EN Official Journal of the European Union C 230/33

Opinion of the European Economic and Social Committee on ‘Industrial changes in the European packaging sector’

(own-initiative opinion)

(2015/C 230/05)

Rapporteur: Mr Gonçalo LOBO XAVIER Co-rapporteur: Mr Nicola KONSTANTINOU

On 22 January 2014, the European Economic and Social Committee, acting under Rule 29(2) of its Rules of Procedure, decided to draw up an own-initiative opinion on

Industrial changes in the European packaging sector.

The Consultative Commission on Industrial Change (CCMI), which was responsible for preparing the Committee’s work on the subject, adopted its opinion on 13 November 2014.

At its 503rd plenary session, held on 10 and 11 December 2014 (meeting of 10 December 2014), the European Economic and Social Committee adopted the following opinion by 119 votes to 1 with 4 abstentions.

1. Conclusions and recommendations

1.1. The European packaging industry faces several challenges. Its critical role in a number of sectors places the industry in a central position as regards the competitiveness of the European economy. Europe must retain leadership of this industry and should keep up trends concerning environmental sustainability, safety and branding issues in packaging. The EESC believes that this leadership must be based around four key pillars: resource efficiency; R & D and innovation; social dialogue; sustainability and adaptation.

1.1.1. Resource efficiency

Due to the fact that the sector’s products are used to hold, protect and preserve other consumables, and thereafter are often disposed of, the sector has a pivotal role to play in boosting the recycling rates of EU Member States. However, companies still need support in achieving this goal and the EESC believes that the European Commission could provide assistance on this issue, giving more information about best practices and the best use of available resources. This can also be done by supporting respect for environmental issues by all stakeholders, including those with operations based outside Europe. Resource efficiency is a crucial element in the packaging process and is also an environmental concern. The EESC believes that the EC could develop a policy framework to support the transition needed to achieve the goals of the Europe 2020 strategy and renew and sustain an environmentally conscious packaging industry.

1.1.2. Challenges

The EESC is aware of the challenges for industry resulting from rising energy prices, not only as regards its day-to-day performance but also the recycling process. The EESC would point out that the recycling process crucial for the packaging industry is organised inside, but also outside the European Union. The EESC believes that the balanced price energy issue should be a policy priority for the EU regarding this specific industry.

To further contribute to the EU’s carbon emission targets, each sector of the industry should set realistic targets for recycling, in line with those defined in EU law (the Packaging and Packaging Waste Directive and the Waste Framework Directive) associated with the Europe 2020 strategy and thereafter provide annual statements to measure progress. Despite the efforts of each Member State to provide data, which is published annually by Eurostat, there is still a missing element in data assessment. The EESC believes that the practice of using more packaging material than necessary is wasteful and should be challenged by industry and also be part of the consumers’ conscience. A public awareness campaign might be an option also to boost the ‘essential requirements’ defined by the Packaging and Packaging Waste Directive regarding ‘overpackaging’. By way of an example, the Commission should set a precise timetable with a view to calling for a total ban on disposable plastic bags and the promotion of reusable or biodegradable bags. This timetable should include social-partner consultation phases and measures to support the transformation of the sector.

1.1.3. Research and Development and innovation

It is clear from the research undertaken for this opinion and from discussions with stakeholders and the Commission that there is insufficient data available on a number of crucial issues. The Commission’s support would be welcome therefore in organising an improved methodology for the collection of sector data, in order to provide the social partners with relevant information to ensure the sector’s long-term viability. The EESC believes that key R & D challenges for the sector are also significant and include the efficient transport of goods, the effectiveness of traceability systems, cost reduction, and regulatory and safety issues, along with eco-design and life cycle package performance. The EESC considers that with these specific needs and approach, it is very important that the innovation Horizon 2020 funds be a priority and an opportunity for the packaging industry. The ability to participate in European consortia in order to boost innovation activities must be encouraged by sector associations and by the usual stakeholders.

The EESC believes that the ongoing investment required to meet all of the existing challenges is critical. It is crucial for the sector’s long-term survival that capital investment takes place in conjunction with investment in the sector’s workforce. This requires proper planning and dialogue between workers, employers, governments, European institutions and wider societal stakeholders, including national education infrastructures.

It is clear that the packaging industry is evolving under pressure from new trends such as e-commerce. The growth of e-commerce was demonstrated by findings of the 2013 Eurobarometer survey that almost half of Europe’s citizens had made online purchases in the previous six months (1). The Commission states that e-commerce ‘is an important driver for development with a potential for economic growth and rising employment estimated at over 10 % between 2013 and 2016’ (2). This evolution might be an incentive to implement new solutions aimed at reducing waste materials such as cardboard and plastic, and R & D activities must keep these trends in mind.

