PLASTIC AND FLEXIBLE PACKAGING BUSINESSES CREATE ELIPSO, A NEW TRADE FEDERATION

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1 2 October 2008 PRESS PACK PLASTIC AND FLEXIBLE PACKAGING BUSINESSES CREATE ELIPSO, A NEW TRADE FEDERATION TO SUPPORT DEVELOPMENT AND MARKET CHANGES CSEMP (French plastic packaging federation) and UNITES (French flexible packaging federation) announce the creation of ELIPSO, the new federation for the plastic packaging and flexible packaging trades. Plastic and flexible packaging comprises 370 companies that employ more than 42,370 people and posted 7.1 billion euros turnover in Elipso was created to support the sector s companies, which have to meet many challenges on a growing market (turnover up 6% in 2007). The businesses represented by the federation are faced with volatile rises in raw materials that affect their costs as well as energy and transport prices. Companies are also collectively and individually committed to a sustainable development process with the aim of keeping their environmental impact to a minimum. This commitment is primarily based on technological innovation that facilitates the development of packaging eco-design and bioplastics, as well as determined recycling systems. Elipso also intends to consolidate its role as a partner to public authorities and all decision-makers in future orientations. A dynamic sector with real growth prospects With converted tonnage of 2,080 KT in 2007, up 1.5% from 2006, production continues to grow for plastic film and packaging, as it does for flexible packaging with shipments of 2,500 billion m² in 2007, up 2.5% from A momentum supported by innovations in favour of sustainable development and involvement in the Grenelle consultation on the environment The plastic and flexible packaging sector adopted a sustainable development approach at a very early stage. The first actions intended to reconcile protecting the planet with economic and social development date from the early 1990 s, particularly the setup of recycling channels.

2 The trade organisation for plastic and flexible packaging contributed to the work of the Grenelle consultation. In that framework, Elipso put forward solutions that are structured around three major orientations: packaging weight reduction, greater recycling and the search for new materials. Elipso, with its manufacturers, has drawn up a work plan to make its commitments operational and take part in implementing the main orientations of the Grenelle consultation: Contribute to waste reduction: prevent and so reduce packaging weight by implementing the innovations needed to cut weight and foster reuse of transport packaging; in relevant cases, propose refillable packaging, whether for consumer or BtoB use. These actions will be carried out with even more determination, in full partnership with all players in the chain, from material producers upstream to their customers downstream. Increase recycling rate from 20.5 to 35% in the medium term by working on relevant levers on the environmental, technical and economic fronts. These actions will apply equally to household and to industrial and commercial packaging. Some orientations: find other sources of household packaging, integrate more and more recycled materials into packaging, including for food. All these actions will enable the plastic and flexible packaging industry to reduce its environmental impact, including carbon footprint. The sector will also be a stakeholder in environmental labelling, a strong commitment from the Grenelle consultation. 2

3 CONTENTS ELIPSO: A NEW STRUCTURE TO BRING TOGETHER PLASTIC AND FLEXIBLE PACKAGING PROFESSIONALS Elipso: two organisations in one for better representativeness The choice of a dynamic, evocative name An easily identifiable logo p.4 p.4 p.5 ELIPSO: FOR ACTIVE REPRESENTATION OF A DYNAMIC, INNOVATIVE MARKET A 7 billion market in France A key role worldwide Volatile rises in raw material prices Unstable raw material costs A growing market with a promising future p.6 p.8 p.9 p.10 p.11 ELIPSO: PRACTICAL SOLUTIONS FOR SUSTAINABLE DEVELOPMENT Key figures Elipso and the Grenelle environmental consultation Packaging weight reduction: figures that speak for themselves Recycling: 15 years of industrial commitment Bioplastics: 5-10% of film and packaging by 2015 p.12 p.12 p.13 p.15 p.18 3

