U.S. packaging equipment makers embrace sustainability

ITA study shows sustainable practices can help packaging machinery exporters.

John Kalkowski — Packaging Digest, 12/3/2010 4:56:39 PM

Sustainable manufacturing (the use of processes that minimize negative environmental impacts; conserve energy and natural resources; are safe for employees, communities and consumers; and are economically sound) is a practice that is being driven worldwide by market forces and regulation.
U.S. packaging machinery manufacturers are not exempt from those forces; they operate in global supply chains that face increasing demands for more sustainable products and services.
Many innovative U.S. packaging machinery companies are taking a practical approach to those challenges by using sustainability as one more strategy to meet fierce competition from Asia and Europe. The efforts are detailed in a study recently published by the International Trade Administration (ITA), “Packaging Machinery: Sustainability and Competitiveness.” The report was produced under the auspices of the Department of Commerce’s Sustainable Manufacturing Initiative.

Small producers, worldwide sales

The total U.S. market for packaging machinery in 2008 was worth $6.3 billion, with domestic manufacturers posting $4.8 billion in sales. The Census Bureau reports that 551 companies manufactured packaging machinery in the U.S. in 2007.
Most producers are small, with nearly 64 percent having fewer than 20 employees. Many U.S. packaging machinery manufacturers are successful exporters that do business with customers worldwide. Nevertheless, the U.S. industry has lost ground in recent years to foreign competition. Imported packaging machinery accounted for 39 percent of the domestic U.S. market in 2008, which was up from 26.2 percent in 2002. On the flip side, exports were a relatively modest 17 percent of U.S. manufacturers’ sales in 2008.
For the most part, U.S. packaging machinery manufacturers’ leading competitors are from Europe: Germany, Italy and several other countries. Japanese manufacturers are also significant, well-established competitors. Imports from China and other East Asian nations have also grown strongly in recent years.
Economics and green solutions
Packaging machinery manufacturers that pursue sustainability are aligning themselves with the broad direction of the packaging sector. Major retailers recognize that source reduction-that is, the elimination of waste at the source rather than after it has been created-can yield significant cost savings, and they are demanding it from their suppliers. As a result, both large retailers and the consumer goods manufacturers that sell to them are managing their supply chains more aggressively to reduce costs associated with environmental waste, including packaging waste.
Paul Appelbaum, president of Partner Pak, cites his company’s experience as a supplier to Costco as an example of how sustainability has enabled his company to compete successfully.
“Costco wanted to go green by eliminating PVC and replacing it with maximally sustainable RPET.” Partner Pak provided Costco with a solution that satisfied environmental and economic concerns. “The energy savings actually reduced Costco’s carbon footprint, when compared to other sealing methods.”
Corporate and consumer demands for packaging that is more environmentally sensitive also drive change. When added with cost savings, the combination can be a winner for all parties.
According to Scott Smith of Hartness International, one of the companies profiled in the ITA study, the company’s lean packaging line designs have won business “not just because they meet ‘sustainability’ criteria, but because they make good business sense and eliminate waste.”

Environmental and regulatory drivers

Regulation is also a growing factor in the global marketplace for packaging technologies. Many countries already impose reporting requirements and packaging fees to control waste. In the U.S. and elsewhere, retailers such as Walmart, Safeway, and Tesco require similar documentation from their packaging vendors. The trend is likely to continue, notes Jack Aguero, vp of Pro Mach. “More and more, sustainability will be required of packaging machinery manufacturers over time.”
Another driver for packaging machinery manufacturers is the push to cut energy use and greenhouse gas (GHG) emissions. For manufacturers doing business in the European Union and elsewhere, pressure to implement low-carbon manufacturing practices is growing.
According to Mike Steur of Hixson Inc., an engineering firm that specializes in food and beverage manufacturing, “The more sophisticated companies are anticipating the change and laying the groundwork now for measuring and reporting” their electricity consumption and GHG emissions.
Challenges to industry
Despite the growing requirements for more sustainable packaging technology, actual demand for sustainability has been slow to reach the packaging machinery industry. Many end-users have not integrated their corporate sustainability visions into their business operations. Moreover, no definition, certifications or standards currently exist for sustainability in packaging machinery. There is a widespread belief that packaging machinery consumes too little energy to be significant.
But, as the ITA report notes, with demand for more sustainable packaging technology growing continuously, “It is not too soon for packaging machinery manufacturers to prepare for the day when their customers begin to demand machinery, services and other products that can deliver cost-effective, sustainable packaging solutions.”

Padraic Sweeney, author of this article, is an international trade specialist with the Manufacturing and Services unit of the International Trade Administration. The full report, “Packaging Machinery: Sustainability and Competitiveness,” is available online at www.trade.gov/publications/abstracts/packaging-machinery-sustainability-competitiveness.asp.


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