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FLEXO Magazine : January 2011
INDUSTRY INDICATORS pants across the supply chain, according to Frank Perkowski, president, Business Development Advisory (BDA). “ Recent and emerging developments within this segment are likely to result in major market shifts going forward.” Different paper types and applications are characterized by very different market and supply dynamics, BDA says. Taken as a whole, these market applications consist of 10 distinct segments and represent some $7.9 billion in annual U.S. sales at the finished packaging level. Volume equates to, nearly 3.9 million tons. Raw paper value stands at roughly $4.0 billion. From a paper converter or printer perspective, Perkowski reports that these papers collectively represent a little more than 50 percent of the total cost of sales, reflecting for most converters their largest cost area. Applications range from unprinted grocery bags and in- dustrial wrapping papers at the low end of the print spectrum to decorative labels and composite packaging wraps at the high end. Some 44 percent of the packaging paper volume does not get printed at all, yet most of the volume does re- ceive some degree of print coverage and this amount totals about 2.2 million tons annually. Perkowski reports, “Flexo printing is still the primary print process employed across every category for a number of reasons including cost, flex- ibility, relatively short setup times, and high print quality.” He admits, “Volume printed, using both an analog and digital process, has been growing and now represents more than 15 percent of the total paper volume. As more printers develop capabilities to offer customers both variable and analog print designs, it has become more common for customers to print smaller shorter variable runs within longer runs of a master design for an optimal overall print solution.” BDA cites differing dynamics at work in each paper market. For example, multiwall bags have declined by about 9 per- cent per year over the last five years, but release papers have grown by about 3 percent over the same time frame. Looking ahead, it says numerous developments will have a positive impact on the use of paper based packaging materials. It specifically projects that paper based materials will likely gain acceptance among CPC companies, due to favorable envi- ronmental profiles and expected technology developments. Converters may want to reconsider paper alternatives for some applications that may have switched to film or other competing substrates in the past few years. Furthermore, it is critical for printers/converters to understand the relative competitiveness of their different paper suppliers to ensure that they possess the capabilities to respond to emerging opportunities. TALENT POOL Heidrick & Struggles, human resource experts recently reported, “The paper and packaging industry faces daunt- ing challenges from many directions. Economic turmoil has resulted in reduced demand while costs continue to rise, leading to a hypercompetitive situation that hurts everyone. As globalization continues to lead consumer companies to build capabilities overseas to win over new market segments, many packaging companies are not prepared to participate.” The firm’s team of analysts, headed by Jonathan Graham and Julie Kuhar, note, “The call for sustainable packaging solutions is gaining momentum and creating both an oppor- tunity for those companies that are innovative and a concern for those that are not. Meanwhile, customers, suppliers, and an extremely competitive marketplace are squeezing the industry on all sides. Ultimately, they say, “These challenges and the many others that the industry faces will be solved only by outstand- ing leadership and highly talented senior executives. Paper and packaging companies need leaders and top executives who can: navigate in a rapidly consolidating and globalizing industry, increase speed and address costs, lead innovation and take advantage of technology, and get ahead of emerg- ing issues like sustainability. It is therefore more critical than ever that paper and packaging companies have a robust hu- man capital strategy in place if they hope to thrive in the most demanding business environment they have ever faced”. In North America, Graham and Kuhar maintain that the industry faces what can only be called, quite candidly, a crisis in talent. Their argument is based on a far-reaching survey of CEOs and high ranking corporate executives reporting directly to the CEO: Talent leads the list of concerns, with 93 percent of industry executives seeing it as critical for their company ’s success. While 73 percent of executives recognize the importance of better talent management, only 4 percent believe strongly that their talent management is well prepared for the challenges facing them. Sixty-two percent of respondents indicate that attracting and retaining talent is an issue for their company. More than 40 percent of respondents say that it is difficult to find top talent inside the industry. There are a number of concrete steps, which companies can take to turn the situation around.; chief among them, de- velop and execute more comprehensive talent management strategies, linked closely to business performance. Compa- nies must create a comprehensive “people supply chain” out of recruitment, development, assessment, and other tradition- ally disparate HR activities. It should include a leadership pipeline and a rigorous and disciplined succession planning process at multiple levels. The company should also imple- ment a continuous learning and development program that includes competency and skills development, experiential learning, and coaching. Heidrik and Struggles advises, “A rigorous performance management system should drive ac- countability to all levels in the organization. Employing best practices across all of these dimensions and integrating them enables companies to create and maintain the people supply chain they need to compete more effectively in the market.” SUSTAINABILITY Sustainability is generally defined as: balancing the needs of society, environment, and the organization; plus meet- ing today ’s needs without compromising the ability to meet tomorrow ’s. The Food Marketing Institute Sustainability Task Force describes sustainability as, “Business strategies and practices that promote the long-term well being of the environment, society and the bottom line.” P RIM IR stresses its blending of economic growth with social responsibility and environmental stewardship In fact, PRIMIR identifies a number of recommendations for all participants in the print supply chain. Among them: Develop a concerted effort to focus on increasing the up- take of 1SO 14001 and the standardization of EMS processes. • Carbon calculation best practices need to be developed with all key stakeholders in the supply chain. • Establish lower VOC (volatile organic compound) solu- tions for washes, solvents and ink, with improved perfor- mance of capture and recovery systems. 16 FLEXO JANUARY 2011 www.flexography.org
Sustainable Winter 2011