The heads of two U.S. flexible packaging companies are looking to developing countries for growth while moving quickly on their home turf in a pressure-filled environment.
Ampac Packaging LLC and KlÃ¶ckner Pentaplast of America Inc. have looked beyond North American borders. Ampac has a film and bag plant in Nanjing, China, that continues to expand, said John Baumann, president and chief executive officer of the Cincinnati firm.
And KlÃ¶ckner, based in Gordonsville, Va., is looking at China and Russia for growth, although no quick decisions are expected on either location, said President Michael Tubridy.
Baumann and Tubridy spoke during a chief executives' panel at Packaging Strategies 2005, held March 29-31 in Atlanta.
Ampac, which filed for Chapter 11 protection from creditors in 1995 and changed owners in 1997, has grown from $20 million in sales in 1997 to an expected $200 million in 2005, Baumann said. Along the way, Ampac had made eight acquisitions and opened a plant in China.
Now, Ampac is starting to export products from the Nanjing facility to Europe and already has shipped some bags back to the United States, Baumann said.
Ampac started as a maker of retail bags, primarily for department and high-end retail stores, and now is focusing on specialty bags, including tamper-evident products for carrying currency and gemstones, and stand-up pouches. A recent purchase started the firm in the medical and pharmaceutical bag business.
In each case, Ampac has found a pressing need to grow into what Baumann called more-value-added products. To play on a national platform, in a market that is highly fragmented, requires a diverse product line, he said.
``We went about this with a sense of urgency,'' Baumann said. ``We needed to develop shareholder value.''
In each of its acquisitions, the company set measurable goals for performance and results. It also gathered a bold leadership team, he said.
Ampac was looking for self-starters and risk-takers, Baumann said. The sales force observes the slogan ``sell and repent.'' That means decisions are made quickly and any judgment errors are recanted later.
``We think risk is a good thing, a very positive thing,'' Baumann said. ``Many people take risks and find rewards.''
KlÃ¶ckner, owned by London-based equity firm Cinven Ltd., has 22 sites and 3,700 people spread mainly between the Americas and Europe. The company, a major producer of calendered PVC sheet and film, also has a plant in Thailand, Tubridy said.
KlÃ¶ckner added a plant in Brazil a year ago, upping capacity there for rigid PVC, he said. About 70 percent of the company's sales of $1.5 billion come from its diversified packaging segment; the rest are in nonpackaging applications.
KlÃ¶ckner has maintained growth ahead of the market and always has been profitable, Tubridy said. KlÃ¶ckner never has had layoffs and pays workers 6-20 percent of its profit each year.
Externally, KlÃ¶ckner does not put all its work with one customer; its largest customer accounts for only 2 percent of sales.
KlÃ¶ckner is branching out beyond PVC, using co-polyesters, polypropylene and other materials.
``We'll continue to expand and grow the business on what we know: film technology,'' Tubridy said.
As far as Cinven goes, KlÃ¶ckner is not certain how long the equity firm will own the company. A possible exit strategy would be a leveraged buyout, one that could add cash to KlÃ¶ckner, he said, but that will depend on the market and the company's needs in the future.