Packaging is, and will remain, big business. The impact of transportation packaging on material handling, in particular, is expected to outpace other sectors of the packaging industry. Transport packaging is the fastest growing segment within the general packaging business sector, says Bill Armstrong, technical development manager, Sealed Air Corporation. “The world of packaging has changed from pallets to eaches in many distribution centers,” he explains. “Thus, managers have placed a higher value on the packaging process in terms of speed, efficiency and performance.”
According to various industry figures, the global packaging industry expanded to more than $400 billion in 2002. While the growth rate was regarded as stagnant, by some standards, packaging stocks outperformed the market, according the U.S. Bancorp Piper Jaffray packaging index in which stocks rose 12 percent.
Mergers and acquisitions played a major role in packaging industry activity throughout 2002 and have continued. U.S. Bancorp Piper Jaffray reports the number of mergers and acquisitions in 2002 dropped 20 percent from the previous year and were a third fewer than the historical high of 370 transactions in 2000.
In the perennial paper-versus-plastic conundrum, plastic is expected to make continued inroads, albeit at a slower pace — this, according to a study by the Freedonia Group. The Paper Versus Plastic in Packaging study indicates plastic packaging demand will increase at a 3.3 percent annual pace for the next several years.
According to the recently published 2003 U.S. Packaging Machinery Purchasing Plans Study, completed by the Packaging Machinery Manufacturers Association (PMMI), consumer and industrial goods companies will increase their packaging machinery expenditures 1.5 percent to 2.5 percent over the previous year. This is expected to amount to $5.084 billion in 2003.
The study suggests that five of the eight major market segments will grow between 3.2 percent and 4.9 percent during the year. These segments account for approximately 80 percent of the U.S. and Canadian packaging machinery market.
“Packaging machinery manufacturers serving the food, pharmaceutical, beverage, personal care and household chemical markets should be confident that they will have sales growth, based on this study,” says Charles D. Yuska, president, PMMI. “Growth in these specific markets, combined with the fact that more than two-thirds of the overall respondents plan to keep up or increase their packaging machinery expenditures this year is good news for packaging machinery manufacturers who have been seriously affected by the manufacturing recession over the past two years.”
More companies (33 percent of those responding) plan to increase spending for packaging machinery in 2003 rather than reduce spending (27 percent). Thirty-four percent are budgeting about the same as last year.
PMMI’s 2003 Purchasing Plans study is based on in-depth interviews with 417 decision-makers reporting on the purchasing plans of 1,628 plants throughout all sectors of the U. S. market. The study offers a snapshot of the purchasing intentions of consumer and industrial goods companies and the primary market factors affecting spending levels for the given year.
The top three reasons consumer and industrial goods companies cited for ordering new equipment in 2003 are:
• Replacing machinery to gain efficiency, speed, flexibility and productivity (27 percent);
• Expanding production capacity for existing products (23 percent);
• Automating to reduce labor costs (12 percent).
“Consumer and industrial goods companies are under extreme pressure to introduce new products to gain market share,” says Yuska. “This means they are looking at new products, and innovative packaging shapes, sizes and configurations for their packaging. The study finds that more than 60 percent of all machines being ordered are the result of customers’ needs to gain better flexibility to handle these new products and packages.”
Calling for help
Another interesting aspect of the survey reflects the increasing use of contract packagers, or third-party logistics providers (3PLs). Forty-eight percent of the sample’s respondents reported using contract packagers for at least a portion of their packaging requirements.
As one on the consulting side of the transport packaging business, Tom Blanck, president, Packaging Solutions Group, says, “We’re seeing a lot of pent-up energy being transformed into solid activity. Even in the non-traditional channels, resellers are buying in unit loads and shipping in small parcel units.”
The reasoning behind choosing consulting and third parties for packaging fulfillment continue to be as they always have been. Companies find it more cost effective to use professional services for a limited time, rather than maintain full-time packaging engineers. It’s estimated by PMMI that slightly less than one-third (32.8 percent) of the sample in their survey outsource some portion of the design and installation of packaging systems to system integrators. The systems integration involvement of the machinery manufacturers as a percent of the total continues to increase.
