2011 has been a year of global economic, political and social turmoil set against a backdrop of natural and manmade disasters, and allegations that have rocked the foundations of our sector.
In our natural world, 2011 brought huge earthquakes in Argentina, China, Japan and New Zealand. Devastating floods occurred in Australia and South East Asia, and a savage tsunami struck Japan, leaving coastlines obliterated and nuclear calamity at Fukushima. Civil war has occurred throughout the Middle East and North Africa, where regime changes have caused civil unrest. The global economy has been turbulent and even now, the eurozone one is facing massive challenges and survival of the common currency is being openly questioned.
Whilst all of these events occurred, the banknote industry faced its own challenges and successes.
The allegations of impropriety against Securency followed by the production irregularities at De La Rue that began in 2010 spilled over into 2011 and both have yet to reach a conclusion. These latter allegations contributed to the RBIâ€™s determination to become self-sufficient in all aspects of banknote production, a determination fuelled by increasing levels of supposed â€˜politicalâ€™ counterfeiting of the Indian currency.
More recently in the year, allegations were levelled against the Austrian state-owned printer OeBS for suspected payment of un-authorised sales commissions in Syria and Azerbaijan, allegations which stretched as far as Governor Ewald Nowotny who is a member of the ECBâ€™s governing council. Today, these allegations still remain unresolved.
2011 has seen a mixed set of results reported by various major companies. In the spring Oberthur, G&D and Orell FÃ¼ssli announced improved profits; Landqart, Oberthur, Spectra Sciences and Authentix raised money on the capital markets; and De La Rue surprised industry watchers with a better-than-expected half-year report. As we approach year end, however, Orell FÃ¼ssli has issued a profits warning and Fortress, owners of Landqart, reported a very poor first half for the Swiss banknote paper maker and are raising another C$35m on the market.
There have also been a number of company changes seen during the year. G&D and Wincor joined forces in producing sensors and banknote sorting giant Toshiba bought US company Non Linear Concepts. The worldâ€™s largest security and CIT employer – G4S Â â€“ tried but failed to acquire the Danish contract cleaning and catering company, ISS, in a Â£5.2 billion deal. De La Rue closed two non-banknote plants in UK, and in November G&D announced the closure of its 145 year-old plant in Ottawa, Canada saying that the decision was related to the Bank of Canada’s move to longer-lasting polymer currency which would reduce demand for new banknotes.
During November De La Rue surprised the markets when it announced the signing of a technical partnership with Komori. The strong demand for euro currency saw a Joint European Tendering (JET) contract awarded by De Nederlandsche Bank (DNB) to Bundesdruckerei, G&D and De La Rue, excluding Dutch banknote printer Royal Joh EnschedÃ© from printing for its own central bank for the first time in 200 years.
Regarding industry products, most paper makers continued to promote durable substrates though seemingly ignoring the threat of industry contraction caused by longer-lasting banknotes. De La Rue launched its polymer substrate Flexycoin and announced its first reference note, for issue in 2012. Louisenthalâ€™s paper/polymer variant Hybridâ„¢ is now gaining traction, while Fabriano has joined the ranks of composite substrates with the launch of Fusion.
Despite the existing bewildering array of security features for banknotes already available in the market, 2011 saw the introduction of even more as, again, the industry showed its ingenuity in producing a wide range of substrate and print features.
But whereas product differentiation appears to be the name of the game on the production side of the industry, it is standardisation that is gaining ground on the issue side, with a growing consensus that common systems and platforms are the way to successful recirculation that will drive down the cost of cash in circulation.
As 2012 approaches, there are signs of better trading conditions; Nigeria is considering its future as a polymer substrate issuer, Euro Series 2 is predicted for issue in 2013 which will mean higher ES1 series printing, and there remains the outside possibility of a return to legacy currencies for some of the hardest hit eurozone economies.
No one can say the banknote industry is dull; we live in interesting times!