A glance at the Labelexpo Europe show guides of 1997 and 2007 is instructive: Labelexpo 1997 was a resolutely European show, with 83 percent of exhibitors from Europe, 12 percent from North America and just 5 percent from the rest of the world (mostly from Japan and Taiwan). Ten years later, in 2007, the line-up had shifted to just 9 percent of exhibitors from Canada and the US, 80 percent from Europe and 11 percent from the rest of the world, mostly from emerging markets – India, China, Turkey…

Now that the cold wind of world recession is blowing, Western European label equipment manufacturers can feel behind them the hot breath of competitors from lower-cost countries. A glance at recent new product launches confirms this trend. Slitter rewinders made by EMIS in Poland are mostly being sold on the domestic market, but competitor Jurmet, also manufacturing in Poland, has started appointing agents worldwide. On the other side of the world, Indian and Chinese narrow web press manufacturers are homing in on the European market, or what’s left of it. Press suppliers like Labelmen and Link Label (both based in Taiwan) are old hands on the European scene but are now being joined by many upstart press manufacturers from Asian countries. At the same time, several European leaders in the narrow web press sector – Nilpeter and MPS are examples – are shifting part of their production to third world, lower-cost countries like India and Brazil.

Gaining currency

Britain’s newspapers have been fretting about the “weakness” of the pound. Of course everyone wants to have a “strong” currency, which is seen as a symbol of economic virility. At least – not quite everybody. British manufacturers, for example, faced with a nose-dive in domestic demand, have not been slow to realize that shifts in exchange rates have effortlessly wiped 20 percent off the costs of their products when sold in continental Europe, their main export market. Narrow web equipment manufacturers like Edale, which recently moved into a new purpose-built factory and office in the south of England, have stepped up their marketing efforts throughout continental Europe; Edale recently installed two presses in Germany and one in France. The company’s main successes over the past three months, however, been in more distant markets, including Cyprus, Nigeria, Vietnam and Saudi Arabia. The latest sale to Zultec in Jeddah brings to six the total number of Edale presses being operated by this leading Middle East converter. In Hanoi, Vietnam, Posts & Telecommunications Group has just installed an Edale Beta press to provide secure phone card production.

The French label market

Major automobile manufacturers may shout to the world that they are on the brink of bankruptcy, but bosses of smaller, family run businesses (like the majority of label converters) would rather be thrown naked into a vat of vipers than admit to any kind of financial difficulty. That said, the mood in the French label converting sector – which your correspondent has been investigating – could be summed up as “concerned, but resolute.”

JPL, one of France’s leading narrow web converters, went on an acquisition spree last year which could, in theory, at least spell trouble now that storm-clouds are lowering. Not so, says owner-manager Philippe Leyval, who cut a lot of dead wood from the acquired companies, while reorganizing and centralizing marketing, purchasing and administrative funtions. The main strength of the newly streamlined JPL group, he says, lies in the fact that it makes labels for a wide range of end-user sectors.

“The fourth quarter 2008 was terrible for the food sector,” Leyval admits, “but cosmetics labels were not so badly hit and the pharma sector was almost normal. At the same time, we have been doing good business with sleeve labels, a new product for us.” Another owner-manager, Patrick Wack of 5/7 Etiquettes in the south of France, is also not waving the white flag. “Our traditional label products are down by 10 to 20 percent from January/February 2008, but the innovative, high value-added label products are doing well,” he says. Both companies, like others in the French label converting business, acknowledge that they have shelved all major investment plans for the time being, while at the same time stoutly denying that they have laid off permanent staff. This is not too surprising in a country where it is notoriously difficult to fire staff. Anecdotal evidence nonetheless confirms that French label converters have generally stopped hiring and are not renewing fixed-term work contracts.

Bullish in Belgium

Just over the frontier in Belgium are the headquarters of two of Europe’s largest label converters: Bopack and Reynders. Bopack recently wound up its labeling systems division, citing falling sales and “deadly” foreign competition. Bopack Systems (which is separate from Bopack Labels, though both owned by the same family) had sales of €16.6 million ($21 million) in 1997, its best year, but both sales and profitability were hit in 2008.

According to CEO Timothy Boehlen, “For a long time we had good, profitable business designing and manufacturing custom-built labeling systems. But faced by increasing competition from makers of standard labelers, we decided to enter that business as well. However, we were confronted by murderous competition from foreign brands, mostly subcontracting their manufacture in Asian countries. Then in the last quarter of 2008 we faced a 33 percent decline in demand and were forced to put one quarter of the 60-strong work force on temporary unemployment. Continuing losses forced us to file for voluntary liquidation, which we did on January 8th of this year.”

