Label industry ‘faces up to challenging times’

The big winners in the self-adhesive label industry as the present general economic crisis runs its course will be the companies that focus on their core business, are aggressive with their sales, innovative in their products and are financially strong.

These conclusions were drawn by Paul de Ruijter, a keynote speaker at the Label Printers Forum in Amsterdam, held to examine the effects of the recession – and find ways out of it. The Forum was organized by FINAT, the global trade association for self-adhesive labels.

Quoting Charles Darwin, de Ruijter, managing director at De Ruijter Strategy (NL), said: ‘It is not the strongest of the species that survives, nor the most intelligent. It is the one that is most adaptable to change.’

The losers will be those companies that compete solely on price, try to supply every type of customer, only focus on cost cutting and have poor costs structures, are too big to be ‘niche’ and too small to be ‘players’ – and supply the worst hit sectors such as the automotive market. Start-ups, with no cash and no reputation, unfortunately will be non-starters, he said.

de Ruijter produced wide-ranging findings from an internet survey of trading conditions within the European self-adhesive label industry which found unanimous feeling among FINAT members that the present economic troubles will certainly last throughout 2009 and probably throughout 2010. A few expect it to last beyond 2012.

According to the findings, the brightest outlook is for label printers in the food and beverage sector but they are facing some pressure from the moves by supermarket groups to introduce cheaper own-brand labels. The blackspot is the demand for labels from the globally-hit automotive sector, construction and the luxury goods market.

High price pressures remain but raw material prices have not dropped and more competition has led to lower margins. Demand will drop further, largely due to a reduction in volumes, and the shortage of money. Respondents believe there will ‘definitely’ be more bankruptcies and that possibly up to 50 or more label producing firms will be taken over this year.

All companies are tightening controls on their payments and 40 percent are now demanding payment within 30 days.

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