter of last year the average market volume in this sector for the first quarter of 2009 was about 10 per cent down, with one source even reporting a 25 per cent lower market volume.

But this performance was a significant improvement on the last quarter of 2008, with 2009 first quarter output being 20 per cent up.

“Consumption in the food sector, estimated as over 50 per cent of that segment, is reported as good and in line with the expectations,” he says. “It is expected that the market will babble on for the rest of the year. Only a very slight increase of market volume is hoped for. Small and modest price increases, if any, may be expected for the rest of the year.”

On the paper side, Lieve Vanlierde of the Belgian Paper and Card Converting Industry Federation, sees no signs yet of a recovery, although an anticipated worsening of business in April did not happen – rather orders were stable, albeit at March’s low level.

She says no Belgian paper and card converting businesses were “doing really well”. As with plastics converters, the food sector has been better placed to “resist the recession”. However, across the board “there is a widespread pressure on prices”. Also, the quality of labels and packaging materials being ordered has been declining.

“Consumers are buying food, but not necessarily the products of the big brands, rather own brand products. The quality of the packaging is less, with lower prices.”

Even this lower end food business is expected to fall off in September, with a general decline in business being feared, she says. One recent survey of Belgian businesses showed 70 per cent feared the rest of 2009 would be tough economically. That said, there have been no closures of businesses this year among her association’s members, she adds.

However, one major supplier, Netherlands based Stork Prints, is riding out the recession, partly through a continued strong showing in its consumables business.

Stork has been protected from the downturn by its diversification. Sales and marketing manager Rieks Reyers says while orders for capital items such as printing machines were down, there was steady demand for consumables, such as its rotary nickel screens.

“If companies have the printing machines, they want to use them,” he notes. And the demand for labels in terms of overall numbers is staying steady for small consumable goods. The difference, however, is in the quality of the goods being bought – higher end ‘A’ brand products are losing out to cheaper own brand lines, and that has boosted demand for cheaper, simpler labelling.

That has led to a slight shift from screen to flexo printing. As a result, Stork’s acquisition of Germany’s AKL Flexo Technik last year has placed the Dutch company in a good position to supply this lower cost market. In the meantime, it is biding its time for the recovery, which Rieks Reyers thinks will release pent-up demand for printing machine capital expenditure put on hold during the downturn.

And with constantly rising legislative demands for information on labelling, he notes, not only is “overall demand stable and increasing”, but there is a built-in demand for increased quality, regardless of market shifts during the recession.




Privacy Policy
We have updated our privacy policy. In the latest update it explains what cookies are and how we use them on our site. To learn more about cookies and their benefits, please view our privacy policy. Please be aware that parts of this site will not function correctly if you disable cookies. By continuing to use this site, you consent to our use of cookies in accordance with our privacy policy unless you have disabled them.