Scarcely two weeks later, fellow Belgian Zetes announced the acquisition of the Bopack labeling division along with 30 of its staff. This latest acquisition – following similar moves in France and Spain – places Zetes in the front rank of European labeling systems suppliers. It is an example of how players who went into the recession with a strong balance sheet are making carefully selected acquisitions with a view to taking advantage of the upturn when it comes.

Bopack Label, meanwhile, already a market leader in France and in Benelux, has jumped on the digital bandwagon with an HP Indigo ws4050, just recently installed in one of its four French label plants.

Reynders has also battened down its hatches, but according to Business Unit Manager Christian Bosschaert, it has reduced neither its staff nor its investment schedule. “Our sales of high-tech labels for the automobile industry fell to zero in December 2008,” says Bosschaert. “But our big advantage is that we’re present in most label end-user sectors, and some of them are doing moderately well. Digital labels are doing satisfactorily, as are anything to do with promotion, marketing and product decoration. Pharmaceutical labels are scarcely affected by the downturn; in fact, labels for anti-depressants are at an all-time high. Booklet and multi-page labels, another of our specialties, are also continuing to do well. Our investment program is continuing unchanged, at least until mid-year.”

Plastic? No, whey

First it was corn, which was suddenly discovered to be the miracle eco-ingredient for everything from gasoline to plastic films. Now it’s whey, the watery stuff that is left over when you make cheese. A group of European print and packaging companies under the leadership of IRIS, a Spanish research center, say they have discovered that whey protein can be substituted for polymer layers in film for food packaging. By developing a technique for the manufacture of whey-coated plastic films, said to have excellent oxygen barrier and anti-microbial properties, the consortium argues that this new technology improves food safety while at the same time providing bio-based and partly biodegradable packaging. Using a byproduct from cheese production that at present goes straight down the drain in order to create commercial value means killing two economic birds with one ecological stone – which should in theory please everyone.

Also on the ecology front, UK based API, which makes hot and cold foils for the label and narrow web converting sector, is currently working on a patented biodegradable cellulose acetate product which could improve recyclability of foils.

Is the digital label business recession-proof?

The short answer to that is, of course, no. The slightly longer answer is that label converters are still showing a flicker of interest for investing in digital presses. Clever Etiketten in the Hague (Netherlands), for example, was until a few weeks ago a 100 percent flexo printer. Director Michel Tromp explains the decision to “go digital” as a reaction to the smaller and smaller print runs being demanded by Clever’s customers.

“Our customers are getting fewer and fewer guarantees from their customers, such as supermarkets,” says Tromp, “so their orders are for smaller numbers, to keep stocks low. And they are using the opportunity of the greater number of orders to make endless changes to the design or the text. We can now take advantage of that by printing digitally with our new HP Indigo ws4500. The coming months will be tough for everyone, and I foresee that digital printing will supplement the capacity of our flexo presses and undoubtedly also partly replace them.”

Another converter who installed a digital press in February is Etiketten-Reissner GmbH in Germany. Reissner is an old hand in the digital printing business, having taken delivery of its first digital press in 2001. Etiketten-Reissner’s customers include direct marketing agencies and companies in the retail and industrial sectors, and the new press, also a ws4500, will make it possible to extend services and deliver even shorter runs, with faster turnaround times, according to the company’s CEO, Richard Reissner.

Cut, cut and cut again

EskoArtwork, based in Ghent (Belgium) and one of the world leaders in prepress technology for the narrow web sector, has also not escaped the chill wind of recession. In February, the company – which employs 900 and had sales of €170 million ($215 million) last year – announced a restructuring plan involving a 10 percent cut in staff. Meanwhile the world’s biggest maker of printing machinery, Heidelberg, has just announced its latest quarterly results, with a loss of €24 million, a sales drop of 19 percent and new orders down by a mind-boggling 42 percent. Worldwide, Heidelberg has already cut more than 2,000 jobs. As well as manufacturing the Speedmaster presses for printing dry labels and packaging, Heidelberg is also a 30 percent owner of Gallus, based in Switzerland.

The demise and promised rebirth of Italy’s Gidue has already been reported in the previous issue of Label & Narrow Web. Other major European press makers are keeping their heads down, but the acute shortage of glowing press releases tells its own story.

And finally: A growth sector for the euro

Euro-zone citizens who suffer from an inferiority complex from living under the shadow of the almighty greenback can take comfort. The European Central Bank has just announced that seizures of forged euro notes were up by 13 percent in 2008. The biggest haul was found in Colombia, of all places, where police raided a clandestine print shop and seized “top quality” forged notes worth €11 million. It is not known who supplied the printing press.