4 ELIPSO: A NEW STRUCTURE TO BRING TOGETHER PLASTIC AND FLEXIBLE PACKAGING PROFESSIONALS Elipso: two organisations in one for better representativeness CSEMP (French plastic packaging and film federation) and (French flexible packaging conversion federation) decided to merge within a single structure, Elipso, to enhance their representativeness and pool their resources. Both organisations have customers from the food/agriculture, health and personal care/beauty sectors. They also bring together companies with similar structures, i.e. international groups and family-owned companies of comparable size. Moreover, they share the same business issues, e.g. sustainable development, health & safety, regulations, standardisation and unstable raw material prices. Elipso represents 370 firms in plastic and flexible packaging, i.e. 42,370 jobs and 7.1 billion euros in annual sales. With 130 member companies, Elipso represents 70-90% of the trade by turnover depending on the sector. Chaired by Alix HUBIN, the new entity will be a place for dialogue, ideas and emerging projects to promote the trade s players and the image of their products. The choice of a dynamic, evocative name CSEMP and UNITES have chosen to unite under a name that meets four main goals: Easy to remember, Enhances the image of flexible, plastic packaging, Reflects the sector s dynamism, modernity and diversity, Reflects trade members pride in belonging. This change is also an opportunity to give the represented industries a clearer, higher profile. Elipso meets the demands of both organisations. The name conveys the notions of both plastic and flexible packaging. It also suggests synergy, group dynamics, organisation, coordination, professionals and businesses. Moreover, the new name has an upscale, modern tone and a positive institutional connotation, reflecting the vitality of the companies that make up the new entity. 4

5 Finally, Elipso is easy to read and memorise for both French and English-speaking audiences. 5

6 An easily identifiable logo The red and blue logo chosen for Elipso is easy to spot and identify. The background to the new entity s name is a blue sphere, suggesting the main notions that characterise the industries brought together in Elipso, plastic and flexible packaging. Moreover, the logo is made more visible by the explicit reference to the sector that Elipso represents: plastic and flexible packaging businesses. 6

7 ELIPSO: FOR ACTIVE REPRESENTATION OF A DYNAMIC, INNOVATIVE MARKET A 7 billion market in France The French plastic and flexible packaging sector numbers 370 businesses with 42,370 employees. In 2007, they posted 7.1 billion euros in sales (up 6% vs. 2006). Plastic packaging: Breakdown of plastic and flexible packaging markets 5.7 billion sales in companies (with more than 20 employees) 35,720 employees 2,080 KT Plastic packaging and film market (by turnover) Health - Personal care- Beauty 12% Food and Cleaning products 13% Industry and transport 10% agriculture 65% Flexible packaging: 1,4 billion sales in companies 6,650 employees 2,500 billion m 2 Health - Personal care - Beauty 18% Flexible packaging market (by turnover) Miscellaneous 5% Cleaning products 7% Food and agriculture 70% 7

8 Locations Total 370 businesses employees Employees Units < 1000 < Plastic and flexible packaging represents more than a third of the packaging industry s sales and workforce >2000 >40 Packaging sales in 2007 GLASS 10% WOOD 10% PAPER & BOARD 31% Packaging Workforce in 2007 GLASS 7% WOOD 18% PAPER & BOARD 34% METAL 10% FLEXIBLE 7% PLASTIC 30% METAL 7% FLEXIBLE 6% PLASTIC 32% 37% of turnover out of a total of 19,094 million 38% of the workforce out of a total of 112,380 employees Source: CLIFE 8

9 A key role worldwide With 7.1 billion in sales, France is Europe s second-largest producer of plastic and flexile packaging, just behind Germany. Main European plastic and flexible packaging producing countries(2007) Production value (M ) Plastic packaging Flexible packaging Allemagne France Italie Royaume-Uni Espagne Source: Eurostat / PCI Films with the support of FPE French plastic and flexible packaging companies exported 30% of their output by value in 2007 (up 3.5% vs. 2006), mostly to other European countries. Outside Europe, exports primarily go to the United States, Japan and Russia. Destination of French exports by value (2007) Rest of world 31% Germany 15% United Kingdom 12% Switzerland 5% Netherlands 5% Italy 9% Belgium 12% Spain 11% 9

10 Rising capital expenditure In 2007, the capital expenditure rate for plastic packaging and film companies was 6.7%, compared with 6.3% in In value terms, this represents 380 million capex in 2007, up 6% from the previous year. Capital expenditure in plastic packaging M % Source: SESSI Volatile rises in raw material prices The plastic and flexible packaging sector has to cope with fluctuations in raw material prices. Mainly arising from changes in oil prices, they are putting businesses profitability under pressure. Companies are operating with sales prices that are closer and closer to industrial cost prices. Rises in the cost of raw materials, energy and transport are weighing heavily on the industry s profitability. HdPE price: 2003-August 2008 Average annual plastic prices August Euros / metric ton Average 1 600, , , , , , ,00 900,00 800,00 700,00 Crystal PS Copolymere PP PET HDPE Blow moulding HDPE (until August) Years

