Stiffer competition from Asian countries, particularly from China, has caused major changes in the European PE film industry. These changes are very similar to those that were seen in North America.
Overall, 1300 plant sites across Europe are involved in PE film business. However, the continent has recently witnessed few notable shifts in production. The most significant change has been in the UK � where an 11% drop has been noted in the number of PE film manufacturing companies. France and Italy too have seen some loss of capacity reflecting challenging market conditions for polyethylene film extruders. The largest number of PE film manufacturing companies are located in Italy, reflecting the country's highly fragmented plastics processing industry. Interestingly, Italy is also an important centre for stretch film production, making it the largest producing country. The larger PE film manufacturing companies are located in Germany and Belgium. In the latter case, this is because of the location of some major film extruders that supply to a wide international market. A number of companies operating in Central Europe have recently shown robust growth, and this region now accounts for 9% of PE film production in Europe compared with 8% in 2003. Production of PE films has been growing at the annual rate of 12% for the past two years in Central Europe as compared with 3% in Western Europe.

Slowing growth of polyethylene film products has been associated with fluctuating raw material costs, highly competitive market conditions and increasing price pressure from customers. The industry has also had to face continued threat of imports of converted products from Asia which has further heightened the competitive pressures within the industry. This has resulted in an ongoing process of corporate restructuring and change among Europe's PE film companies.

The changing structure of the industry illustrates that British Polythene Industries is no longer the largest PE film extruding group. According to AMI's research, in 2005, the German group RKW emerged as the largest group in volume terms with an estimated 2005 throughput of 325,000 tons Vs. BPI's 321,000 tons. As BPI did in the 1990s, RKW has been building a position through acquisitions. In 2000, RKW purchased the Rosenlew polyethylene film and sack business from UPM-Kymmene and followed this in 2002 with the acquisition of the German film units which had previously belonged to BP Chemicals and which operated in similar fields of industrial packaging, agricultural and hygiene films as RKW. It recently acquired Werra Plastic in Germany.
BPI meanwhile has been following a strategy of reorganisation and consolidation following its rapid build of plants and operations in the early 1990s. Several operations have been closed and it has withdrawn from non-core activities in an effort to improve profitability. As a result, polymer throughput in Europe is now some 45,000 tons less than at its peak in 2000.

Private equity continues to increase its involvement in the PE film industry with leading players such as Autobar, Clondalkin, Nordenia and Pactiv. This often leads to rationalisation as investors look to focus on core areas or improve profitability in order to eventually sell on the business. Autobar closed one of its three sites in France and its operations in UK to create a more profitable platform from which to grow the business. Among the smaller PE film producers, there has been a trend to sell machinery as the companies prefer to act as converters or agents only, while others have transferred production to Eastern Europe.