Waqas Qureshi catches up with some key players in the rigid plastics segment to find out what to expect in 2023.
How was trading in 2022 – did you hit forecasts? What is your company forecast for 2023?
Vincent Gass, Klöckner Pentaplast: Market demand was down in 2022, due to many headwinds including massive inflation. Consumers downtraded across the value chain. They spent less in takeaway despite the post Covid mobility recovery. In 2023 market demand is expected to stay weak, with high price-sensitivity. Key players will start focusing again on longer-term growth and investing in innovation.
Helene Roberts, Robinson: Trading is expected to be in line with market forecast and we forecast for further growth in our plastics and paperboard businesses in 2023.
Simon Firth, Macpac: It was very buoyant year from Macpac with turnover increasing in line with what we anticipated for the year. Strong growth was seen across food, medical and retail sectors. This year’s targets are set and if we continue to perform as we are then we hope to have a good year ahead, growing and giving a return on the investment made in the last year.
Nigel Coates, LVF Packaging: Our 2022 went well. We took the expected hit on energy bills and rising material costs, but demand from our key sectors returned more or less to pre-Covid levels. We also benefited from activity in markets that had begun to present opportunities in 2021 and delivered last year; namely further expansion in protein packaging as well as some interesting projects in the non-food sector.
Richard Drayson, Aegg Creative Packaging: Our performance on plastics was in line with forecast whilst glass sales were up year on year. We are forecasting 2023 will be a challenging year as customers grapple with costs and continuing pressures – energy, labour and raw materials.
Jean-Marc Galvez, Berry Global CPI (Consumer Packaging International) Division: Berry Global delivered strong fiscal year record results, coming off another record year in fiscal 2021. In both the near- and long-term, we remain focused on driving consistent, dependable, and sustainable growth, supported by our large-scale and diverse portfolio that enables us to be very agile and quick to adapt to changing market circumstances.
Did you invest in capital expenditure, new staff or site expansion last year? What are the investment plans for 2023?
Vincent Gass: KP chose Beaver, West Virginia for its multi-million dollar production expansion, adding post-consumer recycled content (PCR) PET capacity in North America. The installation will add around 60 jobs to the facility with commercialization starting now for the first thermoform line. The completion of the second thermoform line and new production hall is scheduled for the end of Q4 2023.
Helene Roberts: We continued in our investment during 2022 for machinery with new plastic moulding and a box making machine, digital systems, and investment in recruiting new skills as well as training our existing employees. We opened a new facility to expand our site at Kirkby-in-Ashfield in the UK.
Simon Firth: Macpac invested in the first Illig down stacking machine with a punch press in the UK which arrived in October 2022. This new machine gives us the capability to produce thermoformed packaging with holes punched and removed within the forming itself and increase production capacity. Along side this we increased our CAD design team to give extra capacity to develop new pack formats.
Nigel Coates: We have already this year installed another Kiefel thermoformer, our sixth, to help us deliver on our customer service aims. Further capex is planned for later in the year with a revamp of our staff facilities as well as expansion of our solar generation.
Richard Drayson: We are finalising our new plastics packaging manufacturing site in Eye, Suffolk, where production will be significantly expanded from April 2023. This will provide additional capacity for bespoke packaging, right weighted packaging and packaging with 30% recycled content. This has resulted in the recruitment of new staff and capital investment in both manufacturing equipment and warehousing.
Jean-Marc Galvez: Two major recent examples are the establishment of our new recycling facility in Leamington Spa, UK which utilises our CleanStream technology, the world’s first closed-loop system to mechanically process domestically recovered household waste polypropylene (PP) back into food-grade packaging; and the establishment of a second manufacturing facility and healthcare centre of excellence in Bangalore, India.
What are the main challenges you are facing?
Vincent Gass: A bit of all like every player is currently. In particular we see recycled PET (rPET) as a pivotal resource with a tense supply on the market, especially with our leadership position in PCR incorporation. That’s where the KP Tray2Tray initiative comes into play, creating a closed loop for food packaging we can all benefit from.
Helene Roberts: As many of our customers and other packaging converters, we have experienced inflationary costs with regards to energy, labour, and cost of materials.
Simon Firth: As energy costs rise and wages increase in line with the cost of living, we have had to review our business model in the last 6 months. Staffing seems to be an issue since Brexit especially when we are increasing our work force, finding the right person for the role required is a challenge.