11 The impact of raw material prices on businesses turnover varies according to markets and products: 42% on average but a variation of 10%-90% depending on the sector. Cosmetics / Perfume 12% Bottles 45% Trays 50% Cushioning 50% Flexible 55% Film 65% Thermoforming sheet 90% Source: ELIPSO A growing market with a promising future With 2,080 KT converted tonnage in 2007, plastic packaging production continues to increase. Flexible packaging production has been gathering speed since 2003, with 2,500 m² shipped in Tonnage has risen 15.5% over the past 7 years. In parallel, packaging weight has been reduced and the number of consumer sales units increased slightly (up 2.4% from 2003 to 2006). Production since Plastic packaging and film Flexible packaging Source: Elipso. Health and beauty-personal care offer substantial growth prospects for the plastic and flexible packaging sector. 11

12 Production indices of main customer industries Para-chemistry Household equipment Food & agriculture Pharmaceuticals, perfume and cleaning products All industry (excluding energy,food and agriculture) Source : INSEE According to Observatoire de l Emballage 2008, plastic has the strongest purchasing prospects for the medium term ( ): 57% of interviewed buyers believe they will increase their plastic purchases. Biomaterials are a development avenue mentioned by 54% of buyers. 12

13 ELIPSO: PRACTICAL SOLUTIONS FOR SUSTAINABLE DEVELOPMENT The plastic and flexible packaging sector is now recognised as a pioneer in terms of its commitment to finding solutions to develop a tangible environmental policy and actions. Today, manufacturers research and solutions are mainly structured around three major innovation avenues: Packaging weight reduction, Development of recycling, Research on new materials. Key figures Plastics represent 4% of oil consumption. Plastic packaging represents 1.5% of oil consumption. Plastic packaging represents 2 million metric tons, of which 50% for household packaging. After use, household packaging accounts for 4% of household waste by weight. Elipso and the Grenelle environmental consultation The trade organisation contributed to the work of the Grenelle national consultation on the environment, as did other organisations such as ANIA, ILEC, FCD, PlasticsEurope and ECO-EMBALLAGES. The topics that concern us most directly are in the following articles: - 16 (greenhouse gases) - 41 (reduction of refuse bin weight and increase of material and organic recycling for household packaging waste) - 47 (environmental information for consumers). ELIPSO plan to continue Grenelle work Increase the recycling rate of all packaging (household and industrial & commercial). Integrate recycled materials into packaging. Contribute to the national goal of waste reduction. Play a key role in environmental labelling. 13

14 The 4 orientations of ELIPSO s sustainable development policy Eco-design (reduction at source and recyclability). Recycling: Increase recycling rate from 20.5 to 35% in the medium term. Bioplastics: Long-term development and intelligence. Energy recovery: A relevant method in some cases that avoids sending waste to landfill. Eco-design An essential approach (decree ). An innovation process. Comprehensive work on reducing weight and factoring in end-of-life recycling (CoTREP creation). Lower total environmental impact, including carbon footprint. Lower transport carbon footprint. Contribution to waste reduction. Resource savings. Packaging weight reduction: figures that speak for themselves The packaging industry began working on product weight reduction well before the 1998 decree on eco-design, particularly reduction at source, came into force. Packaging weight has been substantially reduced, leading to outstanding benefits in terms of the weight/product ratio in transport. In 20 years, plastic and flexible packaging s weight has been reduced by 30-70% depending on the product. 14

15 Examples of prevention by reduction at source: 1.5 litre mineral water bottle Frozen meal tray 1kg frozen vegetable bag EPS fish crate 125g yoghurt carton Grocery bag Weight 20 years ago Weight today Reduction at source Container Ratio Content 40 g 25 g -38% 25 g 1.5 l 40 g 23 g -40% 23 g 300 g g 7.5 g g 7.9g 4 kg 100 g 87 g -13% 87 g 3 kg 5.8 g 4.8 g -17% 4.8 g 125 g 15 µ 9 µ -40 % Packaging reduction at source: an ongoing process Innovation serves reduction at source while avoiding any compromise over functionality, packaging performance and user service. Producers Research & Development efforts focus on prevention by acting on: Manufacturing process control. Design / work on shapes: optimising packaging in terms of product volume. This involves cooperation between packaging designer, manufacturer and filler. Optimisation is now part of a wider process: Raw materials Mould Mechanisation in filler/customer plant Designer All packaging: primary secondary tertiary New packaging solutions. The packaging manufacturer is the cornerstone of ecodesign. 15

