DOW Attends FEPE Annual Congress

Midland, MI - January 07, 2004

FEPE, the European envelope manufacturers association, annual congress was held in Athens Greece on October 8^th through 12^th. The Dow Chemical Company was a sponsor for this congress along with other suppliers in the envelope industry. One of the special guests at the event was Bob Muma, who is currently the Chairman of the EMA (Envelope Manufacturer’s Association) and the Vice-President of Mail-Well. Dow participants included Michael Basista (sales), Alberto Valencia (sales), and Ludovic Harelle (technical service and development).

The first day started with working group sessions that included a report and discussion on promoting physical mail and the use of internet auctions in the envelope purchase process. FEPE has developed a “code of behavior” for whenever envelope manufacturers’ become involved in an internet auction, and the document can be found on the FEPE website (http://www.fepe.de/). Another work session included financially unstable clients and a report of clients with unsettled bills. The morning presentation given by Bob Muma and Klaus Schulz discussed Postal statistics, which can be summarized as follows:

Postal Market Facts and Figures (Fall 2003)

Europe North America

Total annual volume of sales 2.3 billion € 5,0 billion €

Envelope Consumption 120 billion 208 billion

Average Price per 1,000 19,90 € 23,76 €

Population (millions) 652 326

Area (million sq.kms) 3,2 16,6

Envelopes per 1.000 inhabitants 175 658

Envelopes per 1.000 sq.kms 37 11

Number of Factories 173 170

Average Factory Size Staff 98 35

Number of Factories

over 100 Staff 48 40

Number of Companies

over € 100 mio annual sales 12 8

Postal Market Facts and Figures (Fall 2003)

Europe North America

Number of publicly

owned companies 2 4

Major players

(billion envelopes) Tompla (16) National (43)

Bong (15) Mail-Well (36)

Mayer (13) Mead/Westvaco (23)

GPV (12) Atlantic (12)

Hamelin (8) Tension (11)

Top 5 player SOM 53 % 60

Market key differentiating factors

Declining Market in 2003 - 5% flat

Overcapacity in envelopes 18 % 20 %

Declining margins -15 % - 6 %

Instability of raw material costs NO YES

Some interesting information was provided by Bob Muma for discussion:

How important is the substitution by electronical media? Electronic diversion has not occurred at the rate originally estimated but it is slowly coming. Transactional mail can be divided into two groups: business to business and business to consumer. The business to business is down because of electronic funds transfer, and the business to consumer will start to decline later in this decade because of online bill payment.

How important are postage costs? The cost of postage is a key determinant of envelope demand; every class of mail is price elastic. For the First class mail, a 1% increase in postage cost means 0.5% decrease in volume. For advertising or direct mail, a 2% increase in postage cost results in 0.8% decrease in volume. Rate is very important to the industry and the EMA will continue to argue for a longer time between postal rate increases.

The second day of the conference included presentations such as “The Greek Post – where does it stands today and what challenges will bring the future”, “Evolution of direct mail”, “The EMA foundation and its accomplishments”, and “Strategic industry management in difficult times”.

Naturally the Dow team took some time to visit the sites of Athens while they were with FEPE. Activities for the FEPE attendees included a guided tour to The Acropolis and Athens City. Other social events included the Cap Sunion Tour and a Vorres Museum & Wine Tasting Tour, with both being sponsored by Dow. The final day wrapped up the congress with golf and an island –sightseeing tour. All the events were very much enjoyed by the FEPE attendees and gave everyone an excellent chance to network and make new friends and contacts.

FEPE plans to hold its next annual conference in Bordeaux France on the 23^rd of September 2004. FEPE is also planning to have a congress in Russia or Turkey to be focused on Eastern Europe sometime during 2004.


News and Information		DOW Attends FEPE Annual Congress Midland, MI - January 07, 2004 FEPE, the European envelope manufacturers association, annual congress was held in Athens Greece on October 8^th through 12^th. The Dow Chemical Company was a sponsor for this congress along with other suppliers in the envelope industry. One of the special guests at the event was Bob Muma, who is currently the Chairman of the EMA (Envelope Manufacturer’s Association) and the Vice-President of Mail-Well. Dow participants included Michael Basista (sales), Alberto Valencia (sales), and Ludovic Harelle (technical service and development). The first day started with working group sessions that included a report and discussion on promoting physical mail and the use of internet auctions in the envelope purchase process. FEPE has developed a “code of behavior” for whenever envelope manufacturers’ become involved in an internet auction, and the document can be found on the FEPE website (http://www.fepe.de/). Another work session included financially unstable clients and a report of clients with unsettled bills. The morning presentation given by Bob Muma and Klaus Schulz discussed Postal statistics, which can be summarized as follows: Postal Market Facts and Figures (Fall 2003) Europe North America Total annual volume of sales 2.3 billion € 5,0 billion € Envelope Consumption 120 billion 208 billion Average Price per 1,000 19,90 € 23,76 € Population (millions) 652 326 Area (million sq.kms) 3,2 16,6 Envelopes per 1.000 inhabitants 175 658 Envelopes per 1.000 sq.kms 37 11 Number of Factories 173 170 Average Factory Size Staff 98 35 Number of Factories over 100 Staff 48 40 Number of Companies over € 100 mio annual sales 12 8 Postal Market Facts and Figures (Fall 2003) Europe North America Number of publicly owned companies 2 4 Major players (billion envelopes) Tompla (16) National (43) Bong (15) Mail-Well (36) Mayer (13) Mead/Westvaco (23) GPV (12) Atlantic (12) Hamelin (8) Tension (11) Top 5 player SOM 53 % 60 Market key differentiating factors Declining Market in 2003 - 5% flat Overcapacity in envelopes 18 % 20 % Declining margins -15 % - 6 % Instability of raw material costs NO YES Some interesting information was provided by Bob Muma for discussion: How important is the substitution by electronical media? Electronic diversion has not occurred at the rate originally estimated but it is slowly coming. Transactional mail can be divided into two groups: business to business and business to consumer. The business to business is down because of electronic funds transfer, and the business to consumer will start to decline later in this decade because of online bill payment. How important are postage costs? The cost of postage is a key determinant of envelope demand; every class of mail is price elastic. For the First class mail, a 1% increase in postage cost means 0.5% decrease in volume. For advertising or direct mail, a 2% increase in postage cost results in 0.8% decrease in volume. Rate is very important to the industry and the EMA will continue to argue for a longer time between postal rate increases. The second day of the conference included presentations such as “The Greek Post – where does it stands today and what challenges will bring the future”, “Evolution of direct mail”, “The EMA foundation and its accomplishments”, and “Strategic industry management in difficult times”. Naturally the Dow team took some time to visit the sites of Athens while they were with FEPE. Activities for the FEPE attendees included a guided tour to The Acropolis and Athens City. Other social events included the Cap Sunion Tour and a Vorres Museum & Wine Tasting Tour, with both being sponsored by Dow. The final day wrapped up the congress with golf and an island –sightseeing tour. All the events were very much enjoyed by the FEPE attendees and gave everyone an excellent chance to network and make new friends and contacts. FEPE plans to hold its next annual conference in Bordeaux France on the 23^rd of September 2004. FEPE is also planning to have a congress in Russia or Turkey to be focused on Eastern Europe sometime during 2004.
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