Innovation in the packaging industry has also proved to be an opportunity in terms of youth employment. Industrial designers, materials engineers and other new professions can find a wide range of opportunities in the future market. The EESC sees an opportunity for innovation in sectors where the packaging is extensively used, in terms of sustainability and design.

1.1.4. Civil engagement, workforce social dialogue, sustainability and adaptation

The EESC considers that the critical challenge for the European sector’s employers and workforce is to ensure that the industry maintains a competitive edge, fully utilises technological innovations and produces high quality, sustainable goods. The EESC also believes that the new skills involved in the future of the sector must be identified by stakeholders in order to adapt education systems to this vital challenge. New trends such as online sales create challenges that should be examined thoroughly and their influence and impact assessed.

The EESC concludes that the majority of packaging companies and their workforces are willing to adapt to change, but more information is required to enable the parties to make the right decisions for the sector and employment. This adaptation to changes in the market should be done in a way that respects workers but also keeps in mind the threat of rapid change and relocation.

The EESC believes that the discussion for sector sustainability must be achieved through civil-society and social dialogue at national and European level. The creation of a Sectoral Social Dialogue Committee (SSDC) for the packaging industry could provide such an opportunity.

2. Introduction

The main objective of this document is to inform the European institutions of a number of recommendations which the EESC/CCMI consider to be critical for boosting the European economy and the packaging sector in particular. Europe must lead the way and support positive legislative compliance to support the economy, that is carried out in a sustainable way with a view to improving the internal market: confidence and compliance with legal requirements should be paramount, not protection.

2.1. The packaging industry serves a wide variety of purposes in our daily lives: protection (prevents breakages, spoilage and contamination, increases shelf-life); promotion (product ingredients, features, promotional messages and branding); information (product identification, preparation and usage, nutritional and storage data, safety warnings, contact information, opening instructions, end-of-life management); convenience (product preparation, serving, storage and portioning); utilisation (provision to consumer, retail and transport units); handling (transport from producer to retailer, point of sale display); and waste reduction (processing, re-use of by-products, storage and transport energy).

2.2. Given the immense variety that exists within the sector, the packaging industry necessarily requires a vast and varied approach. As a valuable sector, it is necessary to adopt a careful attitude which takes account of its diversity, the need to comply with rules and legislation and, of course, the competitiveness of the sector.

2.3. While there are a number of critical concerns common to most sectors, individual subsectors naturally face their own set of specific problems. This is due to the fact that specific products are subject to different requirements, particularly in terms of standards and certifications.

2.4. The use of packaging to communicate innovation and quality is an opportunity for Europe. To this end, several measures aim to identify clearly the quality and innovation of the products contained in a given package. This is a never-ending challenge that is crucial for differentiating EU products from those originating in other parts of the world.

2.5. The EESC believes that there are two further issues that are also vital for this discussion: the logistical aspect of the packaging industry and access to the raw materials used by the sector. In light of these two issues, it is easy to see just why the challenges facing the European packaging industry are so enormous. The main objective of this document is to inform the European institutions of a number of recommendations which the EESC/CCMI consider to be critical for boosting the European economy in general and the packaging sector in particular. As in other areas, Europe must once again lead the way and call for compliance with rules and legislation that genuinely help the economy and that are carried out in a sustainable manner with a view to boosting the internal market: confidence and compliance with legal requirements should be the watchwords, not protection.

2.6. The specific case of the materials used is a critical issue that requires careful analysis in order to respect the open market and ensure a level playing field for all market players.

2.7. The EESC considers that establishing a coordinated and inclusive dialogue between sector stakeholders will ensure that the sector remains sustainable and provides decent employment in the long term and is better able to cope with change and adapt to the needs of consumers and wider societal demands. In this respect, social dialogue’s potential to strengthen the sector is not being fully realised and this needs to be addressed urgently.

2.8. If the sector needs to adapt to change and transform to meet market requirements, the only way to achieve sustainability and equitable remedies is through a multi-channel approach to stakeholder engagement. In order to address issues related to the sector, its structure, competitiveness and related issues such as employment, skills, adaptation and the future viability of the sector and its workforce, properly structured and organised social dialogue should be encouraged by the Commission. In addition, to provide a platform for the expression of interests by a wider audience (i.e. society and consumers, workers, employers, governments, etc.), a channel of two-way communication between the various actors and institutions ought to be created. In this way, all concerned parties can be involved in the sector and in its broader and central role in society.

3. Analysis/framework

3.1. The European packaging sector encompasses a broad range of activities and although it shares similar problems with other industries, the sector faces a number of unique and significant challenges at the present and in the short to medium term. The packaging sector comprises glass, metal, plastic, wood and paper packaging companies which, in total, employ over 6,5 million people in Europe (3) (Eurostat).

