Global Giants

European Converting

The coming of age of the European Union coupled with the collapse of communism has had a lingering effect on European converting in 2006. Over the past decade, there has been a gradual decline in smaller, family-owned, national European flexible packaging converters and rapid growth of the larger multinational converters with production plants worldwide.

“Pan-Europeanism” and the spread of production facilities in both eastern and central Europe by western European converters is characteristic of today’s converting industry. Although there are still many viable niche flex-pack converters in Europe such as ELAG Verpackungen (Switzerland) and Wipf AG (Switzerland), European industry is led by the huge multinational converter, Amcor, with corporate headquarters in Australia.

Amcor has 225 plants in 37 nations with more than 30,000 employees. Its flex-pack business, headquartered in Europe, has production plants in every continent but Africa. The company considers itself a “global packaging company” and markets an “international product-based strategy.” Companies such as Amcor represent, to a large degree, the majority of the European converting market. It is incorrect to consider Huhtamaki to be a Finnish converter or Tetra Pak a Swedish converter.

Rather than a national discussion, this article will treat European converting as pan-European entities, with many being global suppliers.

Alcan is an excellent example. In the new Alcan Group, Alcan Packaging is a core division that represents 31% of the revenue. The accession of Pechiney has created the world’s number one food flexibles, pharmaceuticals, and cosmetics supplier. With major corporate offices in Canada and the US, Europe is the biggest income producer in revenue and also has the most employees.

Alcan Packaging and Amcor Flexibles represent an almost even 35% share of the converted flexible packaging market in 2005. The recent announcement by Amcor that two of its European plants (unspecified) will be closing might alter this breakdown slightly.

Growth in Central/Eastern Europe
With an aging population, relatively high labor costs, and a benefit-laden society, western European converters are being squeezed profitwise. The opening up of both the huge populations of central and eastern Europe and their significantly lower labor costs has provoked many western European converters to relocate or open turnkey plants in these regions.

Amcor Flexibles has announced that a significant amount of its tobacco package converting will be in new eastern European plants. Brückner successfully started a high-speed biaxially oriented polypropylene line in Moscow in conjunction with the Russian film producer, Euromet.

The changing of obsolete equipment purchased during the socialist era into internationally accepted equipment has made many low-cost Polish/Hungarian flex-pack converters competitive to western European suppliers. Global food producers such as Procter & Gamble and Nestlé now source not only from these converters but increasingly from all of Europe.

Other European Facts
Behind Amcor Flexibles and Alcan Packaging are eight or so flex-pack converters with 2%–7% market share. The bottom 30% represent a variety of converters in the bracket of $40 million to $100 million serving successful niche markets.

The four largest national flex-pack markets are Germany, UK, France, and Italy. Germany represents 25% of the total, and the four countries together about 75% of all flexible packaging by value.

With central and eastern Europe being the current major growing European flex-pack markets (about 6% annually) and western European converters relatively static, the huge consumer populations of Russia, Ukraine, and Poland represent major growth potential.

Turkish converters such as Korozo supply Russian markets on a commodity-style basis. The huge dependence of Russian markets for Turkish flex-pack will be displaced slowly by the successful integration of domestic Russian or turnkey western converters.

Not being in the European Union and having some internal political problems has slowed the rapid growth of the Turkish flex-pack industry. An additional problem is its overall dependence on commodity-based flex-pack constructions. These constructions are not value-added, and as the central/eastern markets use more complex materials, Turkish markets will be displaced slowly in favor of the newer domestics suppliers.

Bolstering the domestic supply situation in Russia and the other Commonwealth of Independent States (CIS) nations is Alcan’s recent announcement it considers the area a major target for new flex-pack markets.

Alcan recently acquired the assets of Parkside’s flexible packaging plant in Zlotow, Poland. The company also announced the construction of two new Russian plants in Moscow and St. Petersburg. This $55-million investment establishes a firm Alcan stronghold in Russia.

New facilities in this area include the expansion of Finnish converter Suominen Flexible Packaging’s plant in Grodzisk Mazowiecki, Poland. The company has almost doubled its capacity to serve this new market.

Western/Northern European Converters
There are many middle range to large flex-pack converters in Europe that produce excellent materials. These “movers and shakers” are often also multinational in scope. On this list is Nordenia Intl., a multinational converter headquartered in Greven (North Rhine–Westphalia), Germany.

Peter Mager founded Nordenia Kunststoffe Peter Mager KG in 1966 with the idea of producing plastic bags instead of wire and plastic packaging for the pest industry.

The company, which started with eight employees, has developed into a 3,000-employee firm with production plants in Europe, (west, central, and east), Asia, Australia, and a plant in Morocco.

Dr. Giancarlo Caimmi, Nordmeccanica sales director, told me that “Nordenia has one of the most significant indexes of growth” among Europe’s flex-pack converters.

Danapak Flexibles, located in Horsens and Slagelse in Denmark and in Dundee, Scotland, is part of the huge Constantia Verpackungen group in Austria and is an additional mover and shaker.

The combined efforts of merging Danapak and the two Teich-owned companies of Teich Flexibles (UK) and Corona Packaging (Denmark) has produced total sales exceeding $125 million for Danapak Flexibles A/S. This firm is among the largest producers of flexible packaging in Northern Europe.

Having visited the Teich aluminum facility in Weinburg, Austria, several years ago, this author was impressed with its overall capability in flexible packaging.

Italy, a nation of many superb converters and the birthplace of new flexible films from OPP to laminates, has companies such as Safta, part of the Guala Group. The firm produces a wide variety of high-barrier flexible packaging materials and employs 300 people.

Also in Italy is Neophane, located near Milan. The firm offers ten-station printing and laminates to four layers.

Cofibox, part of the huge Goglio Group, located in Cadorago, Italy, specializes in the production of coffee packages. It also provides a wide array of high-barrier food packaging.

Rounding out several highly touted European flex-pack converters are firms such as LPF Flexible Packaging in the Netherlands and Vitra in Belgium.

The European converting scene is quite complex and dynamic with many outstanding converters. This article can cover only a small number!



Top Ten European Flex-Pack Converters
These coverters make up 60% of the total European Market:

Amcor Flexibles—amcor.com
Alcan Packaging—alcanpackaging.com
Constantia Packaging—constantiapackaging.com
Clondalkin Group—clondalkin-group.com
Sealed Air—sealedair.com
Huhtamaki—huhtamaki.com
Wipak—wipak.com
Bemis Co.—bemis.com
Mondi Packaging—mondipackaging.com
United Flexibles—united-flexibles.com



Stanley Sacharow has been in the flexible packaging industry for more than 35 years. His company, The Packaging Group, is an organizer of targeted conferences and a consultant to the international packaging/converting industry. Stan is also the author of PFFC's "Package Converting" column. Contact him at 732/838-0885; univpac@aol.com.




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