Category Archives: Packaging

I’m Back and We’re Not for Sale

Recently a purchasing manager at a customer opined that our company Emerald Packaging, Inc., must be up for sale. His evidence? I have not been as active since my father’s death in August 2016 and family businesses nearly always sell after the founder dies.

This purchasing manager doesn’t know me well,  so he doesn’t know what has happened over the last 15 months.  Regards the business he may not understand we’ve invested heavily over the last three years, a sure sign of commitment.  Perhaps we have not told our story well enough. I know I have failed to tell my tale. Maybe vanity, maybe pride, maybe just a simple wish for privacy.  But I figure one person must represent a few.  Other’s must think like him. So here’s the truth.

My father’s death hit me hard.  He was a confidant, friend, and the man who raised me. During the final days of his life I guided much of his care spending 18 hours by his hospital bedside day-after-day, making sure doctor’s did as they promised, preventing his early release, helping put together his treatment plan, and regularly checking with his case manager. I did this almost as I would a job. I walled off emotion.  I focused on making the right decisions and helping him say goodbye to friends and family.

His doctor admired my dedication but warned I would pay a steep price for the hours logged and emotions stuffed. A wise man.  I held it together through his funeral, helping guide the planning, and then fell apart. I sat on the edge of my bed the night of his funeral sobbing, asking him “What now Dad, what now?”

I wandered the desert for several months. I had been intimately involved in his care since February 2016 and now that was over. I had a hard time entering my office simply because he used to sit at my small conference table a couple of times a week and go back-and-forth with me about politics, the grandchildren, the Catholic Church and business, whether his or Emerald.  I had no resilience, no energy. Exhaustion enveloped me. I became irritable quickly, had a hard time with complex tasks. I read for solace, avoided people.

As I emerged in the late spring my youngest daughter developed health issues. Some of it was emotional. She had spent a lot of time with Dad in the hospital, even holding his hand as he died. Post-traumatic stress descended. Obviously her recovery became paramount.

When she improved, I immersed myself in the business during the early summer. I threw myself into operational issues including a study on press efficiencies. I oversaw the final stages of our project that connected the buildings that house our operations. Not one part of the business didn’t feel my touch or escape questions. I felt I was back. I think employees would agree.

Then over the summer horrid news. My wife had ovarian cancer. We got the word on the last day of our early August vacation following a series of tests that began in mid-July. Ovarian cancer is the number one killer of women under 50 because it grows silently. Usually it is advanced when discovered. Often too advanced for treatment. I couldn’t believe it. This couldn’t happen again?  Or would it?

I spent the next weeks helping at home as she gradually weakened.  We searched to find the right doctor for the necessary surgery. Her tumor grew so rapidly that if she sucked in her abdominal muscles you could actually see the large lump. We found a surgeon on the recommendation of my Dad’s oncologist. He removed the tumor on September 11. We were warned, given the its size, to expect months of chemotherapy.

As these things go though we got terribly lucky. Her cancer had not spread which meant no chemotherapy. But a 9″ incision needed to heal, she had sutures everywhere, and a radical  hysterectomy.  She faced an eight week recovery with the first three or four mostly in bed limited to 2 or 3 walks per day.

Unfortunately for my children this meant I became head of the household. This experience changed me. I could not believe the amount of work involved in running a family, from meals to constant clean-up, help with homework, projects around the house, care for the vegetable garden, washing the clothes and so on. I oversaw her care, provided emotional support as best I could. By the third week though I exclaimed that housework made me “feel like a slave.” She laughed at the lesson.

Finally, in mid-October, I reinserted myself into the business. By now I worried some jinx had befallen me. I could not help but think another disaster would ensue. I began the process of catching up. I took on drafting a three-year strategic plan, and looked at reorganizing our sales organization. I attended an industry trade show, reintroducing myself to  customers, many I had not seen in many months.  Over the last month I’ve grown confident that the worst year of my life is behind me.

So that’s been my life. I have no regrets how I mourned my father. Some may look at it as a sign of weakness or a failure of will.  I couldn’t have done it differently. I had to go where I had to go. I knew I needed to heal emotionally, I examined how I wanted to grow, and I thought about how the business needed to change. Getting diverted by a daughter’s sickness causes no shame. I stand by how I cared for my wife before surgery and after. Anything less would have been a sin.

