Co-operatives are the key to new entry to US label market – FINAT told

The high cost of equipment for small firms entering America’s label market could prompt entrepreneurs to create co-operative arrangements between several operations, with each concentrating on one specialized aspect to present the market with a combined service, Scott Pillsbury, chairman of the US-based Tag and Label Manufacturers Institute (TLMI), told Europe’s label makers.

Mr Pillsbury told FINAT’s Congress in Warsaw: ‘Our market is robust and growing and there are opportunities for both large and small, specialized players but the high cost of better technology is a barrier to entry while remaining competitive.

‘There is still a lot of business out there for the entrepreneurial company that wants to provide full service to its customers but with the cost of the technology these companies cannot afford to do everything and will have to form partnerships, with each providing a specialized part of that service.’

He told FINAT, the self-adhesive label makers’ trade association, that after both the US and the world economy struggled for the past several years, his industry had just begun to recover after a hard-fought blitz on costs which had meant tighter margins and reduced profits.

Last year the total US label sales totaled $5.71bn, of which TLMI members took almost $2bn. Average profitability of his members had continued to improve for the third year. His organization’s 2005 trade survey showed median sales within his converter members at just over $10m although the average sales across that sector were $23m.

Most companies responding employed fewer than 100 and had a sole factory – ‘so small business is still a force in our market’.