Nigel Coates: Production costs remain the main challenge for 2023. Fortunately we’re beginning to see some softening in material prices which is certainly welcome. And although we have experienced a three-fold increase in energy costs, measures we have/are taking to be less dependent on the grid will hopefully benefit us later in the year. Another major consideration is that of staffing costs. The cost-of-living crisis can’t be ignored, and as such we’re reviewing wages across the board.
Richard Drayson: The rocketing cost of Packaging Recycling Notes impacted 2022 with prices jumping from under £100 / tonne to over £350/ tonne during the course of the year. This is continuing into 2023. The difficult trading environment, cost pressures and pressure on peoples’ incomes have resulted in a number of smaller customers falling into difficulties in January 2023, so tight financial control of customers is more important than ever. On the flip side, polymer prices have continued to trend down year on year; transport/logistics costs have stabilised and the availability of good staff seems to have eased.
Jean-Marc Galvez: Like every other business, we are faced with rising costs and labour and supply chain shortages. Nevertheless, in many respects, these are not entirely new challenges and over the past few years we have taken proactive pricing actions designed to recover inflation, while investing in cost reduction efforts
Please describe sustainability demands you work towards.
Vincent Gass: National regulations, such as the impending ban of EPP in England and Wales, has given us the opportunity to transition customers to EPS, the truly sustainable packaging solution known as KP Infinity. With improved features, we’ve seen great success with this move in Scotland. We’re also seeing growing demand for flow pack solutions.
Helene Roberts: We have a very clear sustainability pledge and road map to 2030. All products that we sell are now 100% recyclable and we are working with our customers to increase the level of recycled content in our products towards 30%. Our paperboard can already be made from 100% recycled content, but we are proud to have recently been accredited by the Forest Stewardship Council (FSC). However, we will continue to drive all aspects of our environmental and social agenda such as improving our energy efficiency which will in turn reduce our carbon emissions and working with our local communities on key initiatives. We are supporting The Children’s Hospital Charity with fundraising and the manufacture of gift boxes for their snowflake campaign.
Simon Firth: Aligning our sustainability goals with a global initiative such as UN’s Sustainable Development Goals (SDG) that were set in 2015 are what we are working towards The SDG are a collection of 17 interlinked global goals and are applicable to everyone from a small business to a country.
Nigel Coates: It does feel like the noise about sustainability far outstrips any new demands being placed upon us as a packaging manufacturer. From our perspective that’s easy to explain – we’ve been working towards our own sustainability goals for many years and I firmly believe we’re operating at a level far ahead of any targets being set by stop gap measures such as the UK Plastics Packaging Tax. There’s still a huge issue with corporate greenwashing that really does need to be properly addressed; as businesses gaining public kudos on the back of a few empty promises is hugely unfair on those doing everything they can to deliver sustainable solutions that really will make a difference in the long-term.
Richard Drayson: With the plastic packaging tax now live, demand for our packaging with at least 30% recycled content is high. We are also working with customers on right-weighting their packaging, as the availability of food grade recycled material is still limited. We are constantly reviewing different options to offer our customers new innovations and solutions.
Jean-Marc Galvez: A critical part of our new product development work is to ensure any sustainability benefits are achieved without compromising on the overall performance and functionality of the pack. Equally important, we are focused on demonstrating the economic viability and technical possibilities of integrating circular feedstocks into the solutions we developed for customers. Through both recycled and renewable resins, the critical goal is to shift feedstocks away from fossil-based feedstocks. The continuing introduction of more circular resins will support decarbonising the plastics sector and achieving a net-zero future.
Have you developed products and strategies as the UK Plastics Packaging Tax was implemented?
Vincent Gass: A good example is where we’ve had successful customer conversions to SmartCycle rigid PET films, which contain declared minimum amounts of PCR and have been granted a Certificate of Verification” by NSF International, an independent, third party, not-for-profit organisation. Customers who use these films can be confident that the PCR-content claim is true and valid.
Helene Roberts: In terms of the plastic packaging tax in the UK, we are already working on increasing the level of recycled content in our plastics packaging in line with customer and our own targets. Clearly, there is a need to increase the supply of recycled materials in our main polymers of PET, PP and HDPE, especially for food grade applications.
