Gravure Package Printing Gravure Package Printing Update from North AmericaUpdate from North America

Presented by:Presented by:

Charles R. ConoverCharles R. ConoverDirector of Sales & Service Director of Sales & Service

Hurletron, Inc.Hurletron, Inc.Libertyville, IL USALibertyville, IL USA

Market Share in DeclineMarket Share in Decline

• Gravure Package Printing continues Gravure Package Printing continues to loose market share. to loose market share.

• Companies in 2007 added or Companies in 2007 added or replaced 60-70 Flexo-graphic presses replaced 60-70 Flexo-graphic presses whereas only 9-10 Rotogravure whereas only 9-10 Rotogravure presses were added or replaced.presses were added or replaced.

• Heat Set Web Offset is capturing more Heat Set Web Offset is capturing more jobs in the insert & catalogue markets jobs in the insert & catalogue markets at the expense of publication gravure. at the expense of publication gravure.

• Product Gravure such as wood grain, Product Gravure such as wood grain, flooring & gift–wrap remain relatively flooring & gift–wrap remain relatively strong, as other presses cannot match strong, as other presses cannot match gravure quality.gravure quality.

• More than 3,000 printing presses in More than 3,000 printing presses in North America for package & product North America for package & product printing. Include Flexo, Gravure, Offset, printing. Include Flexo, Gravure, Offset, Digital & Screen. Of these, 470-490 are Digital & Screen. Of these, 470-490 are GravureGravure