The business? It has done well because I’ve put together a great team over the last five years. My chief operating officer dove into our software implementation, helped the sales group, and tackled financial issues with our controller. Our management team began planning our next investments, having just completed a $15 million expansion with the addition of a new printing press and pouch making machine in August. We hired a great director of printing.  Sales pursued leads, landed new accounts, and continued our commitment to hit lead times better than we had in recent years.

We’re not up for sale unless someone hands me a blank check. That won’t happen. I’m only 56. I have a great, young group of managers. I like the business. I love equipment, the people, customers and the search for new opportunities.

I do know companies that have sold after the father dies. That mostly happens when the next generation isn’t deeply involved. Cashing out makes sense. But that’s not us. It’s simply gossip that comes up after a death. I’ve been chief executive officer since 2002, making the decisions, driving the strategy, modernizing our factory. Dad provided advice on big issues — he had been in the business since 1956 so why wouldn’t I turn to him — but I often did not take his advice, sometimes for the better, sometimes not.  My shoulders carried the responsibility, not his.

There it is. An update on me and the business. Hopefully this reassures our customers.  I know gossip fills vacuums. We didn’t provide information, tried to keep my travails private, and maybe didn’t tell customers enough about new equipment purchases, great hires, and plans for the future. I promise more communication. Beginning with this post.

On Bids

bidEvery so often a bid lands on my desk. It’s either a current customer seeking lower prices or a prospect looking to see if we’ll compete for their business. Whatever the case, it usually means someone asking for bottom dollar, or close. No other qualifications matter. Such exercises drive me nuts.  Any company can find someone desperate or dumb enough to buy business.  Even we’ve been guilty of such stupidity, always discovering it doesn’t pay.  Some customers can’t help themselves.  Supplier madness is just too tempting.

Sometimes we run into a company that takes an entirely different approach. They work to find a way to create a win-win. I know that sounds cliched,  but it does happen. It requires hard work on both sides, a willingness to find creative ways to cut costs or limit price increases.  The process works because it cements partnerships that lead us to bring new ideas to them first and help them through hard times when needed.

Two or three times this year customers took this approach. They stated up front that they value what we bring to them, usually quality and new technology. Another appreciated our willingness to extend terms when they ran into a financial blip. Each wanted to trim cost, but they wanted to understand what we needed as well.  They didn’t want to disrupt a supplier relationship that worked, and valued that over the lowest price.

The approaches varied. One customer sat down with us and reviewed their packaging cost drivers. Plastic resin is one, but they understand we have little control over price movements pounded through by oligopolists like  Dow Chemical and Exxon Mobil.  However, this customer had an obvious way to reduce their prices. They used several different packaging sizes for the same item, an old practice that wasn’t required anymore.  Multiple bags meant we had to run smaller batches, which lead to higher prices. Together we worked to rationalize their bag sizes, taking four down to two, which allowed us to produce larger orders and reduce their prices.

Another customer took an entirely different approach. When they did their biannual bid we sat down and talked over their current prices. We contended they needed to go up, thanks to low prices exacted on prior bids and our need to cover cost increases in other parts of our business, like health care. We’ve done business with this company for many years and they appreciate the new ideas we bring to the table, and the consistency with which we meet their specifications. So they listened. In the end we compromised. We still provided highly competitive pricing, but we got enough bump to help. We kept most of our business.

On the opposite end of the spectrum there’s a company that bids their business every two years. They send a multi-page questionnaire asking about our technical ability, financial stability and willingness to help them develop new products. I spend hours answering the questions believing for some reason that even if we are not the lowest price, our service orientation and our engineering prowess will win the day. It never does.  The buyer awards the business to the lowest price, and my impassioned pitch goes to waste. Someday I won’t accept their invitation to bid.

Our company takes a holistic approach.  We do check resin prices rigorously, but award most of our business to the company that has delivered consistently good product. We work with our ink company to find ways to reduce cost, but we don’t toss them if someone shoots in a lower price trying to buy our business.  That doesn’t mean we never cut lose a supplier. Currently we have one on the way out. They didn’t deliver, rarely reduced cost and never brought new ideas.  So why be loyal?

Bid can cut prices. But they guarantee nothing when it comes to quality or service or willingness to work with a customer to reduce total cost.  Bids won’t reveal if a supplier will work with you when you run into trouble, as most companies do at some point. I know those companies that have gotten us where we are remain the ones which will drive us into the future. We hitch our wagon to them. We appreciate and value and help those customers that do the same.

