October 2008 

Cost Rises Threaten the European Flexible Tube Industry

After a record production of etma members of 10.1 billion flexible aluminium, plastic and laminate tubes in 2007 demand for flexible tubes in Europe has slowed down recently. Although volume-wise the market was still growing by about 5 percent in the first half of 2008 thanks to a good demand from the toothpaste, cosmetics and pharmaceutical industry, flexible tube manufacturers have recorded a significant downturn in demand in the second half of 2008.

This slowdown is further fuelled by a general decline in consumer demand across Europe and the turmoil on the international financial markets which is leading to an increasing uncertainty of consumers about their future financial situation.

The negative development of demand is accompanied by an equally unfavourable situation on the supply side. Energy and raw material price increases are increasingly threatening the financial backbone of European flexible tube producers. "The squeeze on margins caused by increased raw material prices and rising energy, transport and labour cost is putting enormous pressure on this highly innovative packaging sector", warns Dr. Gussoni, President of the european tube manufacturers association (etma).

In fact, the flexible packaging sector has been forced to accept a succession of price rises from energy, carton, coating, closure, polymer and slug suppliers lately. In recent years the industry has been working to offset increased cost with efficiency improvement, but the latest unprecedented levels of increase become impossible to absorb.

"Now the time has come for each customer to work together with his flexible tube suppliers on solutions to what is becoming an untenable situation," explains Dr. Gussoni.