Cost pressure, profitability and future investment are the current top business concerns facing the global release-liner converting market, according to AWA Alexander Watson Associates’ annual survey of industry professionals. Results were reported Feb. 27 at the “AWA Global Release Liner Industry Conference & Exhibition (GRLICE) 2020” in Amsterdam, The Netherlands. That event drew nearly 200 attendees from across the globe for two intensive days of market and technical presentations.
Some “Converting Curmudgeon” bullet points-of-interest:
- Release liners’ diverse end-use markets have seen demand increase across most of the world’s economies, creating growth opportunities in almost all segments. And while fully three-quarters of all respondents consider their companies to be truly global, about two-thirds believe that globalization is not the only way to achieve business growth.
- At the same time, slightly more than half of the respondents expect that product standards will become global by 2025.
Mergers & Acquisitions
- Seventy-six percent of respondents anticipate M&A activity will affect their business in the next five years. This is up a full 10% over the 2017 survey. As with past surveys, companies find it easier to achieve their growth objectives via acquisitions.
- Five years from now, half of the respondents say M&A activity in the release-liner converting and material-supply industry will increase, and a full third think it will pretty much remain the same. Only 3% say M&As will decrease.
Costs & Profitability
- The overall majority of respondents say they experienced operating cost increases in 2019 for labor, energy, transportation and materials. And in 2020, about 80% of survey respondents foresee all these costs to rise again. A small share – only about 7% – expect their materials and energy costs to actually fall.
- Among all respondents, only 11% said their stocking levels (for inventory management) were extremely low in 2018 compared to 2019; 52% said it stayed the same, and 37% said it was higher or extremely higher in 2018 vs. 2019. It was difficult to make sizable profits when the warehouse is full of unsold product.
- During 2019, investment in all categories fell compared to 2018. About 57% of respondents replied that their new-product investment increased, while about half boosted their R&D and capital-equipment investments. Things are not expected to change much by 2023, but the responses show similar investment levels for capital-equipment and new products, and slightly more for R&D.
- A wide range of answers were given when respondents were asked where expected innovations in release liners would emerge in the coming years. From the top down, they included coating or surface treatment or base materials, nanotechnology, biomaterials, overall manufacturing processes, structures of release liner, raw materials generally, liner-release coating, new applications, and current end-product systems.
Sustainability & Environment
- Sustainability remains a top concern for the global release-liner industry as about 90% of respondents say sustainability/recyclability/eco initiatives are important to their businesses today.
- Seventy-five percent think issues about recycling release-liner waste specifically are negatively affecting their business, while 80% now say they’ve taken measurable efforts to address these and other environmental issues.
- Fully three-quarters of respondents say sustainability issues will have a major effect on their businesses through 2025, and only 5% outright disagree.
- Survey respondents in North American and Asian markets are the most optimistic about growth in their individual businesses to 2023, followed by Europeans.
- Among higher growth rates expected in 2020, 75% of Asian companies surveyed say business will be up 3 to >9% over 2019; 70% of North American and 60% of European businesses foresee the same growth-rate range.
- On the flip side, nearly half of African & Middle Eastern businesses expect zero-percent growth in 2020, while 35% of South American converters forecast similar non-growth this year.
My Thoughts: The annual AWA survey gives a great snapshot of the general business-forecast thoughts for converters and suppliers to the global release-liner manufacturing field. But now with the spread of the coronavirus (COVID-19) pandemic, pretty much all these numbers must be taken with a large grain of salt. In particular, growth projections and cost/profitability data will be impacted the most. Supply-chain disruptions and end-product sales declines are inevitable in the short term. We can only hope things will rebound in the second half of 2020.
For a look at the release-liner market through the eyes of three top industry executives, see my Blog post HERE.