Interview by Jules Lejeune for Etiqueta News
What forecasts of evolution of the European and Spanish market of the label for the next years?
After the ‘double dip’ economic crisis at the beginning of this decade, the European label industry has seen a strong recovery. Compared to 2010, the European consumption of labelstock had increased by 30% in 2018 to 7.5 billion m2, with several years of above 5% growth, mainly due to the growth in high quality filmic labels, variable data and the growth of pre-packaged goods in emerging markets. Since 2017 however we have seen a slowdown in our growth figures and in that sense, our industry has been a significant indicator of the increasing economic uncertainty that we are seeing in Europe with the Brexit, the impact of US – China trade wars, turmoil on Europe’s eastern borders and political uncertainty in some countries. In 2019 this trend has continued. For the first 3 quarters, growth compared to the same period in 2018 has dropped to just above 1%, with the UK and Central Europe now in negative growth figures.
Southern and Eastern Europe were still in the plus. In fact, as one of the top 5 markets in Europe, Spain has outperformed the big four throughout this decade and the Spanish label market is now 40% larger than it was in 2010. In the first three quarters of 2019, consumption of self-adhesive roll label materials in Spain grew by almost 4% compared to 2018. It will be interesting to see how a general decline in the European economy will affect Spain and other southern label markets in the years to come.
How can Brexit affect the European label industry?
In the short run, it has already affected the British label industry as companies have been stockpiling in the face of the original deadline of 29 March. Now that the deadline has been postponed for the second time, business have had the opportunity to prepare themselves better. Regardless of whether there will be a deal or a hard Brexit, Brexit will mainly affect those countries that have a strong ‘exposure’ to Britain, starting with Great Britain itself, but also neighboring countries like Ireland and The Netherlands. What can also be foreseen is the fact that British companies start ‘offshoring’ businesses on the mainland and vice versa to facilitate the flow of goods and services.
In the area of production, European label manufacturers are having trouble hiring professionals, what solutions are they receiving in this regard from FINAT?
In our ‘Radar’ surveys, business owners and managers frequently indicate that the ability to recruit and retain young talent is one of the top 3 challenges. In today’s digital world, manufacturing industries have to compete with fancy ‘touchscreen’ industries. In the case of the label industry we are also struggling with the negative image associated with the demise of commercial printing. To reverse that perception we have decided to reach out to students and young professionals through the so-called #LABELicious competition, of which the winners have just been announced at Labelexpo at the end of September (note: see also the press release we issued after the ceremony). It was the first time we held this competition but the response we have seen both from young talent and from the education field (including the Gremi institute in Barcelona) have been encouraging and we will continue and expand this project in the coming years.
The efficiency ratios in production indicate that there is a lot of difference between label manufacturers in northern and southern Europe, how do they stimulate to correct this situation from FINAT?
The advantage of our organization is that members have the opportunity to be in contact with their peers from other countries to exchange know-how and experience and to learn from the industry’s best performers. In the past, FINAT facilitated industry benchmarking, but members somehow lost interest in this exercise. Nowadays we do have our 6-monthly Radar reports to fulfill the need for benchmarking data. Each spring we do a survey among the converter members to measure their performance. In the autumn, we track the evolution of trends among brand-owners and retailers. Furthermore, we organise lean manufacturing and productivity workshops around our annual European Label Forum and at our ELF in Rome next June this will again feature prominently on the agenda.
The environmental measures of the European industry in general do not seem to be generating great results, what initiatives are planned in this regard for the label industry?
FINAT ‘s initiatives to help the industry in creating guidance on Life Cycle Assessment (LCA) and our sustainability and recycling programmes such as our annual award are intended to encourage and help our members to apply corporate sustainability practices.
As far as liner recycling is concerned, we have seen that the amount of spent materials collected for recycling into new liners has been increasing to 10%. This is only a small but growing proportion and it all boils down to logistics and cost. Of course it does not mean that all other materials end up as landfill or fuel. There are an increasing number of very creative solutions for both for liner (generated at the end-users plant) and for self-adhesive ‘matrix’ by-products.
Finally, FINAT and its members are only a small part of the value chain. In order to increase our effectiveness, it is essential that we liaise with other stakeholder organisations and agree on common standards on ‘design for recycling’. Sustainability and Recycling was indicated as THE top priority among our converter members when we did a survey this spring. You should soon see a more prominent presence from FINAT as advocate of our industry’s interest and as driving force for the development and promotion of industrial recycling solutions.
Recent public attention to issues like climate change and plastic soup has made us all aware that ‘sustainability’ is no longer a ‘nice to have as long as it does not cost more’.
Will we soon see how manufacturers buy their product labels online?
Of course we have seen the emergence of e-tenders and even ‘reverse auctions’ among some big brand-owners for large scale products. A number of label printers have installed online ordering systems. And in the world of the Industry 4.0 and the Internet of Things (IoT), everything is connected to everything, so the amount of digital interaction is bound to increase. However, labels are not a commodity product but a tailored solution that will always require the specific expertise from the label company as far as multiple printing technologies and and converting are concerned. And as far as materials and technology are concerned, unlike any other industry in package print, the self-adhesive label industry has a sophisticated network of expert partners along the supply chain. It would be very difficult to ‘catch’ the multiple parameters necessary to define your order into an online system that does not require the intervention of the label company as their customer’s ‘brand custodian’.
What size of label maker do you think will have greater opportunities in the coming years?
The strength of the European label industry has been the entrepreneurship and agility of the small and medium sized family companies in the label industry. Even the big groups active in our industry combine global thinking with the art of acting locally. The majority of FINAT’s converter membership is composed of medium sized companies with a turnover of less than € 15 million. On the other hand it cannot be ignored that with the growth of our industry, the scale of label companies has increased and that also more and more consolidation is taking place, especially now that our industry has been identified as an interesting inward investment opportunity by private equity firms that have plenty of low interest cash.
How can FINAT be useful in the merger and sale processes of companies that are taking place in the sector?
FINAT is not a M&A matchmaker, although I am sure that our events have provided a fruitful meeting point for companies to meet and network. It is a common fact that many mergers fail due to a cultural or business mismatch. One of our keynote speakers once characterized such mismatches in a hilarious way: “Our relationship is built on trust and understanding. You don’t understand me and I don’t trust you.” It all starts with people and associations are all about people.
What advantages does a company in the European label industry receive as part of FINAT and to what extent are they complementary to those offered by local associations?
FINAT does not intend to duplicate what the national associations are doing. The role for national associations is to serve as the ‘first port of call’ for label companies when they are looking for contacts and references to perceive common goals with regards to networking, labour relations, education facilities, local legislation and regulation and joint manufacturing facilities with regards to for instance worker health and safety. FINAT’s role is to supersede the national level and focus on high level issues relevant to business strategy and as source of knowledge and networks for companies operating in an international environment and/or with an international business mindset. Our 6-star strategy says it all: ‘Knowledge leadership’, ‘Technology awareness’, ‘Workforce development’, ‘Sustainable practice’, ‘Industry positioning’ and, last but not least, ‘Member focus’.
How would you like your management to be remembered?
This year is the 50th anniversary of the FINAT – Lejeune partnership. In 1969, my father’s association management firm acquired the young emerging association FINAT as one of its clients. Today, 50 years down the road, FINAT has grown from a small group of 30 licensees, into an international association of more than 600 member facilities in over 50 countries. I am proud have been offered the opportunity 20 years ago to succeed my father and become part of the history of this wonderful association. I am still far from retirement but would like to be remembered as a perfect fit for the culture of business friendship, dynamic entrepreneurship and solid professionalism that characterizes FINAT.