A power house of package engineering – the $5bn a year USA machinery business – has found many ways to bring its technology this side of the pond writes Pauline Covell
Despite a poor year, with shipments slipping by 4.1%, the USA machinery sector was still estimated to be worth a staggering $4.804bn by the Packaging Machinery Manufacturers Institute in 2001, according to its 8th Annual Packaging Machinery Shipments and Outlook Study. In money terms it represented a decline of $204M – the first decline since the reports began in 1995.
“Owing to the competitive disadvantages imposed on US manufacturers by the strength of the dollar as well as the extended slowdown of most foreign economies, US packaging machinery exports declined by 12.1% in 2001,” reports the PMMI.
“The further erosion of exports reduced their share of total US shipments to 15.5% of the dollar value for the year, the lowest since PMMI began collecting statistics in this format.”
The report is far from gloomy. Sales are forecast to grow at a cumulative annual rate of 3.7% from 2002 to reach a value of $5.354bn by 2004.
“As the global economy revives in 2003, which most forecasters expect, US exports will undoubtedly improve, particularly as long as the US dollar remains at or near a more favourable rate of exchange.
“Considering the important role that exports have historically played in annual packaging machinery shipments, the predicted recovery bodes well for future growth,” predicts the PMMI.
PMMI director of communications Matt Crosen told Packaging Today International: “The dollar’s lower value will make US-made equipment more attractive going forward but we are still seeing signs of weakness in the EU market overall.
“Our general position is that Europe is an exciting market and our members sell through a variety of channels including direct, through agents and, of course, through some of the major shows that are spread throughout Europe.”
These days, though, doing international business is not a simple matter of a company from one country selling into another. The USA is no exception. The global village applies just as easily to machinery manufacture as it does to popular carbonated drinks!
One way that US companies have tackled the European market is to buy European companies and grow from that position. There are many advantages.
Thermo Electron, a $2.4bn US corporation, added Goring Kerr and Allen Coding to what is now its Process Instruments division at the end of last year. The company had already purchased Mesulec in the late 80s, HiTech in the 90s and Tecnoeuropa – the Parma, Italy based checkweigher manufacturer. Back in the USA other members of the division are Ramsey (and Icore), Moisture Systems and Thermo Detection.
Says John Craig, global vertical marketing manager for food and beverages at Process Instruments, Thermo Electron: “We now have the ability to provide a basket of technologies from the front end – the silos – through the processing to the packaging in the food, beverage and pharmaceuticals markets.
“That’s important for the big operators who are seeking to reduce the number of vendors they’re doing business with. Business people must have the ability to service globally if they want to play with the big boys.”
A main advantage from buying a European company is the ability to see Europe through European eyes. Employees know their way around legislation and buying cultures. “I do think it is sometimes difficult for the Americans to see outside the US but in our company more than 50% of our sales now come from outside that large home market. That can be a compelling argument for knowing how things are done elsewhere.
“I do think there have been difficulties in ensuring equipment is in line with European requirements. The CE mark has been a big stumbling block in the past. But, having European companies in the portfolio, means we have enormous experience and are able to talk with authority about legislation and differing requirements.”
The PMMI produces a guide to European directives for its members and last year developed Packsafe – a Windows-based risk assessment software tool that helps companies identify and alleviate potential hazards when designing packaging machinery.
PMMI claims that it satisfies the risk assessment documentation requirements for the CE Mark for European markets. Says director of technical services Maria Ferrante: “It provides designers with a systematic method for eliminating and controlling hazards during the design process when it is less costly to make changes.”
There are some outstanding examples of US machinery companies who have a long exporting history.
Econocorp, the specialist builders of slow to medium speed horizontal, vertical and tray-style cartoners, as well as horizontal case packers, is a good example.
The proud recipient of the Presidential E star award for export [the highest honour a US company can achieve], it regularly exports 50% of turnover. It boasts that, in one year, exports accounted for 70% of turnover.