Careless Email, Destructive Words

imagesMost of us have vented frustration in an email.  Some rant at the recipient like they’d never do in person.  A smaller subset stumble badly.  We hit “Reply All” when we don’t intend to, write a nastygram or some other uncomplimentary email about a person and hit “Send” only to  realize that the person who we are complaining about got the email.  Fevered attempts to recall it usually prove fruitless.  The unintended recipient either ends up embarrassed or offended.  Explanations may or may not salve wounds.  But damage lingers.

As a principle I don’t write nasty notes because they might get forwarded.  If I have criticism, I make sure I say it in person.  However I have hit the “Reply All” button and unintentionally sent an email asking another manager why one of his direct reports doesn’t understand his directions, only to realize too late that the message went to the direct report.

Recently something worse happened.  One of my colleagues had to deliver some bad news to an important supplier.   My colleague had done everything they could to ensure a good outcome.  But it just didn’t work out.  The email my colleague sent had several recipients on it.  One obviously unintentionally hit “Reply All” and sent an email questioning my colleague’s competence and even their motivations.  The result? Just like that our relationship, central to a new project, deflated.

The invective dripping from his email indicated feeling that went beyond this one issue.  But when he recognized what he had done — even before we had seen the email — he left a message on my colleague’s cellphone backpedaling.  “I shouldn’t have sent that email,” he said. “I’m sorry.  I was frustrated about something unrelated to you.”  That didn’t pass the smell test.  I immediately began asking myself why he had written it.  What frustration did he harbor that lead him to say what he did?  We must have done something wrong.

He compounded his error by making the lame excuse. The sender should have spelt out his frustrations.  Failing to do so chipped away his integrity.  He could have used his mistake to speak frankly about what we had done to upset him and in doing so strengthened the relationship.  Actually I think it best in these situations to go a step further and address the issues in person.  That tells someone you value the relationship.  Voicemail doesn’t.

One of his superiors called to fix the damage.  Doing so upset me further. Why couldn’t he call to talk in person?  Unfortunately the partner used the word “if”, as in “I am sorry if you were offended,” or something like that. The British writer George Orwell recognized the word’s power half a century ago in his wonderful essay “Politics of the English Language.”  Want to deflect responsibility?   Deploy “if”.  “I’m sorry if you were offended” shifts blame from the speaker and places it on the victim.  “If” distances the transgressor from their transgression.   The correct usage?  “I’m sorry he offended you.”

We did not hear from the writer for two weeks. That meant the wound festered for days.  “What had we done? What had we done?” droned on in my head.   Obviously not good for any relationship, personal or business.

When we finally talked he confessed that a series of frustrations unrelated to us caused him to crack when we delivered the bad news.  Plausible?  Maybe. But the length of time it took to call left too many questions unanswered.  His in effect uttering the hollow words of the protagonist in poet T.S. Eliot’s “Love Song of J. Alfred Prufrock: “That is not what I meant at all;/that is not it/at all.” didn’t really satisfy.  However it was time to move on.  The relationship mattered too much to allow an email to destroy it.  Ultimately I hope the lack of respect embedded in it doesn’t portend a sad end to it.

Whatever the case, the writer provided a reminder that “Reply All” has destructive power.  At least I can thank him for that.

 

Turning Disaster into Freeze-Dried Blueberries

dried-blueberry-productRecently I had the wonderful opportunity to dine with the executive team of Homegrown Organic Farms, which operates one of the largest organic blueberry operations in the country.  I’ve rarely met a more open, honest and intelligent group — and I am not saying that just because they are customers — so passionate about their product.  It being our first meal together we spent time swapping stories family and corporate histories.  My team, lead by local Xpedx technical sales representative Chris Kampsen then had a chance to learn about the range of new products they hoped to introduce.  They asked our help to develop the necessary packaging.

If you had told me I would be sitting at this table over steaks and Italian food nine months ago I would laughed in disbelief.  Back then we had nearly destroyed the retail launch of their freeze-dried blueberries thanks to pouches that failed during packing.  Quite simply the seals at the bottom of the bag which enable it to stand-up did not exist. You couldn’t tell from the outside of the pouch.  The impression left by the seal bar was there, so the bags slipped past quality control.  If we had stuck our hands in we would have noticed the problem.  But that wasn’t part of our quality control protocol back then.

We had been so proud of the pouch.  The life-like printing made the blueberries on the front come to life.  Pitch perfect blue.  The bag looked majestic, tall with silver edges, likely to catch the consumer’s eye.  Our company knew that Homegrown had taken a big risk being first to market with freeze-dried blueberries.  So we thought we had taken extra care with the printing and pouchmaking.  The project was also our first with the Fresno branch of Xpedx and we wanted to shine.