GRAVURE PACKAGE PRINTING UPDATE NORTH AMERICAAugust 2008

© 2 0 0 7 A L C A N I N C. Alcan Packaging Tobacco – North America

0.000

100.000

200.000

300.000

400.000

500.000

$USD Biillion

$USD Billion 372.40 383.35 376.14 382.80 427.21 459.26 477.09

1999 2000 2001 2002 2003 2004 2005

WORLD PACKAGING MARKET SIZE WORLD PACKAGING CONSUMPTION BY REGION

* Source: World Packaging Organization, 2008

WORLDWIDE PACKAGING OVERVIEW

0 50 100 150

France

Germany

China

Japan

USA

2009

2003

$USD Billion* Source: World Packaging Organization, 2008

0 50 100 150 200

Oceania

Asia

South & Central America

North America

Africa

Middle East

Eastern Europe

Western Europe

2009

2003

TOP PACKAGING CONSUMPTION COUNTRIES

$USD Billion

* Source: World Packaging Organization, 2008

© 2 0 0 7 A L C A N I N C. Alcan Packaging Tobacco – North America

40%

18%

15%

19%

4% 4%

Paper & Board

Rigid Plastic

Flexible Plastic

Metal

Glass

Others

115.000

120.000

125.000

130.000

135.000

140.000

$USD Biillion

$USD Billion 125.33 132.06 130.03 128.48 131.87 134.90 137.60

1999 2000 2001 2002 2003 2004 2005

NORTH AMERICA PACKAGING MARKET SIZE

NORTH AMERICA PACKAGING OVERVIEW

NORTH AMERICA PACKAGING MARKET BY MATERIAL, 2005

* Source: World Packaging Organization, 2008

* Source: World Packaging Organization, 2008

40%

14%4%

4%

16%

22%

Food

Beverage

Health Care

Cosmetic

Other

Industrial

NORTH AMERICA PACKAGING MARKET BY INDUSTRY TYPE, 2005

* Source: World Packaging Organization, 2008

© 2 0 0 7 A L C A N I N C. Alcan Packaging Tobacco – North America

NORTH AMERICA PACKAGING OVERVIEW

48.000

50.000

52.000

54.000

56.000

58.000

$USD Biillion

$USD Billion 51.389 56.168 54.161 51.734 52.190 53.592 54.834

1999 2000 2001 2002 2003 2004 2005

BOARD & PAPER PACKAGING – NORTH AMERICA

* Source: World Packaging Organization, 2008

18.000

19.000

20.000

21.000

22.000

23.000

24.000

25.000

$USD Biillion

$USD Billion 20.377 21.938 22.610 22.235 23.052 23.704 24.347

1999 2000 2001 2002 2003 2004 2005

RIGID PLASTIC PACKAGING – NORTH AMERICA

* Source: World Packaging Organization, 2008

15.000

16.000

17.000

18.000

19.000

20.000

21.000

22.000

$USD Biillion

$USD Billion 17.663 18.524 18.671 18.446 20.085 20.666 21.195

1999 2000 2001 2002 2003 2004 2005

FLEXIBLE PLASTIC PACKAGING – NORTH AMERICA

* Source: World Packaging Organization, 2008

22.000

23.000

24.000

25.000

26.000

27.000

$USD Biillion

$USD Billion 24.855 24.278 23.838 24.815 25.425 25.843 26.135

1999 2000 2001 2002 2003 2004 2005

METAL PACKAGING – NORTH AMERICA

* Source: World Packaging Organization, 2008

© 2 0 0 7 A L C A N I N C. Alcan Packaging Tobacco – North America

NORTH AMERICA PACKAGING OVERVIEW

5.100

5.200

5.300

5.400

5.500

5.600

5.700

$USD Biillion

$USD Billion 5.312 5.310 5.321 5.661 5.661 5.527 5.416

1999 2000 2001 2002 2003 2004 2005

GLASS PACKAGING – NORTH AMERICA

* Source: World Packaging Organization, 2008

5.200

5.300

5.400

5.500

5.600

5.700

5.800

5.900

$USD Biillion

$USD Billion 5.737 5.846 5.533 5.598 5.465 5.569 5.675

1999 2000 2001 2002 2003 2004 2005

OTHER PACKAGING – NORTH AMERICA

* Source: World Packaging Organization, 2008

Package Printing by Package Printing by CategoryCategory

Flexographic 69%

Offset 15%

Gravure 10%

Screen 2%

Letter Press 1%

All Others 3%

Relative Cost of Engraved Relative Cost of Engraved Gravure CylindersGravure Cylinders

•North America 100 %North America 100 %

•England 60-70 %England 60-70 %

•Europe 50-60 %Europe 50-60 %

•Asia 20-30 %Asia 20-30 %

Cost Difference Flexo vs. Cost Difference Flexo vs. GravureGravure

• ““Run of the mill” Run of the mill” Flexo……………$0.35/in²Flexo……………$0.35/in²

• High quality High quality Flexo………………....$0.49/in²Flexo………………....$0.49/in²

• Gravure…………………………$0.50-Gravure…………………………$0.50-$0.51/in²$0.51/in²

Major Plastic Flexible Major Plastic Flexible Packaging StructuresPackaging StructuresCategoryCategory % of Market in Dollar Value% of Market in Dollar Value

RollstockRollstock 61%61%

BagsBags 14%14%

Lay Flat PouchesLay Flat Pouches 3%3%

Standup PouchesStandup Pouches 4%4%

Retort PouchesRetort Pouches 1%1%

Shrink SleevesShrink Sleeves <1%<1%

LiddingLidding 1%1%

Stretch FilmsStretch Films 6%6%

Shrink WrapsShrink Wraps 5%5%

WrappersWrappers <1%<1%

OtherOther 5%5%

Packaging Growth MarketsPackaging Growth Markets

• Labels (Heat Transfer- In Mold- Clear Labels)Labels (Heat Transfer- In Mold- Clear Labels)

• Shrink SleevesShrink Sleeves

• Shrink WrapsShrink Wraps

• Standup PouchesStandup Pouches

• LiddingLidding

Actions Required to Benefit Actions Required to Benefit from Growth Opportunitiesfrom Growth Opportunities

• Look at use of Specialized inks & Look at use of Specialized inks & CoatingsCoatings

• Concentrate on value added productsConcentrate on value added products

• Printers must work to ensure that Printers must work to ensure that packages “Stand out on Shelves”packages “Stand out on Shelves”

• First Moment of Truth” a defining First Moment of Truth” a defining factor in purchase decisionsfactor in purchase decisions

• Antiquated & outdated equipment Antiquated & outdated equipment must be replaced with modern, must be replaced with modern, quick-change gravure pressesquick-change gravure presses

• Gravure is the easiest process Gravure is the easiest process available to produce the highest available to produce the highest quality printingquality printing

Declining Packaging Gravure Declining Packaging Gravure MarketsMarkets

• Non-Value Added ProductsNon-Value Added Products

• Tobacco PackagingTobacco Packaging

• Very Short Run JobsVery Short Run Jobs

New Market OpportunitiesNew Market Opportunities

• Printed ElectronicsPrinted Electronics

Printed Electronics – Printed Electronics – MarketsMarkets

• Photovoltaics / BatteriesPhotovoltaics / Batteries

• SensorsSensors

• Transistors / Memory / LogicTransistors / Memory / Logic

• Commercial LightingCommercial Lighting

• Active DisplaysActive Displays

• Graphic Design /Graphic Design /

Advertising / P.O.S.Advertising / P.O.S.

