Concern over ‘continued reservation’ of investment in German plastic packaging and films industry

By Jenny Eagle contact

- Last updated on GMT

Picture credit: Fraunhofer Institute for Process Engineering and Packaging
Picture credit: Fraunhofer Institute for Process Engineering and Packaging

Related tags: Packaging

Despite periods of economic weakness and the introduction of a minimum wage last year the German Association for Plastics Packagings and Films, IK (Industrievereinigung Kunststoffverpackungen), predicts a positive turnover in 2015.

But, one concern the association has is the ‘continued reservation’ where investments are concerned for maintaining the competitiveness of the German industry.

'We need to think about long-term goals'

Inga Kelkenberg, manager communications and economics, IK, told FoodProductionDaily companies need to think about long term goals because if they don’t invest in machines and technology they will miss out on innovation.

The investment rate in Germany is now one of the lowest of all industrial countries​,” she said.

This may turn into a considerable locational disadvantage more quickly than expected​.

IK believes the current economic policy conditions in Germany, which caused insecurity among the companies, are one reason for the bad investment climate, in the plastic packaging industry as well​.”

IK predicts theforecast for the economic development for the first quarter of 2015 is more restrained than the one in early 2014. However, current results show companies assume the economy will revive now as compared to the 4th quarter 2014.

It found 31% of the companies surveyed assume turnover increases compared to 7% in the last quarter of 2014.

Economic crisis is far from over

In this respect, a positive expectation for 2015 prevails in the German plastic packaging industry, even though in many European countries the economic crisis is far from over​,” added Kelkenberg.

Some of the largest players in the German market include RKW, Wipak, Coveris, Südpack​ Packaging Group; RPC and Alpla.

According to Kelkenberg, firms are expecting an increase in turnover this year compared to last year because the economic climate is better and for food packaging the situation is ‘overall more stable’ than for other types of packaging.

Last year's economic development was characterised by many periods of weakness, there was a big rise in Q1 then Q2 was less fortunate. The situation here was volatile at the beginning of the year but members are more optimistic now and less cautious​,” she said.

The economic situation changed in Germany and was worse than expected, at the end of year we saw plastics prices going down and while some customers were waiting for further price decreases, packaging prices were falling as well​.”

Kelkenberg said a continued low oil price may become an additional driver for economic development for the plastic packing industry. However, the strong oil price reduction in the last half of the year did not have any substantial effects on the price situation in plastics for packaging. The markets show oil and plastic prices do not develop in parallel. This is expected to continue in 2015.

Minimum wage of €8.50

The German Federal government needs to make its energy policy more investment-friendly because we have one of the highest energy prices compared to other European countries​,” she added.

Many companies were not happy with the introduction of labour costs; a minimum wage of €8.50 ($11.57) per hour. Opponents say the wage could threaten jobs at small firms, particularly those in the former East where wages are lower, and hurt the competitiveness of Europe's largest economy​.

The problem is German faces competition with France which is nearby and there are a lot of cheaper imports coming from southern Europe and Turkey​.”

Kelkenberg said the biggest trends she sees this year will be sustainability and how to be resource efficient using less material.

IK debuted itsPackTheFuture - Sustainable Plastic Packaging Award with elipso (French Plastic and Flexible Packaging Association) at Interpack in Dusseldorf, last year.

The European competition is open to the members of both industry organizations and promotes the creative and innovative potential in the field of sustainable plastic and foil packaging to offer consumers effective, attractive and environmentally friendly packaging.

Entries for this year’s competition will open in spring with an award ceremony held in Paris in October.

Related topics: Processing & Packaging

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