Trouble arrived on a Saturday morning around 6:30 a.m.  I happened to look at emails while driving my daughter to a track meet in the Central Valley.  I know you shouldn’t read emails while driving but the story was so compelling that once I started I couldn’t stop. Our salesperson Barbara Gaitan and chief operating officer Pallavi Joyappa and Chris were trading notes about a potential pouch failure.  And as the day wore on the news got worse and worse.  The 4 oz. pouches did not work.  If something wasn’t done fast the company would not meet its roll out.  We had no choice but to get good pouches out pronto.

Pallavi guided the rescue effort.  We sorted bags in inventory at our facility and shipped them.  That bought us a few days. Then we went back into production to make new pouches.  That meant finding a way to break into the schedule — a task that fell to my sister Maura — print and make bags.  Later we dispatched a crew to their packing facility to sort through the bags on the floor. It took two days in near freezing conditions but they culled out the failed pouches.

Homegrown made its first shipment thanks to the crisis management.  But we had left them with a hefty bill for ruined product.  Xpedx told me the not insignificant number and my head hit the desk.  It did not occur to me for a moment not to pick up the bill.  We run a company imbued with family values.  One of those is integrity.  We don’t stick others for problems obviously of our own making.

I didn’t expect Homegrown  to keep us as a supplier.  We had failed to deliver what they needed most — quality pouches.  But this company proved different.  They admired the lengths we had gone to address the issue and profoundly appreciated the efforts made by our staffers who sorted the pouches in frostbite conditions. The fact that we paid the bill without hesitation told them we stood by our customers.  To my great shock came the phone call that they planned to keep doing business with us.

Owner Karen Avinelis spoke plainly.  They liked our character so much they wanted to partner with us, provided (of course) that the problem did not recur.  I think I had not been so humbled in my life, and rarely so touched by a businessperson.  She not only taught me that doing the right thing sometimes pays, but that telling a person how much you appreciate their company’s efforts can touch the heart.  Her willingness to give us a second chance made me look at how we treated our own suppliers.  Today I’m prouder than ever of that pouch.  Not because of what’s on the outside but what’s on the inside.  The soul of a family, the Homegrown Organics family, and the best freeze-dried fruit I’ve ever tasted.

 

The California Bag Ban 2014

flying bagAfter over a decade of struggle, the plastic grocery carry-out sack looks doomed in California.  Earlier this month the legislature passed a state-wide ban on bags to take effect in July, 2015.  After that you’ll either have to bring your own or pay 10 cents for a paper bag.  If you’re like me and carry a reusable bag in your car, that means roughly a quarter of the time you’ll get dinged for paper. I forget the bag that often.  One of my main arguments against the ban has always been that it disproportionately effects older people, who are more prone to forgetting.  Well, actually I’ve never argued that, but doing so may have convinced the American Association of Retired People to throw their weight against the bill.

Plastics manufacturers in California saw the ban coming years ago.  Back in the late 1990s regulators had taken aim at bags, thanks to the amount crowding municipal landfills.  Nearly 15 years ago our statewide plastics group, then called the California Film Extruders and Conveters Assn., saw the bag in the wind and pulled together a national plastics group to hash out a program to sidetrack bag legislation.  We proposed organizing a self-regulating industry commission that would levy a fee on each pound of plastic sold in California — less than a penny a pound — that the state could use to encourage recycling and clean-up litter.

Our group proved ahead of its time.  Too many of the large national bag suppliers as well as their Washington, D.C. trade associations opposed taking any action in California, arguing that a ban would never happen.  This position did not change much over the years, though the big companies moved from outright dismissal of our group’s fears to actively fighting against bans by throwing dollars at the legislature.  During one particularly vicious fight in 2010 to block a bill opponents spent over $2 million.  Year after year such lobbying succeeded, which bred a belief that bans could always be defeated.  They got it right, until this year.

What changed?  My guess several things shifted.  To begin with the Latino Caucus, with its 24 mainly pro-business legislative members, has fallen into disarray.  Last year the FBI launched an investigation into the its leadership and the use of Caucus funds.  As a result caucus members did not want to appear beholden to donors, so money pumped into the fight had diminishing returns.  Grocers have also grown tired of the patchwork of bag laws across the state — over 100 cities and counties covering 35% of the state’s population have already passed bans — and wanted a unified law. Finally, California corporations took varying positions on the proposed bill, which had not happened before, reducing the industry’s clout.