3.2. The packaging sector represents not only a diverse range of products, but also a variety of different processes that are distinct and which are utilised to create products for specific markets and particular uses, each requiring different environments and producing a variety of challenges and characteristics. For instance, energy use is a significant cost factor for glass packaging companies. Moreover, since up to 80 % of waste glass packaging is recycled, glass recycling is a significant contributor to the EU targets for recycling and lowering the region’s carbon footprint.

3.3. The connection between the materials used for packaging is also an important aspect and the increased transport costs for the transit of materials, such as corrugated board and tubes to be used for packaging, has had a negative effect on the packaging sector. Thus, the impact of energy costs throughout the sector’s supply chain — note the distance that products, such as printed material, travel before they are used by packaging companies — is passed on to the packaging sector.

3.4. Metal can be recycled over and over again without any diminution in quality, which creates additional value to the sector’s contribution to the EU recycling targets.

3.5. Container glass is used to produce bottles and jars and other packaging products and is the largest sector in the EU glass industry, representing about 60 % of total glass production and employing 90 000 people in the EU (Eurostat). Employment in the glass sector overall has declined due to increased automation, industry consolidation and low-cost competition. Imports from outside the EU provide increasing competition and there has been a rise in the number of production plants in countries close to or bordering the EU with lower labour costs and laxer regulations; this creates short-term excess capacity and puts pressure on prices. France, Germany and Italy are the largest producers in the EU, accounting the next largest producers in the EU. Glass is a resource efficient material and can be recycled an infinite number of times. For instance, energy use is a significant cost factor for glass packaging companies and less so for others. As up to 80 % of waste glass packaging is recycled, glass recycling is a significant contributor to the EU targets for recycling and lowering the region’s carbon footprint. However, due to the materials they use and the products produced, other segments of the sector will rely to a lesser extent on energy.

3.6. If we consider the use of paper or similar materials, the sector’s supply chain is complicated by the fact that the companies responsible for processing paper and paperboard packaging — for products such as cartons, corrugated cardboard, boxboard and containerboard — tend to produce paper themselves and are part of a circular process involving the pulping and de-inking of used materials as well as the use of raw products from wood.

3.7. On the other hand, plastic packaging also has its specific features: not all packaging subsectors are represented by several industry bodies. Plastic packaging supplies markets other than those mentioned above — with end-users such as car manufacturers, cosmetics companies and companies producing health products and containers for pre-packed food. Yet there is just one single industry association for this subsector. Plastic packaging is also linked to environmental issues, such as the production of plastic bags for shopping and the difficulties associated with their disposal and the decomposition of their constituent components.

3.8. In this scenario, this variety of production processes has created a plethora of business representative bodies, which in itself creates barriers to cooperation between companies and worker representatives over such significant issues as environmental sustainability and change management. The segmented nature of packaging subsectors, such as metal packagers, is demonstrated by the large number of trade representative bodies. For example, the producers of aluminium are often the same companies that produce aluminium packaging and have their own trade organisation (European Aluminium Association). However, specialists in metal packaging that produce beverage cans (made of steel and aluminium) have their own trade organisation; and for packaging companies specialising in steel products, there is yet another trade association.

3.9. Due to the sector’s importance, both in terms of its contribution to GDP and employment, these sector-specific issues require particular attention. However, being such a segmented sector, the packaging industry serves the needs of upstream businesses right across economies, and far beyond its traditional markets.

3.10. Product packaging serves a number of needs and covers issues such as product protection (prevention of breakage, spoilage and contamination), promotional information (product identification, branding, preparation, usage, nutritional and safety information), information on handling (transportation and point of sale display), reducing packaging waste (processing, storage and transport energy) and, important within the context of efforts to reduce carbon emissions, packaging design is an important aspect of maximising the space available for the transportation of goods. The role of packaging itself in reducing waste has become relevant as online companies, such as Amazon, have become very large users of packaging and the question of ‘the responsible party’ ought to be addressed. Amazon, for example, utilises certified ‘easy opening packaging’ systems. By eliminating plastic and straps, since 2008, Amazon has radically changed its approach for 2 00 000 products from 2 000 manufactures, thereby reducing cardboard consumption by 5,4 million square metres, the generic materials by 11 203,7 tons and the total volume of boxes by 410 thousand cubic metres. In reality, the consumer bears the ultimate responsibility for waste packaging, but the producer, or intermediate user, ought to have an interest in the amount of packaging which eventually becomes waste.

3.11. The issues referred to below require thorough examination to provide an overall understanding of the current state of play and to produce potential solutions to ensure that the European packaging sector remains competitive and sustainable from an environmental point of view and provides decent employment for the thousands of workers dependent on it.

