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The happy pessimists.

Writing this in France at the start of 2015, your correspondent wonders why the French came bottom in a poll of forty countries for "confidence in the future," while the same poll shows that over 80% of French people say they are "happy" or "very happy" with their life (and an incredible 72% think life is better in France than in the United States!). Objectively, Europeans generally have little grounds for optimism: average GDP growth in the Euro area in 2014 was a measly 0.8%, and Britons wonder why their above-average GNP growth is not bringing rising incomes or falling unemployment (sound familiar?). In Germany, Europe's economic powerhouse, industrial production is falling, while in Italy the Renzi government's reform program seems to be stalling, and the upcoming election in poor old Greece is giving everyone the jitters.

DO FRONTIERS MEAN ANYTHING FOR EUROPEAN MARKETERS?

Before the advent of the European Union, it made sense for sales networks to have an agent or subsidiary in each country, since import duties and commercial law made each country different. This practice has persisted into the present century, and in some cases it makes sense. In others, it doesn't, and marketing people in the label and packaging business are increasingly looking for new approaches. Sales-and-service company Chromos, for example, has for many years covered all the German-speaking parts of Europe (i.e. including Austria and most of Switzerland), and today successfully represents label press manufacturers Codimag and SMAG (both based in France), and Italians Omet and Durst. Chromos has also more recently taken on distribution, in the same regions, for US-based Spartanics. In all, Chromos provides service for over 200 presses. This language-based approach is clear in the recent announcement by the German Packaging Institute, which, in liaison with sister-organizations, will hold a joint Packaging Day in June 2015 to bring together companies and associations throughout German-speaking Europe. The same language-oriented marketing approach seems less true in Belgium. This small country, which could be dropped into lake Michigan and still leave ample room for navigation, has no less than three national languages, but in the label business, at least is generally not divided into three parts. The Dutch press maker MPS, as well as Mark Andy and UV specialists GEW all treat Belgium as a single entity for sales purposes. This puts a strain on language competences, as your correspondent can testify. Visiting a label converter in the Flemish-speaking part of the country, he was kept waiting until an interpreter could be found because the boss couldn't (or more probably wouldn't) conduct business in French, English or any language but Flemish.

NO PESSIMISM FOR EUROPE'S LABELSTOCK PRODUCERS

All the major labelstock producers seem to be bullish about 2015, and Hernia, based near Stuttgart in Germany, is no exception. The company expects its final figures for 2014 to show sales up over 5% to 275 million [euro] ($330 million), and despite its recent labor-saving investments, it plans 65 new jobs this year. The new jobs will be partly in its home plants in Germany, and partly sales and marketing jobs in Spain and Latin America. According to Herma's Managing Director Sven Schneller, "We have specifically looked for and found technology and sales specialists, particularly for the labeling machinery division, in Spain. There, many applicants are very well trained, highly motivated and ambitious. In addition, Spain is an important sales market for us, and the significance of Central and Latin American markets is also increasing continuously." What he didn't say, or need to say, is that skilled personnel are very hard to find in Germany, particularly in the Stuttgart area, while Spain still suffers from an unemployment rate of an eye-watering 24%.

As Herma recruits, UPM Raflatac is also looking to expand after two years of rationalizing, which saw the closure of its plant at Martigny in Switzerland with the loss of some 60 jobs, staff reductions in France and Spain, as well as the closure of several non-European sites. In its second quarter 2014 figures, UPM recorded a 3 million [euro] write-off from fixed assets, and restructuring costs of 8 million [euro]. Medium-term plans now focus on concentrating and expanding European labelstock production in Poland and in the company's home base in Finland, while also expanding substantially the group's labelstock capacity in China and Indonesia. Latest financials show UPM Raflatac's year-on-year profitability unchanged in Jan-Sept. 2014, with global sales just slightly up, but with lower margins. Western European labelstock demand was "improved," according to UPM, while in Eastern Europe "growth continued." Alongside the financials, UPM Raflatac continues to hammer home its environmental message. It now offers its customers a "Label Life Analysis," enabling them to compare the environmental impact of two or more substrates, as a function of the material itself, the distance transported and the ease or difficulty of recycling. Cynics may think that such an analysis does little to help sell the product, but Robert Taylor, UPM's director of stakeholder relations, insists that major brand owners in particular welcome this kind of information about the labels and packaging they buy.

