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Soap Box - have your say on consolidation in the packaging industry
Mergers and acquisitions in the packaging industry have continued apace this week; Irish group Zeus has bought plastic bag maker Omega, while inkjet technology firm Domino has bought another German outfit. Meanwhile, Rio Tinto's planned sale of Alcan has reportedly been delayed due to the current tough economic conditions.
So in this week's Soap Box, we are looking for your views on consolidation and M&A in the sector. What is driving M&A in packaging? Is consolidation healthy for the sector? What does it mean for clients and suppliers? And if you are looking to sell your business, what options are you considering?
Log in, either under your own name or a pseudonym, and let us know your opinions. We'll be publishing a write-up of the sector's views on Friday's Daily Bulletin and may use some of the comments in September's Packaging News magazine.
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Comments
James Smith - 27 August 2008
Although it can sometimes be tricky, I think consolidation has to be a good thing for packaging. The big number of very small firms out there would be far stronger if they were to build themselves into, say, £10m businesses rather than having sales of only a couple of million.
At the other end of the scale, the bigger the converter, the bigger its influence over the supermarkets and brand owners it works for. Big is best!
Albert Shuttleworth - 27 August 2008
Consolidation is a natural phase of any market, especially one with over-capacity and duplication in so many areas.
However there is always a place for the strategically led, well invested and progressive independent. The big boys are not always best and often approach innovation from a 'what they can make perpective' and not a 'what the customer wants perpective'.
Des King - 28 August 2008
Leaving aside the usual blah-di-blah about scale economies, market forces etc, what never seems to be taken into account in this debate is the effect on the work-force. Most businesses are up for sale or absorption given the right price. That's fine for the owners & financial investors, but doesn't necessarily play out for the shop-floor. I've been told that around 3% of the UK manufacturing labour force is engaged within the packaging sector: approx. 85,000 people, and more incidentally than in say the pharma industry. What happens to them in a M&A scenario?
I'd also take issue with the assertation that 'big is best'. For whom? The more control a company has over the market, the less likelihood there is for genuine innovation simply because there's no compelling competitive need. If we want to become a truly commodity-driven industry then keep on merging and buying each other up. Sometimes it can seem as though there's far too much choice, and a lot of it unnecessary and often derivitative. Even so, that's better surely than less or no choice at all.
There's also the risk of marginalisation, with UK firms being absorbed as satellites into globalised groups managed out of Barcelona say, rather than Birmingham. That can be as market-sensitive as a call-centre in Bangladesh.
Snapping up ailing or poorly-run businesses can be a kindness to all concerned. Gobbling them up on the path to world domination is self-serving greed.
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