The state of the (packaging machinery) union

Chuck Yuska, president and CEO of the Packaging Machinery Manufacturers Institute, gives an update on the state of the North American packaging machinery market, discusses the challenges brought on by globalization, and provides a few hints about the upcoming Pack Expo Las Vegas.

PW: How is PMMI responding to the efforts of some major Consumer Product Goods companies to source low-cost packaging machinery from countries like China and Brazil?
Yuska: It’s clear that this is a competitive industry. We certainly respect—and can’t ignore—the strengths that suppliers in China and Brazil bring to the table. But when buying packaging machinery, brand owners need to look beyond the purchase price and consider total cost of ownership. Once you start factoring in things like freight, parts and labor for repairs, maintenance and basic customer service from a company that could be located halfway around the world, that machine isn’t such a bargain anymore. And don’t forget about safety, standards, and liability. What happens when an injury occurs on a piece of equipment not built to current standards? Some consumer goods companies are learning the hard way about liability and safety. PMMI members stand behind the equipment they sell and can easily address any issues that come up.
PW: Where does PMMI see future growth in shipment dollars for its members?
Yuska: Forty-one percent of machinery shipments are food-related, and we expect to see growth in that area. Personal care products packaging machinery sales are also on the upswing. In fact, according to PMMI’s 2006 U.S. Purchasing Plans Study, these segments have experienced five consecutive years of growth. Double digit increases can also be seen in pharmaceuticals and beverages. One of the factors driving this growth is the rapidly growing 55-plus population. They are smart consumers who are aware of the connection between a healthy diet and lifestyle. But as “baby boomers” near their sixties, they are also dealing with poorer eyesight, the onset of arthritis, and other conditions associated with aging. Our expectation is that this demographic will drive package design—and the systems that deliver the needed packaging formats—for the next few years.
PW: What is PMMI’s view on the future/continuing consolidation in the packaging machinery industry?
Yuska: Today’s packaging machinery buyers want more than just a single machine. They want a total systems solution. There are clearly several active consolidators in the packaging machinery field who have adopted this strategy to respond to market demand. But consolidation isn’t the only answer. In recent years, we’ve also seen more and more companies forming partnerships or strategic alliances in an effort to offer end users total system solutions rather than just individual pieces of the line. And we continue to see new companies start up and join PMMI. In fact, we’ve doubled our membership size since 1990. Clearly, there is room in the marketplace for varied approaches. Offering total systems, collaborating and forming partnerships, and creating new entities that support innovation are all valid ways to satisfy the needs of machinery buyers, and we expect this to continue.
PW: What does PMMI see as the greatest challenges for its membership in the coming years?
Yuska: Customers trying to make packaging machinery a commodity product is the single greatest hurdle we need to overcome. Frankly, end users are hurting themselves because there has been a concerted effort to downsize engineering staffs. The ripple effect is that purchasing departments—a group that typically isn’t familiar with how machinery will help the company meet production goals—become the driving force in the buying process.
It’s hard to understand why a customer would ask its equipment supplier to respond to a lengthy RFP—which details significant and costly engineering requirements—and then accept the proposal, only to turn that equipment supplier over to a purchasing department whose chief goal is to drive down cost. What comes out the other end is a deal no one is happy with.
Getting a discount on the purchase price for a piece of equipment that will run 24/7 for the next twelve years, while delivering product at a faster, more efficient rate, doesn’t necessarily make sense, especially when the return on investment is typically measured in weeks, not years. But that seems to be the mentality right now, and it’s an issue.
We all know cost is a strong consideration, and that is why PMMI continues to support lean manufacturing and other strategies to ensure that members are delivering their products at a fair price. But we feel it’s time that consumer goods companies take a careful look at their approach to the market and fully understand the ramifications of their buying practices.
PW: How is PMMI positioned to help its membership deal with these challenges? Will Pack Expo need to evolve to meet these challenges?
Yuska: First, our events and trade shows bring the industry together for buying and selling, as well as networking and education. Our other products and services, including our end-user focused media vehicles, help support the message that PMMI members deliver innovation. PMMI’s Certified Trainer program has been well received, and we’ve created a Packaging Community of Practice for members and end users to collaborate on training and documentation issues. We’re also recognized leaders in the standards development arena. The ANSI/PMMI B155.1 voluntary safety standard for manufacturing packaging machinery is quickly becoming the de facto global standard with its strong risk assessment approach. We are all operating in a very fluid and competitive time. But, really, has that ever not been the case? All companies have to change and adapt to ensure they meet the current and future needs of the industry in which they operate. The same is true with Pack Expo trade shows. We’ve made sure Pack Expo evolves with the needs of its global audience. Whether it’s introducing a new technology pavilion, adding a new track to the conference program, or partnering with other associations or industry groups to broaden the scope of the show, PMMI remains committed to ensuring each Pack Expo reflects the industry’s current priorities.
PW: How does the sustainable packaging buzz apply to the machinery side of the industry? How will this trend be reflected at Pack Expo Las Vegas this year?
Yuska: There’s no question that sustainability is one of the major forces driving packaging decisions today. But even with all the talk about the topic, there’s no single definition of how sustainability applies to packaging. The description used by the U.S. Environmental Protection Agency is very broad and can be relevant to many industries beyond packaging. The Sustainable Packaging Coalition (SPC) has done a great job narrowing the definition to eight points that resonate with our community, but they do not necessarily address the issue from a machinery point of view.
At this stage in the sustainability dialogue, packaging machinery is not the primary topic of consideration. Still, PMMI actively supports and encourages its members to adopt lean manufacturing and business practices in the development, production, and operation of packaging systems. If companies fully adopt a lean manufacturing approach to their enterprise, they will clearly be supporting the sustainability effort overall.
Pack Expo Las Vegas will tackle the sustainability trend from both perspectives. Multiple show exhibitors will be showcasing materials and machinery that meet sustainability objectives. There will also be a dedicated sustainability track as part of the Conference at Pack Expo programming, which the SPC will help us develop.
PMMI is a trade association whose more than 500 general members manufacture packaging and packaging-related converting machinery in the U.S. and Canada. Pack Expo Las Vegas runs Oct. 15-17. For more information, visit www.pmmi.org.