Much of the news media overlooked that division.  Some company’s actually benefit from the bill because it exempts reusable plastic grocery sacks from the ban, defined as one that can withstand 125 uses.  A few manufacturers already make bags that meet this standard, so the law creates a large market for them.  By contrast, the mainly large national companies that opposed the bill can’t easily retool their machines to make reusable bags, which are thicker than their super-thin cousins.  The bill provided sweetener of $2 million to help California companies upgrade their machines to run compliant bags. The law exempts compostable bags completely, a provision that also peeled away some plastic opposition.

So the plot proved thick.  If only the industry had come together as hoped many years ago and tackled the problem on its own, this whole fight might have been prevented.  The industry did get behind a law a few years ago that mandated stores provide opportunities to recycle bags, but recycling rates never approached what regulators hoped.  Instead, the arguments made by environmentalists increasingly won over the public, even though many of the facts used by them were fiction, including that plastic causes oil pollution (it is made from natural gas), that plastic bags are a major cause of marine debris (studies have not shown this) and that endangered animals mistake bags for food (again, not much here).  But the environmentalists managed to make the single-use bag a symbol of our throwaway society.  Eventually they succeeded.

I’ve spent the last several years involved in the bag battles.  Our company does not make grocery sacks, but anything that harms the industry I figure in the end hurts us.  If plastic gets a bad name, who knows if our bags eventually get banned even if our produce packaging reduces food waste.  So I helped sue the city of Oakland to block its ban (we won) several years ago and lobbied in Sacramento when it made sense.  I was at the table when the industry began debating ideas about how to tackle litter and recycling.

Today I find myself somewhat relieved the bill wasn’t worse.  At least plastics still has some role.  Of course there will likely be suits seeking to block implementation. An initiative effort has already aimed at overturning the ban has kicked-off.  But if California corporations can make hay by producing reusable bags, then in the end that’s making the best of a bad situation.  A ban had become inevitable.  Ultimately the industry negotiated something short of unconditional surrender.  That’s the best we could hope for in 2014.

Emails, Texting and Business

iphone_addiction_798185Recently I banished iPhones and PDA’s from company meetings.  Over time it had become increasingly common to see staff checking their phones while a colleague tried to bring their attention to an issue. Or worse, they’d begin texting.  Not only is such behavior rude, study after study has shown that you cannot divide your attention between your phone and a conversation and do justice to either.  “Not unless you are negotiating Middle East peace,” went the one caveat I offered for getting on the phone during a meeting.  Our confabs aren’t very long, and if someone is expecting a call they can always bow out or reschedule it.

I became alert to the issue when I noticed people glancing at their phones during customer visits. Doing so just communicates exactly what you don’t want in the first place.  If I’m the customer I take away that we aren’t terribly important.  It doesn’t matter if you check by looking down at a phone slightly obscured by a table.  You can’t hide downcast eyes, nor fingers working quickly on a message.  Everyone present knows exactly what’s going on.  More importantly, the customer knows we’re not paying attention.

I don’t think anyone at our company means to be rude.  We’re just part of a culture that has become addicted to our phones.  Surveys show, for instance, that over 50% of Stanford University students believe they’ve developed an iPhone “habit”.  An unbelievable 8% report feeling that their iPad is jealous of their iPhone (these kids are smart?).  Businesspeople obviously aren’t immune.  We’ve become accustomed to putting our phones in our pockets and on our desks or on conference tables just waiting for that tweet, text, email or call to come through that requires  seemingly immediate attention.  Meanwhile those around us suffer from the attention deficit of others.

Worse yet, I think, people generally, especially younger employees, refuse to phone about an issue.  Instead they’d rather email or text.  When they email the cc line gets so crammed full of names it seems like a birthday invitation.  Then everyone kicks back their comments with those on the cc line getting whipped through circuits of information they often don’t need.  A wonderful rule I heard one company adopt states that after the third round emailing about an issue employees had to pick up the phone. Hearing a voice also helps develop a personal relationship in a way a message does not.

Some object to calling because they desire a paper trail.  They want proof a supplier or customer agreed to something.  The alternative? Summarize the phone call in an email, or better yet, trust that an understanding has been reached like we did in days of old.  Where agreement needs documentation, say like on pricing or scheduling, a quick note following a conversation should suffice.  If we are so suspicious of each other that we need documentation of every exchange, then other problems exist, trust being the most obvious.

