Packaging industry: innovation is the key word

Packaging industry: innovation is the key word

The packaging industry was affected by the crisis that started in Europe at the end of 2008 – beginning of 2009.

However, it is in a continuous development process and has a growth rate of around 4% per year. It is a highly competitive industry in which every player is forced to keep the pace with the latest technical and technological developments. Research and development in plastic processing are equally important for both machinery manufacturers and plastic processors.

I expect 2014 will continue to be under the sign of recovery from crises. According tothe European Commission, next year we shall see a slight growth of the economic activity of 1.4% at the EU level, respectively of 1.2% in the EURO zone. Still, the unemployment will not be reduced in a significant percentage. The exchange rate between the RON and EUR/USD will probably remain at the same level of 2013.
Unfortunately, the EU funds absorption will still be low, unless the whole mechanism for applying and collecting the funds is improved.
At Livingjumbo Industry, we first felt the crisis in December 2008. The first semester of 2009 was characterized by a decrease in sales of the big bags compared with the same period of 2008, but the company's business has suffered particularly between March and June. Overall, the evolution ofo ur company has remained in line with the national and European trends. Because of the general economic climate, we had less renewed commercial contracts than in 2008, as customers stopped taking medium and long term financial risks.
There were several strategic decisions that allowed us to keep on track and not follow the numerous businesses that
went bankrupt during 2009 and 2010. First of all, we decided to maintain the number of our employees despite a severe reduction of orders. Production is not easy and qualified workers are one of our most important assets. Secondly, we intensified our marketing efforts in search of new customers that were meant to replace the ones that did not survive the crises. Thirdly, we decided to increase our capacity by investing in new technologies that allowed us to obtain economies of scale and reduce costs (electricity, labor, etc.).
Last, but not least, we increased our financial discipline, paying greater attention to our receivables ands electing new customers carefully.
In spite of the quite high technology-related costs, competition is very tough in our industry, no matter if players are coming from Fast East (India, China, Vietnam, etc.) or from Europe. This is why for a labor intensive segment, such as the big bags production, the continuous increase of salary levels in Romania represents a challenge for companies that need to remain competitive. Unfortunately, we don’t have much bargaining power in front of our suppliers of main raw materials –
polypropylene and polyethylene granules –, so the manpower costs can make the difference for the end-user when selecting abig bag supplier.
Of course, quality of products and the delivery terms are almost as important as the price. This is why we implemented the integrated management system Quality – Environment – Food Safety and we arealways in a continuous improvement program. “Don't manage - lead change before you have to” are the inspirational words of Jack Welch – the famous General Electric CEO – that guided me in the 7 years and 6 months since I have been working as a General Manager in Livingjumbo Industry S.A.
Coming back to the packaging industry, “innovation” is the key word. No matter we speak about plastic packaging (flexible or rigid), or about board, metal, glass or other packaging, most of the efforts of all the R&D departments are directed to recyclability or use of recycled material, weight decrease, renewable or bio-basedmaterials and compostable materials.
The plastic packaging industry first started to focus on innovation in the 50s. Since1976, plastic has become the most used material in the world. Innovations in plastic packaging frequently help reduce the amount of raw materials used to pack food and consumer goods. This often results in lighter packaging, less fuel to transport products, reducing use of natural resources, fewer green house gas emissions, less waste – in conclusion, a lighter environmental footprint.
I recommend to all the professionals in the packaging industry to be pro-active when it comes to the customer’s needs, to not forget that the customer is the essence ofthe existence of a business. I also recommend to stay in touch with the latest technological developments and to be one  step in front of the competition.