In many cases the company operates through long standing agencies in 23 European countries including Landor Cartons in the UK and Schut Systems in The Netherlands.
Says Landor’s Andy Dancer: “The biggest market for Econocorp outside the States is Europe so they have been always very keen to meet and indeed exceed the requirements of the CE mark. Machines are built in metric sizes, unlike some other equipment from the USA.”
He boasts that more Econocorp machines are consistently sold in the UK than in any other export market. His company has sold 38 in the last five years. Just why has Econocorp done so well at export?
“It is really about technical expertise and understanding on both their part and ours,” says Mr Dancer. “The company has a dedicated export sales manager and it understands local needs. It is also dedicated to moderate-sized production lines with equipment properly engineered to meet the requirements of the slower line.”
Another way of moving into Europe is to open up a company in the UK. Automated Packaging Systems of Ohio [known for its Autobag systems] took this route when it sited a European headquarters in Malvern.
Producing bags for the systems in the UK and importing the equipment from the USA, it has sold 2000 machines in Europe since it began operation here in 1984. Globally, the company now has 25 000 machines in operation.
Explains Autobag product manager Nick Long: “One of the advantages of having a company in Europe is that we are able to offer complete after sales support – we can service the customers from our offices here. All the machines are made up to meet the CE requirements.” Although the equipment is still made in imperial specifications he sees no problems as “we supply spares and tools from here.”
One of the most obvious trends at Pack Expo in Chicago last year was the move towards globalisation. Buying and selling goes in both directions across the Atlantic. Cincinnati based R A Jones – perhaps one of the globe’s best known cartoning and pouch making machinery companies with a great export track record in Europe – is now owned by European major IWKA.
Last year it announced a doubling in output speed for the Jones Pouch King. Claimed to be the first true high speed, continuous motion form, fill and seal machine for stand up pouches, the equipment is said to offer speeds up to 500 pouches/min. It is equipped with fully integrated servo systems using advanced motion control, electronic line shafting and Sercos fibre optic networks.
Even the PMMI’s survey figures include shipments of certain foreign based companies [PMMI members] operating in the USA. They have full service operations in the US and import and assemble machinery there.
Bradman Lake, for example has been operating in the USA for two decades, initially selling and assembling equipment and now designing and building machinery in Charlotte.
Chairman and chief executive officer Graham Hayes is clear about the great advantages of partnering with companies in areas outside their fields of expertise to produce a line that offers the “best from all sides”.
The British- and USA-based cartoning machinery specialist entered into a manufacturing and marketing agreement with Propack Processing and Packaging Systems of Ontario, Canada to produce their vertical racetrack robotic loading systems last year.
“You can save on a huge investment by forming partnerships like these and you can also grow without having any increase in plant capacity and all that entails,” he said.
Roberts PolyPro, also of Charlotte, recently partnered with A&R Carton – the European supplier of folding cartons – to develop a beverage carrier assembly machine that reduces the cost of open basket carriers by marrying virgin kraft board and post-consumer recycled pressed board.
It offers a carrier that is said to be stronger, lighter and quicker to produce than traditional one-piece carriers.
“Traditionally, everything in the six-pack carrier market has been made from a single piece of board but A&R realised the bottle divider could be made from recycled paperboard, thus saving money,” Hilger Scheelcke of A&R says.
Ms Scheelcke recognised the need for a new carton design and, more importantly, the need for a machine that would make that design practical. This equipment is claimed to run faster than traditional one-piece assembly machines.
Global-sized companies not only provide economy of scale with the ability to service global-sized customers, they also have an ability to draw on broad R&D and technology.
A cost-effective solution to CO2 monitoring for contamination on carbonated beverage filling lines, the Pulsar EX, launched by Thermo Electron, uses technology from another part of the corporation.
“When the company was approached by a soft drinks manufacturer to see if we could come up with an analyser we found the sensors and put them together as an on-line system.The first systems are being installed in the USA but this is undoubtedly a global solution,” explains John Craig.