3.12. Any change in the availability of raw materials will influence both the price and availability of finished packaging products, and has the potential to seriously disrupt the sector’s activities. Consequently, an examination of the drivers and trends of raw materials ought to be undertaken to enable the industry to anticipate future change without the associated and potential disruption. The metal packaging sector, for example, is particularly under pressure from both sharp increases in the cost of raw materials and energy prices.

3.13. In 2012, the Commission launched the European Innovation Partnership on Raw Materials, with the aim of addressing the challenges associated with the supply of wood-based and mineral raw materials.

3.14. Demand, mainly from Asia, has driven up the price of secondary raw materials for paper packaging, the producers of which are unable to simply pass on these additional costs to their customers. Chinese demand has contributed heavily to the increase in the price of recycled materials for paper packaging (the price of recovered paper has almost doubled since 2006, while in the same period the price of recycled paper has increased by almost 50 %). These increases are likely to continue in the foreseeable future.

4. Sector demands and trends

4.1. According to Eurostat metal packaging (comprising steel and aluminium) for the packaging industry employs around 60 000 people in Europe, out of a total of 3 55 000 in the European steel industry, and Metal Packaging for Europe estimates that 80 000 people are employed in the aluminium industry, extending to 2 55 000 employed throughout the entire European aluminium value chain. However the sector has suffered, and continues to suffer, job losses, either as a result of consolidation in the sector or from overseas competition (4).

4.2. The challenge for the sector’s employers and workforce in Europe is to ensure that the sector maintains its competitive edge, fully utilises technological innovations and produces goods that are environmentally sustainable and of a high quality.

4.3. Competition from overseas continues to exert downward pressure on the working conditions of the sector’s workforce — those we rely upon to create wealth, utilise innovative technologies and, fundamentally, to maintain the sector’s operation and sustainable future for future generations.

4.4. The European packaging sector continues to suffer from over-capacity and this compounds the impact of overseas competition and acts as a dampener on wages and working conditions. The downward trend in employment in the sector illustrates the impact of both competition and over-capacity.

4.5. The packaging sector has the potential to provide wider benefits to Europe’s economies due to its capacity to recycle materials. More and more packaging materials are either being recycled or are themselves products of recycled materials from other manufacturing sectors. The environmental benefits of recycling are obvious enough, and are featured regularly in Commission documents. However, the packaging sector can improve the recycling rates of Member States. At the same time, it has the potential to close the loop of the circular economy by preventing the export of dubious waste materials and denying access to European markets to importers of packaging which does not comply with environmental best practice (5). Metal and aluminium packaging companies, whose products represent 16 % of the total volume of aluminium products in Europe, rely both on the extraction of the raw material (Bauxite) and the recycling of scrap metal.

4.6. The protection of consumers, by providing critical product information or advice regarding product usage, is also a significant and important aspect of the European packaging industry. Consumers rightly expect packaging to protect the goods they buy and, in the case of food and drink, to preserve and prevent health risks associated with contaminated foodstuffs. Retailers have similar expectations but, in addition, the packaging of the goods they sell ought to maximise the shelf life of a product.

4.7. The future shape and structure of the industry is, to a lesser or greater extent, dependent on innovation and investment in technology: 3D printing, for example, offers an opportunity to the sector and consumers but the success of its introduction and operation in the sector will rely heavily on cooperation within the sector and the expectations of consumers. The industry must take advantage of the available technologies and adjust, through proper dialogue.

4.8. Good practice, to transform the sector and to adapt to change, is continuously developing but requires the assistance of the European institutions to maximise its potential. The EU may offer assistance, in terms of financial support or the creation of a forum to further develop discussions among the social partners, and the sector ought to engage with the EU in this process.

4.9. Sustainable and workable solutions will only be achieved if the two sides of industry work together and social dialogue at national and European level provides such an opportunity. Therefore the creation of a Sectorial Social Dialogue Committee for the Packaging Sector is essential to begin tackling a number of the issues raised in this document.

Brussels, 10 December 2014. The President of the European Economic and Social Committee Henri MALOSSE

(1) Eurobarometer 398 Internal Market (October 2013).

(2) MEMO-13-1151, European Commission, quoted in Commission Communication ‘Roadmap for completing the single market for parcel delivery’ (COM(2013) 886 final).

(3) 7 00 000 direct employment.

(4) Eurostat figures for the last decade show a steady reduction of employment in the manufacture of corrugated, plastic, metal, glass and wood packaging. Total employment in these packaging sub-sectors has fallen by 1,2 million since 2003.

(5) Although legislation exists to ensure packaging materials comply with environmental standards, European packagers also follow a number of guidelines in order to reduce emissions and promote environmental best practice. Non-European competitors, although required to comply with European legislation, may not adhere to these voluntary codes or the standards followed by European companies.