Where specialty converting might be in 2015


The next five years hold plenty of challenges for specialty packaging converters. Fortunately, there are an equal number of new business opportunities for those doing laminating, extrusion and vacuum coating. Here’s a quick Converting Curmudgeon rundown based on Dr. William Llewellyn’s presentation at this week’s AWA Mergers & Acquisitions Executive Forum.

Extrusion-Coated & Laminated Materials

  • 2009 North American materials market: 23.1 billion sq meters
  • Growth rates for 2010-2015: up 2.5% a year (on an area basis)
  • Flexible packaging shows the greatest potential for growth
  • Threats: Ongoing consolidation across the supply chain, especially in flex-pack segment; price escalation for raw materials, energy; environmental pressure for source reduction, recyclability and sustainability; cheap imports
  • Opps: Value-added improvements through innovation; use of extrusion coating on renewable substrates to improve performance (PLA extrusion-coated paper); synergies from consolidating companies

Vacuum-Coated Materials

  • 2009 North American market: about 23.1 billion sq meters
  • While market declined 1-1.5% in 2008-2009, it’s expected to recover 2% growth/yr in 2010-2015 (on an area basis)
  • Again, flex packs rule as largest end-use app (46% of total vacuum-coated market is metallized-OPP films for snack-food packaging)
  • Threats: Metallized paper declining due to alternative labeling techs; low-cost imports from Central/South America (mostly OPP); nanotech replacing vacuum-coating
  • Opps: Metallized films replacing aluminum-foil laminates (same barrier, lower cost); more metallized OPP for label constructions; new patterned/stripe metallizations; ultra-high barrier coatings for displays/electronic techs

Labels

  • 2009 North American market was 9.9 billion sq meters
  • Labeling went on 4.5% downward slide since 2008 but is predicted to rebound at 2% annual growth over next five years (on an area basis)
  • Pressure-sensitive labelstocks are largest end-use app (47%); stretch/shrink sleeves now make up 15% of total market
  • Threats: Direct-printed techs (flex packs, metal cans); raw-material price hikes; order sizes continue to shrink while growing more frequent; environmental issues (release-liner recycling)
  • Opps: More premium products demanding improved shelf presence (P&G’s First Moment of Truth concept); need for greater brand security; development of thinner, more sustainable labelstocks; smart/active labels; more consolidation at printer/converter level vs. flex-pack industry

My Thoughts: Specialty packaging converters sure took a hit during The Great Recession, especially labelstock makers. Fortunately, all markets are expected to recover pretty much at the same rate as the US GDP. In other words, things should be back to 2008 levels by 2012. That sounds kinda bad, if you ask me. So, if you want your business to grow twice as fast, now’s the time to investigate and invest in all those juicy Opps listed above. (Anybody for a PLA-coated paper, smart label with covert brand-security features laminated to a fully-recyclable paper release liner?)

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This entry was posted in coating/laminating, flexible packaging, labels, printed electronics, sustainability and tagged , , , , , , , , . Bookmark the permalink.

One Response to Where specialty converting might be in 2015

  1. Mark, I heard this story this morning and thought of your post about specialty converting. At some point, someone is going to have to convert this stuff, right?

    Smart Fibers Could Bring Smarter Clothes
    http://www.npr.org/templates/story/story.php?storyId=128568229

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