• RFIDRFID

Printed Electronics – Printed Electronics – Platform PrintingPlatform Printing

Optimizing and Characterizing Printing Optimizing and Characterizing Printing TechnologiesTechnologies• Ink formulation specifications and tolerancingInk formulation specifications and tolerancing

• Ink film thickness and deposition consistencyInk film thickness and deposition consistency

• Resolution capabilitiesResolution capabilities

• Cost modelsCost models

Printed Electronics – Printed Electronics – Production Production

Print system capability needed is Print system capability needed is determined by device/functional determined by device/functional requirementsrequirements– Opportunities exist today that fit within Opportunities exist today that fit within

printing capabilitiesprinting capabilities– Challenges:Challenges:

•Practical knowledge with emerging technologyPractical knowledge with emerging technology

•Power / BatteryPower / Battery

• Integration of multiple process stepsIntegration of multiple process steps

•Lack of Development facilitiesLack of Development facilities

Printed Electronics – Printed Electronics – ClemsonClemson

What is Clemson doing?What is Clemson doing?– Preparing undergraduate and graduate studentsPreparing undergraduate and graduate students

•Dedicated courses with labs – Dedicated courses with labs – Spring 2009Spring 2009

•Career Education – Printed Electronics – Career Education – Printed Electronics – Spring 2009Spring 2009

– Fundamental research - Fundamental research - ExistingExisting•Developing materials and applicationsDeveloping materials and applications

• Intellectual property in our focus areasIntellectual property in our focus areas

– Printing research - Printing research - ExistingExisting•Defining capabilities for each Defining capabilities for each

printing process throughout printing process throughout the workflowthe workflow

Printed Electronics – Printed Electronics – ClemsonClemsonWhat is Clemson doing?What is Clemson doing?

– Establishing a Printed Electronics Application Establishing a Printed Electronics Application and Research Lab (PEARL) – and Research Lab (PEARL) – Spring 2009Spring 2009

– Platform press with Flexo, Gravure, Screen, Platform press with Flexo, Gravure, Screen, InkjetInkjet

– Fully configurable based on applicationFully configurable based on application•Contract testingContract testing

•Company integrationCompany integration

•Device prototypingDevice prototyping

•Pilot productionPilot production

Printed Electronics - Printed Electronics - ClemsonClemson

Example workExample work– These inks are printed like spot colors These inks are printed like spot colors

and sandwiched in a circuitand sandwiched in a circuit– Tunable for custom colorTunable for custom color

Printed Electronics - Printed Electronics - ClemsonClemson

Example workExample work• Gravure characterization on PETGravure characterization on PET• Ink Film Thickness / SmoothnessInk Film Thickness / Smoothness• ResolutionResolution

Perception of GravurePerception of Gravure

• Only suited for long runsOnly suited for long runs

• Pre-Press cost higher than other Pre-Press cost higher than other processes and require more timeprocesses and require more time

• Change over times highChange over times high

• Gravure quality consistently highGravure quality consistently high

• Easiest of all printing processes to Easiest of all printing processes to operateoperate

Market ConsolidationMarket Consolidation

• Graphic Packaging / AltivityGraphic Packaging / Altivity

• Spear Label / Precision PackagingSpear Label / Precision Packaging

• Dow Chemical / Rohm & HaasDow Chemical / Rohm & Haas

• Printpack / Seal-ItPrintpack / Seal-It

• Printpack / Groupo Industrial Plastico- Printpack / Groupo Industrial Plastico- MexicoMexico

• Alcoa Sale of Reynolds Packaging Alcoa Sale of Reynolds Packaging DivisionDivision

• Printpack opens new plant in PolandPrintpack opens new plant in Poland

SummarySummary

• Gravure Printing in all market Gravure Printing in all market segments continues to shrinksegments continues to shrink

• All is not “LOST” Opportunities exist All is not “LOST” Opportunities exist to recapture market shareto recapture market share

Thank You!Thank You!