Digital communications can present other tripwires.  Even in my wise old age I misunderstand tone in emails.  I don’t know how many times I’ve taken umbrage at something written only to find out I got it wrong.  On the equal and opposite side I’ve seen emails from normally balanced individuals that libel the recipient.  If the person had walked down the hall to work through the dispute, or picked up the phone, they wouldn’t have raised their blood pressure and that of others.  Instead, whatever caused the issue to devolve would have gotten solved.

I know I am no saint when it comes to iPhone abuse.  Too often I forget to turn it off when I get to the office. Then it rings during a meeting.  I’ve written angry emails when I should have picked up the phone.  I’ve disciplined myself over the last year to put those aside to decide once I’ve calmed down whether to hit “Send”.  Usually I end up spiking them.  My one exception: Complaint emails to airlines.  I figure venting can’t hurt because no one reads them anyway.

The final frontier remains internet use.  Games, shopping, stock trading, and so on also clog working hours, often leading to longer less productive days.  My first boss in journalism was an exceptionally disciplined man.  He came at 9, left at 5, and  wrote more stories in a year than just about anyone else.  Our chief operating officer Pallavi Joyappa is much the same.  I’m not there yet, but I’ve started to wean from Google.

I hope our iPhone policy helps us have more productive meetings.  Undoubtedly the messages will wait for us. Unless its President Obama texting for advice on Syria.  Then company policy says make excuses, quickly step outside and answer.

Brother Can You Spare a Dime?

imagesI recall a lunch many years ago with two executives from Exxon Mobil.  They laughed at what they saw coming for the flexible packaging industry.  Resin prices would start rising soon and wouldn’t stop.  Exxon would mint profits while many converters, unable to pass through the increases, would die.  Their giddiness wasn’t simply sadistic.  Resin companies had seen their prices fall for years as customers played rivals against each other. But the worm had turned.  Resin producers had consolidated to three or four from more than 10, which meant market power had shifted to survivors like Exxon and Nova Chemicals.

The two laughing sales guys proved prophetic.  Over the last five years resin prices have quadrupled.  The margins of those companies like Exxon that control their feedstocks have skyrocketed as natural gas (the primary source for plastics in this country) prices have collapsed.  The producers also more closely match their production to demand, slashing capacity to keep margins high rather than increase inventories.  That’s why even with new poly production slatted for 2017, prices won’t decline.  Resin manufacturers will simply shut older plants as needed.  With only a few producers setting the market — and most following the lead of Exxon  — the resin industry has transmogrified into an oligopoly.

Rising resin costs have met their match in customers unwilling to accept increases.  After all the food companies most of us sell to in turn sell to grocers who have kicked, screamed, and scratched to fight-off price hikes.  It’s not hard to see why.  Grocery margins remain mired in the low single digits. Kroger boasts an operating margin of about 2.8%.  Mighty WalMart can only do slightly better at 3.4%  but its profits have flat-lined for several quarters.  There’s no room to raise prices because competition in the food aisle remains too stiff.  So like some Medieval torture victim, the flexible packaging industry finds itself pressed to death.

Worse yet resin pricing isn’t the only cost hitting us.  Trucking charges have zoomed thanks to diesel, health insurance continues its mad, mad double-digit march, and the price of white ink has edged up 20% over the last five years driven by pigment cost.  Workers wouldn’t mind a little help keeping up with inflation as well.  We’ve tried to outrun these by increasing productivity and holding the line where we can.  But you can’t outrun the law of diminishing returns forever.

In fact, the rush to boost productivity has likely hurt the industry.   Many of us have tried to cut costs by replacing old, less efficient capacity with new, faster machinery.  But recent vintage printing presses often produce nearly twice as much as the ones they replace.  If too many companies take this route — and they have in the packaging industry — overcapacity ensues.   So many new printing presses have been bought over the last few years, one executive from a large press manufacturer said he couldn’t fathom how the industry would ever make a return.  Many companies won’t.

Well the desperate do desperate things.  Not every packaging sector faces overcapacity — some have already consolidated — but where too many machines chase too few customers prices have fallen while costs climb.  Even in segments where consolidation has shrunk the field to just a handful, customers fight increases pointing to the pressure exerted by WalMart.  Eventually something has to give.  Maybe high prices will force down plastics use. Or consolidation will continue until flexible packaging companies have the market power to emulate their resin suppliers.  Even then it will take some courage to reflect increases.  My father’s quip sums up the industry’s historical mindset: “If there were only one converter, he’d still cut his own prices.”

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