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FLEXO Magazine : April 2010
www.flexography.org april 2010 FLEXO 25 What the Global Packaging Industry is Planning in 2010 - 2011: Procurement, Investment and Industry Trends Outlook is available from ICD Research for $2,000. For more information or to order, please visit www.icd-research.com. challenges. The majority of respondents also identified that they are concentrating on new product development, new market entry and price reviews as key ways to drive sales. Knowledge of Buyer needs The survey results indicate that most industry suppliers are falling short of their knowledge of buyer needs. Most buyers are demanding competitive prices from suppliers since there is pressure across the industry to reduce prices. Suppliers also underestimate the need for record speed and proximity of supplier operations. These factors, the study reports, should serve as opportuni- ties for suppliers to better align their capabilities with buy- ers’ needs and to market their companies more effectively. Greater pressure to reduce supply costs and internal operat- ing cost reductions are important areas where procurement priorities and resources are likely to be affected. In order to mitigate supplier failure and maintain business continuity buyers are planning on reducing the number of single-source arrangements and switching business to more stable supplier(s). Packaged goods manufacturers and con- verters identified that they are looking for alternative suppliers/ capacity and seeking “preferred customer” status with existing suppliers currently to plan for future product/supply shortages. Mergers & Acquisitions Companies view M&A (mergers and acquisitions) as a major tool to grab opportunities in the packaging industry and also expect to decrease costs by resource consolida- tion. Smaller companies in need of cash and credit would find it difficult to survive unless they are merged with another company or acquired by a bigger company, therefore an increase in M&A activity is expected. “Our limited pipelines, expiring patents and increasing pressure from generic medi- cine manufacturers might force companies to get acquired or merge with other companies,” notes a manager of a pharma- ceutical packaged goods manufacturing company operating in central Europe. The report claims that companies that are unable to sustain price pressures and those expecting to improve their competitiveness are also expecting an increase in M&A activ- ity. “ Price pressure calls for consolidation,” says a director level executive of a packaged goods manufacturing company from Western Europe. Among executives from converter companies there is an expectation that there will be increased levels of consolida- tion in their industry over the next 12 months with 58 percent of respondents predicting either a significant increase or in- crease in M&A activity. Only 7 percent of respondents expect a decrease in M&A activity. n Industry Indicators FLXApril10_mech.indd 25 4/10/10 1:22 AM
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