Here's a snapshot of the packaging industry in 2008: innovative, increasingly global, working toward a shared vision of sustainability - and strapped for cash.
More than 20 speakers - including representatives from Kraft Foods Inc. and Procter & Gamble Co. - shared their views on the changing landscape, focusing on such issues as packaging innovation and supplier-manufacturer relationships, at the Packaging Strategies Summit Meeting 2008. The event took place March 12-14 in Fort Lauderdale.
Keynote speaker Robert Barnden, global leader at PricewaterhouseCoopers of New York, said the Big Four auditor's annual global CEO survey, released in January, shows that chief executive officers in North America are worried about money.
The survey of 1,150 CEOs in 50 countries found 90 percent of Indian CEOs and 73 percent of their Chinese counterparts feeling confident about the future. In emerging markets, 77 percent of Mexican CEOs and 63 percent of Brazilians expressed confidence as well. Among U.S. and Canadian CEOs, only 36 percent and 33 percent, respectively, share that optimism.
``The one single worry of CEOs is the downturn in the [U.S.] economy,'' Barnden said.
While a weakened dollar helps U.S. producers compete again Europe, he said, packaging companies in industrialized nations will have to take stock of emerging players in Asian countries, Russia and Brazil, with their low-cost labor, as well as an increase in Middle Eastern resin production capital flowing into the Western marketplace.
``You're going to be borrowing money from Abu Dhabi in the future,'' Barnden said. ``You'd better get used to it.''
Bernard McPheeley, CEO of machinery maker Hartness International Inc. in Greenville, S.C., said money is a problem when it comes to designing new packaging machines. ``We just can't afford to do the research and development ourselves and be viable,'' he said.
Dave Behringer, program director for packaging global technology and quality at Kraft Foods of Northfield, Ill., said a lack of R&D money is hindering innovation in the consumer goods industry as well. He urged packaging suppliers to work with consumer product manufacturers to make products that appeal to consumers as well as adhere to sustainability requirements set by packagers, consumer goods makers and retailers.
``The thing that we haven't done in the past is think about unique partnerships,'' he said.
Behringer said Kraft is developing a scoring system to rate suppliers, with innovation as a key criteria, as well as issuing ``challenge briefs'' to suppliers - giving them six to nine weeks to get back to Kraft with new packaging proposals or risk losing the firm's business.
Cincinnati-based P&G has gone in a similar direction, creating work groups of ``technology entrepreneurs,'' 70 engineers worldwide who seek out innovative packaging designs for new products, said Paul France, the project's principal engineer.
``We found things that were cooked [market-ready] in North America that totally were not cooked in China,'' he said.
With a goal of introducing 35 new products annually, P&G is seeking global alternatives to traditional supplier networks, rather than strictly sticking with local processors, he said. That garners P&G innovation and cost savings, according to France.
Two emerging global players sent top officials to the conference: Sanjay Bhasin, CEO of tubes and laminates at Mumbai, India-based Essel Propack Ltd., and Jose Carlos Grubisich, CEO of Brazilian petrochemical giant Braskem SA in CamaÃ§ari.
Bhasin said Essel is ``close to making some sort of announcement'' regarding its U.S. operations as part of its 2012 vision plan, but he did not give details. The company has a manufacturing site in Danville, Va., that makes tubes for personal-care products, cosmetics and food.
Grubisich, whose $9.7 billion firm's recent foray into sugar-cane-based PE has plastics executives buzzing worldwide, said Braskem plans to outpace its main competitors in the Americas resins segment by 2012.
By then, Braskem will produce 5.7 million pounds of polyethylene, polypropylene and PVC annually, compared with 3.1 million pounds in 2008, he said.
Partnerships for oil with Venezuela and natural gas with Bolivia, as well as Brazil's newly discovered offshore petroleum fields and the opening of millions of acres for growing sugar cane will aid the firm's efforts, he said.
Grubisich touted the sustainability of Braskem's so-called ``Green PE,'' saying its advantages include low cost, easy conversion and high recyclability value. He said the firm will produce about 26 billion pounds of bio-based PE this year and has invested in a plant that will open in the first half of 2010 with capacity for 440 million pounds per year.
Nearly every presenter at Packaging Strategies had something to say about sustainability, even if there is no industrywide consensus on what the term means.
John Perkins, MeadWestvaco Corp.'s sustainability strategic advantage team leader, highlighted the disconnect between what sustainability means to consumers opposed to manufacturers. ``We only found that two terms resonate with consumers right now, and that is `recycling' and `biodegradability,' '' he said.
For business sustainability, Perkins suggested a three-pronged definition: (1) the use of existing resources in a manner that ensures they're available to future generations; (2) winning sustainable brands; and (3) generations of commercial, social and environmental performance.
Bhasin said sustainability has different meanings depending on which continent a company is doing business: ``I think it's fair to say it's a North American ... and Western European phenomenon,'' he said. ``The rest of the world, like India and China, also talks about sustainability, but somehow the pitch, the sense of urgency,''