Gravure Package Printing Update from North America Presented by: Charles R. Conover Director of Sales & Service Hurletron, Inc. Libertyville, IL USA

Market Share in Decline Gravure Package Printing continues to loose market share. Companies in 2007 added or replaced 60-70 Flexo-graphic presses whereas only 9-10 Rotogravure presses were added or replaced.

Heat Set Web Offset is capturing more jobs in the insert & catalogue markets at the expense of publication gravure. Product Gravure such as wood grain, flooring & gift–wrap remain relatively strong, as other presses cannot match gravure quality. More than 3,000 printing presses in North America for package & product printing. Include Flexo, Gravure, Offset, Digital & Screen. Of these, 470-490 are Gravure

GRAVURE PACKAGE PRINTING UPDATE NORTH AMERICA August 2008

WORLDWIDE PACKAGING OVERVIEW WORLD PACKAGING MARKET SIZE WORLD PACKAGING CONSUMPTION BY REGION * Source: World Packaging Organization, 2008 $USD Billion * Source: World Packaging Organization, 2008 TOP PACKAGING CONSUMPTION COUNTRIES $USD Billion © 2 0 0 7 A L C A N I N C. Alcan Packaging Tobacco – North America * Source: World Packaging Organization, 2008

NORTH AMERICA PACKAGING OVERVIEW NORTH AMERICA PACKAGING MARKET SIZE * Source: World Packaging Organization, 2008 NORTH AMERICA PACKAGING MARKET BY MATERIAL, 2005 NORTH AMERICA PACKAGING MARKET BY INDUSTRY TYPE, 2005 * Source: World Packaging Organization, 2008 * 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 BOARD & PAPER PACKAGING – NORTH AMERICA RIGID PLASTIC PACKAGING – NORTH AMERICA * Source: World Packaging Organization, 2008 * Source: World Packaging Organization, 2008 FLEXIBLE PLASTIC PACKAGING – NORTH AMERICA METAL PACKAGING – NORTH AMERICA * Source: World Packaging Organization, 2008 * 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 GLASS PACKAGING – NORTH AMERICA OTHER PACKAGING – NORTH AMERICA * Source: World Packaging Organization, 2008 * Source: World Packaging Organization, 2008 © 2 0 0 7 A L C A N I N C. Alcan Packaging Tobacco – North America

Package Printing by Category

Relative Cost of Engraved Gravure Cylinders North America 100 % England 60-70 % Europe 50-60 % Asia 20-30 %

Cost Difference Flexo vs. Gravure “Run of the mill” Flexo……………$0.35/in² High quality Flexo………………....$0.49/in² Gravure…………………………$0.50-$0.51/in²

Major Plastic Flexible Packaging Structures Category % of Market in Dollar Value Rollstock 61% Bags 14% Lay Flat Pouches 3% Standup Pouches 4% Retort Pouches 1% Shrink Sleeves <1% Lidding Stretch Films 6% Shrink Wraps 5% Wrappers Other

Packaging Growth Markets Labels (Heat Transfer- In Mold- Clear Labels) Shrink Sleeves Shrink Wraps Standup Pouches Lidding

Actions Required to Benefit from Growth Opportunities Look at use of Specialized inks & Coatings Concentrate on value added products Printers must work to ensure that packages “Stand out on Shelves”

First Moment of Truth” a defining factor in purchase decisions Antiquated & outdated equipment must be replaced with modern, quick-change gravure presses Gravure is the easiest process available to produce the highest quality printing

Declining Packaging Gravure Markets Non-Value Added Products Tobacco Packaging Very Short Run Jobs

New Market Opportunities Printed Electronics

Printed Electronics – Markets Photovoltaics / Batteries Sensors Transistors / Memory / Logic Commercial Lighting Active Displays Graphic Design / Advertising / P.O.S. RFID

Printed Electronics – Platform Printing Optimizing and Characterizing Printing Technologies Ink formulation specifications and tolerancing Ink film thickness and deposition consistency Resolution capabilities Cost models

Printed Electronics – Production Print system capability needed is determined by device/functional requirements Opportunities exist today that fit within printing capabilities Challenges: Practical knowledge with emerging technology Power / Battery Integration of multiple process steps Lack of Development facilities

Printed Electronics – Clemson What is Clemson doing? Preparing undergraduate and graduate students Dedicated courses with labs – Spring 2009 Career Education – Printed Electronics – Spring 2009 Fundamental research - Existing Developing materials and applications Intellectual property in our focus areas Printing research - Existing Defining capabilities for each printing process throughout the workflow

Printed Electronics – Clemson What is Clemson doing? Establishing a Printed Electronics Application and Research Lab (PEARL) – Spring 2009 Platform press with Flexo, Gravure, Screen, Inkjet Fully configurable based on application Contract testing Company integration Device prototyping Pilot production

Printed Electronics - Clemson Example work These inks are printed like spot colors and sandwiched in a circuit Tunable for custom color

Printed Electronics - Clemson Example work Gravure characterization on PET Ink Film Thickness / Smoothness Resolution

Perception of Gravure Only suited for long runs Pre-Press cost higher than other processes and require more time Change over times high Gravure quality consistently high Easiest of all printing processes to operate

Market Consolidation Graphic Packaging / Altivity Spear Label / Precision Packaging Dow Chemical / Rohm & Haas Printpack / Seal-It

Printpack / Groupo Industrial Plastico- Mexico Alcoa Sale of Reynolds Packaging Division Printpack opens new plant in Poland

Summary Gravure Printing in all market segments continues to shrink All is not “LOST” Opportunities exist to recapture market share

Thank You!