The 2006 FPA Annual Meeting was a great success. Held recently at the Ritz Carlton Golf Resort in Naples, Florida, the meeting examined strategies for “Competing Internationally.”

“The Annual Meeting brought together FPA members and their guests for great networking opportunities, great fun and great content-rich presentations provided by knowledgeable speakers who shared industry-focused information,” commented FPA president Marla Donahue.

Presentations from Annual Meeting speakers detailed significant changes in energy markets key to the flexible packaging industry; how large and small flexible packaging companies can compete and excel on a multinational level; and the driving forces behind international cost and market differences. A recap of all the Annual Meeting presentations follows within this issue of the FPA Update.

Peter Schottland, CEO of American Packaging Corporation and chairman of the FPA Board of Directors, shared with Annual Meeting attendees FPA initiatives for 2006.

Schottland detailed the current FPA market research project on the impact of globalization on the U.S. flexible packaging industry. He stressed the importance of understanding the impact globalization is, and will have, on the industry. Schottland stated that the study will examine successful business models, growth opportunities, how innovations differ in the U.S. compared to the rest of the world, global material and equipment issues, and the globalization strategies utilized by customers of flexible packaging companies.

Schottland discussed how the association will work with the U.S. EPA on the EPA’s solid waste initiative. Among other things, the initiative will educate the public on the benefits of source reduction.

In addition, Schottland noted that the association will also work with an industry coalition to ensure that the U.S. Food and Drug Administration’s food contact notification program, which decreases the review time of new food contact material from three years to four months, is not eliminated.

Schottland also delivered preliminary results of the 2006 FPA State of the Industry Report. He noted that flexible packaging is the second largest segment of the U.S. packaging industry, representing $127 billion of the industry.

Schottland noted that the ‘value-added’ segment of flexible packaging (excluding

retail poly, poly storage, poly trash, and other poly bags and wraps) is estimated at $17 billion of total industry revenue ($21.8 billion).

Looking at the growth of U.S. flexible packaging sales, Schotland noted that sales have generally been above U.S. GDP and that the year-to-year growth of the industry has been positive. Flexible packaging profit margins have shown some recovery in the past year, and are expected to continue into 2006.

“Material costs increased as a percentage of net sales in 2005. Of total material purchases, film and resin cost grew from 58 percent in 2002 to 65 percent in 2005,” explained Schottland. He also noted that the report will detail opportunities for flexible packaging growth and the top five converter issues for 2006.

John Durston, COO of Amcor Flexibles Europe and vice chairman of Flexible Packaging Europe – a division of the European Aluminum Foil Association, presented an overview of the European and global markets for flexible packaging. Mr. Durston’s presentation provided a breakdown of the world flexible packaging industry by region and detailed flexible packaging consumption for each region.

He detailed sub-regional growth trends in European flexible packaging markets, discussed drivers for change in Eastern Europe, and future growth opportunities in Central and Eastern Europe. Mr. Durston’s presentation also gave an outlook on the European flexible packaging market for the next five years.

The ‘New’ Flexible Packaging Europe

Stefan Glimm, executive director of Flexible Packaging Europe, discussed the merger of Flexible Packaging Europe and the European Aluminum Foil Association, and the new organizational structure of the associations.

Mr. Glimm detailed the 2005 initiative that created the merger of the two associations, the EAFA/FPE membership structure, key association activities, and how the European flexible packaging industry will benefit from the union of the FPE and EAFA.

“Dare to Be Different…Your Competitive Weapon in the Global Market Place”

Barry Wishner, an expert in business execution, discussed with Annual Meeting attendees how they could differentiate their businesses and successfully compete in the global market place. He outlined several of his philosophies for competitive competition.

• Reality Check: How is your company perceived in the market place?
  
• Innovation is the Key to Success: Avoid the hardening of your imagination.
  
• Building Partnerships with End Users in the Global Market Place: Be a ‘hearaholic.’ Listen to needs and issues of your customers.
  
• Reshape, Rethink and Reposition Your Company for Remarkable Results: Think beyond the status quo to grow your business.
  
• Invest in your Employees: They are the key to profitable growth.
  
• Execution – A Call to Action: Master and execute the fundamentals, and do it differently.

“Global Packaging Mergers and Acquisitions”

Thomas Blaige, CEO and managing partner of Blaige & Company discussed mergers and acquisitions strategies for the flexible packaging industry. His presentation detailed the major challenges facing the U.S. flexible packaging in 2006 including imports, unprecedented resin price levels and increasing equipment cost.

He also discussed with Annual Meeting attendees several drivers of consolidation, merger and acquisition activity in the global plastic packaging markets for the past three years, how to maximize company value before and during a M&A transaction, and full or partial exit strategies.

“Energy Outlook to 2030”

Jesse Tyson, president of ExxonMobil Inter-America Inc. provided an outlook for energy to the year 2030. He noted that the world energy demand will increase 50 percent by 2030, and that the increase will be driven by economic progress and population growth.

Tyson explained that 80 percent of energy demand growth will be in non-OECD and energy efficiency trends are expected to accelerate. Oil, gas and coal consumption will remain predominate, and the use of technology is critical to meeting energy challenges.

During his presentation, Tyson also discussed gasoline prices and noted that the price of gasoline is closely linked to crude oil prices. Global demand for crude oil has significantly increased within the last three years and global spare crude capacity has tightened with demand growth.

Tyson noted that U.S. sources of crude oil are diverse with more than 80 percent of the supply coming from outside the Middle East. Tyson shared that in some states, taxes increase the cost of gas more than 50 cents per gallon, but the increase in gasoline prices over the last 20 years is less than many consumer items.

“A New Day in America; Its Economy, Its Politics, Its Culture”

Stuart Varney, a financial and economic journalist, provided a comprehensive look at changing domestic and global economic trends and issues most relevant to the flexible packaging industry. His presentation detailed the characteristics of a successful economy, the importance and full impact of globalization on the U.S. economy, important challenges facing America today, and the direction of the U.S. economy, long and short term.