BAND OF BROTHERS AT EMBALLAGE

When Emballage, the Paris packaging show, closed its doors on November 20, 2014, 96,000 visitors had passed through them. Exhibitors, according to the organizers, numbered 1,600. This compares favorably with the 2012 show where the statistics were 86,000 and 3,300 respectively. Your correspondent took his deerstalker and magnifying glass and sniffed out several exhibitors, some of whom had interesting new developments to show. You will not find Gen'Etiq in the Fortune 500--and indeed few people in France know this small company specializing in security and traceability. Among a range of anti-fraud and intelligent security solutions on their booth was the "BoxinTrack." This ingenious device is a smartphone with an RFID label. Placed inside a container, it can monitor and transmit all manner of information, including where in the world the container is at any time, and when it has been opened, stolen or contaminated by humidity or temperatures.

Italy's SEI Laser shared a booth with Epson, and demonstrated its latest digital label finishing line alongside an Epson SurePress digital inkjet printer. SEI is also developing new finishing lines for flexible packaging with web widths up to 600 mm, according to Yannick Deforges of SEI France. Gallus did not exhibit (neither did Heidelberg), but digital label press maker Durst was there with a press, along with its French agent Jetpack. What's so interesting about that, you say. Well, what's interesting is an astute solution to a little local difficulty affecting Gallus in France. Gallus has for many years worked with its exclusive agent TMT to develop the French market. Now Gallus, as we know, had until very recently no digital presses, so when TMT wanted to represent Durst in France, Gallus said "Sure, go ahead." Come 2014, and the launch, amid great pomp and circumstance, of the Gallus DCS 340, and the Gallus-Durst-TMT menage a trois began to look embarrassing, to say the least. Fortunately, the owner-managers of TMT were two brothers, and presto, Jetpack was born, sired by the younger of the brothers, to represent Durst, while the elder brother continued running sales and service for Gallus. Who said family businesses were on the way out?

POLES APART

Most exhibitors at the Emballage show were happy, some even deliriously so. An exception, sadly, was Maciej Wojtaszek, owner-manager of the Polish label converter Aniflex. "I expected most visitors to be able to speak English," he told your correspondent, "But very few do, so how can I communicate?" It is true that three quarters of the visitors to the show were French. It is equally true that in Europe, the French and the British come bottom equal in language ability. The difference being that the British can generally get away with speaking English only, whereas it's more difficult for everybody else in Europe.

Language difficulties do not normally hamper Polish companies in the label business, and many native-grown and international label converters can today provide high-quality labels both for the domestic market and for export to the rest of Europe, and notably to Germany. CCL was among the first to see the potential of Poland, as major brand owners shifted production there in the last decade of the 20th century. Skanem was also a pioneer in acquiring and building up a Polish label converter. Today the Polish label industry is winning prizes in international competitions. Sleeve labels made by Masterpress S.A., Bialystok, took prizes both in the 2014 FINAT Label Awards and in the recent World Beverage Innovation Awards. According to the Polish label association there are currently around 150 PS label converters in the country, and business is expanding slowly but surely.

Much the same is true for most other label markets in Eastern Europe (or "Central Europe" as the non-Russians prefer to call their region), and in particular for the Czech Republic, where label converters are benefiting from 2.7% annual GDP growth and over 3% rise in industrial production. On January 1 of this year another Central European country took a great step forward, or a great step at any rate: Lithuania became the 19th European country to start using the Euro officially as its currency. Moving further east, the situation looks bleaker as the crisis in Ukraine and the Western sanctions against Russia continue to depress both countries' economies. A leading Austrian label converter, with a plant in Eastern Ukraine, would only tell your correspondent, "The situation over there is worse than what you read in the newspapers." Hard to imagine. Russia and Ukraine will probably not top the priority lists of many label machinery exporters this year. Nonetheless, UK-based press manufacturer Edale recently signed a deal with Switzerland's Muller Martini (which is stopping production of its own narrow web offset presses).The Swiss company, which has offices in Russia and four other Eastern (sorry, Central) European countries, will in the future handle all Edale's sales and service in these regions of the continent.

As one marketing director remarked recently: "Central Europe is a messy place to do business, but it could be our best hope for 2015."
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Title Annotation:NARROW WEB: Europe
Author:Penhallow, John
Publication:Label & Narrow Web
Geographic Code:4E0EE
Date:Jan 1, 2015
Words:1698
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