E&Y Examines Why Flexpack Converters Are Under Pressure

Published: October 10, 2008

MONTREAL, QC, CANADA | Ernst & Young Orenda Corporate Finance (Canada) publishes its quarterly publication covering recent transactions in the plastics and packaging industry. The company sees a pronounced change in the flexible packaging landscape due to economic uncertainty, rising input costs and growing environmental consciousness.

Flexpack converters, says the company, are looking “inwards to brace for the worst” because on the ongoing US economic turmoil “spurred on by lingering uncertainty in financial markets, employment concerns, volatile foreign exchange markets, and waning consumer confidence.”

The firm points to rising commodity and input prices as the cause of squeezed bottom lines for even the most robust manufacturers and converters. Included causes for concern are high costs for resin, transportation, and energy resulting from record-high oil prices. Sustainability and the impact on the environment are other factors forcing a rapid change in the mindset for many flexible packaging players as well.

Despite all these negative issues on the sort-term, E&Y sees “fundamental long-term strength” with demand for flexible films remaining strong. For a PDF of the newsletter, visit: http://www.ey.com/Global/assets.nsf/Canada/PackagingRecap_Q2_2008/$file/PackagingRecap_Q2_2008.pdf