Simon Firth: As a user of high recycled content rPET material the Plastic Packaging Tax does not impact us as much as other material substrate suppliers. For nearly 20 years we have been using rPET, producing over 90% of the products we manufacture in this material. This gives our customer the reassurance they are getting the right material for their product.
Nigel Coates: We haven’t. Upon its launch, the government’s UK Plastics Packaging Tax was trumpeted as the big step needed to reduce plastic pollution, but if you look closely, it’s clear it’s delivering nothing. Under its new rules, to avoid a tax levy, plastic packaging trays can only be manufactured in this country using material with a minimum of 30% recycled content. What it fails entirely to take into account, is that the vast majority already are (and have been for years) and most aren’t recycled because recycling them isn’t commercially viable. The only plastic item in every day use that’s guaranteed to be recycled is the plastic drinks bottle. All plastic drinks bottles are manufactured from PET, which means when they enter the waste-stream they can be picked out safe in the knowledge that the material they are made from can be recycled and sold as washed bottle flake to bottle manufacturers for use in making new plastic bottles as well as for extrusion into sheet for the production of plastic packaging.
Richard Drayson: We are supplying rPET pots with 30% recycled material and continue to right weight products to minimise the amount of plastic being used whilst still maintaining the functionality of the pack. The lighter weight of the packaging also reduces the impact of CO2 by lowering the weight of the product being transported.
Jean-Marc Galvez: As part of this many of our product ranges already have the potential to incorporate recycled material or renewable feedstocks. Our B Circular range, for example, offers a circular range of standard products for the beauty, personal care, pharmaceutical, food, beverage, home care and industrial sectors. However, no company or individual can instigate such broad sweeping change on their own; and change can be quicker, bolder, and have greater impact when we collaborate across the entire value chain.
What is your message to the sector?
Vincent Gass: It is vital for food packaging manufacturers to work side by side with customers to navigate this storm, with extended shelf life solutions that meet their circularity targets whilst keeping food supply chains affordable. Here, new technologies and digitalisation are key enablers.
Helene Roberts: Sustainability is not a choice. I do believe it will make businesses more agile and able to deal with the difficult market conditions and inflationary pressures we are facing.
Simon Firth: We are all facing volatility not seen for a long time with rising overheads, I am sure that we will all adapt, and flexibility is key to the ever-shifting landscape we are seeing.
Nigel Coates: We’ve had a global pandemic that didn’t derail us; have just got through a year that the late Queen Elizabeth II would surely have described as an annus horribilis; and 2023 looks like it’s shaping up to throw a few more curve balls at us – but despite all this the sector has always stood firm and tall and we’ve all just knuckled down and got on with it.
Richard Drayson: Rigid plastic packaging continues to be an important recyclable packaging option to keep food fresh and protected, resulting in less food waste. Demand and market availability for rigid plastic packaging remains strong.
Jean-Marc Galvez: Partnership throughout the plastics sector is critical; channelling and bringing together everyone’s personal sustainability passions and goals means we can achieve more together to meet and hopefully exceed shared sustainability commitments.
Vincent Gass is VP strategic marketing and innovation at Klöckner Pentaplast – the global rigid and flexible packaging, and specialty film solutions, food packaging markets, amongst others. With a broad portfolio of packaging and product films and services, KP was founded in 1965 and has 31 plants in 18 countries and employs over 5,700 people.
Helene Roberts is chief executive at Robinson, the rigid plastic and paperboard packaging specialist. Turnover is £50m, with sites in the UK, Poland and Denmark, supplying to the food and drink, personal care and beauty, and homecare sectors.
Simon Firth is UK sales manager at Macpac, the thermoformed packaging specialist. Located in Stockport, Macpac supply over 120 million units per annum into the food, medical, retail, and horticulture industries with AA grade BRC accreditation.
Nigel Coates is managing director of LVF Packaging, the rigid plastic specialist primarily for the food sector. LVF supplies a variety of packaging for proteins, confectionery, bakery, dairy and produce. Additionally, the Leeds-based company produces packs for toiletries, promotional gifts, hardware and the medical sector.
Richard Drayson is sales director at Aegg Creative Packaging. It supplies rigid recyclable plastic and glass pots, jars, bottles, bowls and lids to food and drink companies, mainly in the UK and Europe.
Jean-Marc Galvez is president at Berry Global CPI (Consumer Packaging International) Division. The group has 46,000 global employees across more than 265 locations, and develops, designs and manufactures products with circularity in mind.
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