An example of how companies are working together to best serve the customer is the relationship Sealed Air Corporation has with Exel in the United Kingdom. The two companies have worked together for more than 20 years. As the times have changed in the packaging industry, Exel has responded to Sealed Air’s changing needs by developing a supply chain to support Sealed Air’s Just-In-Time manufacturing processes. Exel has virtually eliminated inventory holding and reduced the time goods spend in the supply chain.
At its plant in Kettering, England, Sealed Air has no storage facilities. Trailers are loaded at the end of production lines on a 24-hour basis. Finished product is moved for immediate delivery by Exel or held overnight in an Exel facility, about 1.5 miles away.
“We work with Exel on a close partnership basis,” says Steve Lingard, Sealed Air’s Kettering plant manager. “Exel supplies what we want, when we want and how we want it.”
Exel has recently started a back-hauling scheme with Sealed Air’s customers, also. “Our logistics operation has become increasingly challenging so we need a third party provider who can deal with new levels of sophistication and integration in the supply chain,” says David Blackett, distribution supervisor, Sealed Air.
What to watch for
Dow is a producer of wide range of polyolefins and elastomers used in rigid packaging. Spiro Petsalis, is an asset manager for the company. He says the increased design flexibility of plastic offers users of plastic products more options. “We’re seeing more companies switch their packaging requirements [to plastic] when they want to specialize in how they ship products.”
Petsalis adds that knowing how the package will be used is a key requirement in making the initial packaging material selection.
Several recent developments, products and ideas introduced in the past six months will most likely expand in importance as the economy improves.
The use of air as void fill is not new. The number of companies producing air-filled, or air-based products is increasing. Companies, like Sealed Air, that have offered these products for a long time have consistently improved the quality and usefulness to the point where competitors are more commonplace. Look for air to come packaged in a variety of shapes, as pillows for general void fill, or in specific configurations for safely transporting products like wine bottles.
Another aspect of air void fill is the introduction of machinery to fill precut sheets of film on demand. Recently Sealed Air introduced its machine that can put air into its sheets of inflatable bubble wrap, as needed. The system automatically inflates and dispenses pre-perforated, three-quarter-inch height inflatable Bubble Wrap material.
Pactiv is another company moving toward greater use of air in its void fill packaging material. One system the company offers converts rollstock material into continuous perforated chains of air-filled cushions. The cushions are produced as needed. When deflated, the cushions reduce to one percent of the inflated volume.
At the high-tech end of the spectrum, automation in packaging machinery is beginning to benefit from recent developments in software. Based on the combined efforts of PLCopen and the OMAC Plug-and-Pack Workgroup, international programming standards are emerging for packaging. The official designation of this language standard is IEC 61131-3 and is currently available on some machinery.
More flexible automation, mostly in the form of robotics, can also be expected. At PackExpo 2002, Fanuc Robotics demonstrated a packing robot with two or four axes of control for high-speed packing and improved pick-and-place dexterity. Built-in vision intelligence and belt-line tracking enable the robot to pick random-oriented products off a moving conveyor with little or no fixturing.
Also at the show, Polypack was demonstrating a pick-and-place shrink bundler with case loader. The machine can group products and place them on a conveyor for shrinkwrapping. A robotic discharge system then automatically places the product groupings into an erected case.
It appears the trend is away from fixed automation toward more flexibility in workcell formats.
Ergonomic guidelines from the Occupational Safety and Health Administration are another unknown that packaging professionals are watching. Even without guidelines, packaging lines have become more sensitive to ergonomic issues. In PMMI’s 2002 purchasing study, ergonomic safety made its first significant entrance when five percent of the respondents cited ergonomics as a primary reason for purchasing new equipment. This year, six percent of the respondents cited the factor’s impact as their leading reason for ordering packaging machinery. MHM
Sealed Air Corporation, www.sealedair.com
Packaging Machinery Manufacturers Association (PMMI), www.pmmi.org
Packaging Solutions Group, (952) 967-9400
Fanuc Robotics, www.fanucrobotics.