Sonoco Products Co. of Hartsville, S.C., will continue beefing up its plastics business with acquisitions under Chairman and Chief Executive Officer Harris DeLoach Jr., whose vision for packaging's future means operating a nimble company able to respond to changing consumer demands.
The $450 billion global packaging industry is larger than the airline industry and nearly equal to the global information-technology-hardware industry, he said, but will be affected by several trends including fickle consumer tastes, never-predictable raw material costs and the challenges of rising operating costs including medical and pension expenses. Companies must rely on technology advancements and having the right people in place throughout the organization to advance.
``Business as usual for packaging companies is not an option, and that is not all bad,'' he said during his Oct. 30 keynote address at Pack Expo in Chicago.
``I am convinced that this changing environment presents a unique opportunity for the packaging industry. I also believe that packaging companies that will enjoy success in the future are those that are able and willing to change from being so fixated on their historical products and services to becoming more focused on what the customer wants and needs, and then executes by developing and delivering solutions.''
Under DeLoach, the company will continue to grow the rigid side of its plastics business, DeLoach said in an interview at the show.
``We will do that organically and we will also do it acquisitively,'' he said.
But the company also will not shy away from consolidating facilities in its entire operation, including plastics. Sonoco will do that where necessary as it positions its business to be competitive globally in plastics and paper.
``We will continue to expand and contract our footprint,'' DeLoach said. ``We want to position ourselves to be more cost-effective. We will continue to look at all our operations around the globe, not just plastic. So you should not be surprised by expansion or contraction in numbers of facilities in any of Sonoco's operations.''
Sonoco added to its specialty rigid composite container business in late October, acquiring Cin-Made Packaging Group in Cincinnati. According to Ghansham Panjabi, a research analyst with Wachovia Capital Markets LLC in New York, that acquisition expands Sonoco's print and design capability.
``We continue to expect that Sonoco will make similar bolt-on-type acquisitions throughout 2007, potentially adding a West Coast presence for their pack center business,'' Panjabi said in a recent research report.
At the show, Sonoco introduced several injection molded products, including a lightweight, thin-wall injection molded can made of high density polyethylene. ACH Food Companies Inc. of Memphis needed a container for its private-label shortening that would accommodate a new secondary tray pack.
DeLoach told audience members that several trends will affect the packaging industry, including the push for sustainability, growth of retail power, the desire among customers to deal with one supplier face and the overall trend of consolidation among suppliers as customers seek increasing pricing leverage.