16 Reutilisation: a form of reduction at source In some industrial sectors and in retail, the spread of plastic crates and pallets can save substantial resources. These packaging types go through several cycles are can have lifespans of years depending on how they are used. Recycling: 15 years of industrial commitment The industry has developed the recycling of its plastic packaging and film on an industrial scale for 15 or so years. In 2007, the recycling rate of plastic packaging and film was 20.5%. The number of jobs created in the recycling industry is estimated at 4,000. Manufacturers want to increase the recycling rate of their packaging and are aiming for 35% in the medium term. In 2001, packaging professionals set up CoTREP, the technical committee for plastic packaging recycling), in partnership with Eco-Emballages and Valorplast. CoTREP studies the recyclability of packaging and provides all the information needed to market packaging with good recycling performance. 50-fold increase in recycling of household plastic packaging over 13 years Packaging professionals developed and set up a recycling industry, particularly for household packaging, with the creation of Valorplast, a partner of Eco-Emballages, in The sector has supported the structure technically and financially since its creation. Valorplast ensures that plastic household packaging is recovered from local authorities and recycled. From , the amount of recycled household plastic packaging increased 50- fold (from 4,200 to 210,000 tons). This achievement was made possible by the creation of a real recycling industry, with 10 plants capable of recycling 230,000 tons of packaging. Moreover, the industry has invested massively to develop recycling applications: fibre (filling for quilts and anoraks, etc.), plastic bottles, pallets, film, tubes, etc. Recycled plastic household packaging (metric tons) 16

17 How can the recycling rate of household packaging be increased? Sort plastic bottles better: today 1 bottle in 2 is sorted and recycled (great disparity between types of housing and regions). Find other household packaging sources: small packaging (film and rigid packaging) not sorted for recycling to date. The technical and economic feasibility of sorting, collecting and recycling these packaging types should be examined. Studies are in progress for film. 60 recycling sites for industrial & commercial packaging In 1992, to provide for the recovery or reuse of their industrial & commercial packaging, professionals set up several structures: Ecofut, Eco PSE and Recyfilm. These three additional channels were created to process packaging according to its specificity (material, content, source, etc.). Ecofut organises the recovery of industrial & commercial packaging such as buckets, drums, barrels and containers. Recyfilm processes industrial films such as palletising covers and sacks. Finally, Eco PSE s mission is to promote and organise recovery channels for expanded polystyrene packaging. A network of approximately 40 sites across France recycles these packaging types. In 2006, 204,500 tons of plastic industrial and commercial film and packaging was recycled. Recycled plastic industrial & commercial packaging (metric tons) 17

18 How can the recycling rate of industrial and commercial packaging be increased? Strengthen the application of decree by setting up an incentive system. Have access to comprehensive national statistics on the recovery of industrial & commercial packaging waste, primarily recycling, in order to define relevant actions. Elipso and recycling The actions taken by packaging businesses in favour of recycling not only enable regulatory recycling goals to be reached, but also make a significant contribution in terms of: Develop plastic packaging recycling further to reach 35%. Using less oil resources. Continuing to develop a regional, job-creating recycling industry. Recycling in closed (back to packaging) and/or open (other applications) loops. Practical examples of recycling hdpe: high density polyethylene; PET: polyethylene terephtalate Source: Valorplast 18

19 Energy recovery Energy recovery mainly concerns small, soiled packaging that is technically and/or economically unsuited to recycling. The aim is to use combustible packaging waste as a resource for generating energy by direct incineration with or without other waste, but with heat recovery. The recuperated energy can be use for urban heating or electricity reduction. Bioplastics: 5-10% of film and packaging by 2015 Diversifying raw material resources to produce tomorrow s packaging is an objective for plastic and flexible packaging businesses. Materials from renewable sources could account for 5-10% of packaging and film by Green chemistry should lead to new materials that can fulfil all the packaging s functions (hygiene, food safety, keeping, etc.). Plastics from renewable resources are already on the market but entail some constraints: Low available quantities Limited technical characteristics Price Use of bioplastics in packaging will evolve as available quantities increase and cost control possibilities are developed. Manufacturers are supporting their development to be ready in Press contacts: Françoise Gérardi Carole Carpentier ELIPSO French Plastic and Flexible Packaging Association Tel : 33-(0)

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