Materials feature: rigid plastics

Rodney Abbott , Packaging News, 01 September 2006

 

Rising costs and recycling pressures mean the rigid plastics sector has not had the easiest of times lately, but co-operation and flexibility are the watchwords for future success.

 

The rigid plastics sector is having a tough time. Rising energy costs, challenging recycling targets and supplier hole-in-the-wall operations are blocking the sector’s road to prosperity. To succeed, firms must now make co-operation their keyword.

 

According to Dr Ben Punchard of Euromonitor International’s packaging research team, the continuing instability in the Middle East is increasing the cost of crude oil. Additionally, rising gas and energy costs are further impacting on resin producers, who will be looking to pass these costs on to the packaging industry. But the small margins seen in the packaging world are unlikely to be able to take the significant increases that this will entail.

 

 

Further challenges come in the form of UK packaging legislation, such as The Packaging (Essential Requirements) (Amendment) Regulations 2006 which came into effect on 1 July 2006 in order to meet waste recovery targets set by the EU. As a consequence, the rigid plastic packaging industry must encourage consumers to recycle plastic packaging and ensure that suitable collection and recycling facilities exist so that these targets can be met.

 

 

Another challenge for the industry is to incorporate recycled materials into rigid plastic packaging formats without loss of quality, such as reduced clarity or the migration of contaminants.

 

 

Due to the increased resin price, there is a growing focus on added-value polymers, which can offer more functionality than traditional resin formulations – and hence demand a higher price. This includes such functionality as improved barrier properties, increased clarity, anti-fogging properties and greater temperature range stability. Using these for increased consumer benefit or brand value brings the opportunity to pass costs on to the consumer.

 

Fragmented market

Unlike the market for other packaging materials, the plastic packaging market is quite fragmented, with many suppliers operating only in selected sub-sectors, such as rigid plastics. It is interesting to note that many of the leading British-based companies have successfully expanded into Europe and beyond.

 

Fortunately, the trade body European Plastic Converters (EuPC), which has lobbying power in Brussels, looks after the interests of the EU’s plastics converting industry. It has committed itself to helping companies reposition themselves in the face of increasing competition, decreasing sales prices, increasing production costs and increasing customer requirements.

 

 

EuPC managing director Alexandre Dangis says: “A total of 37,000 firms in our industry are either small or medium-sized. They do not have the economies of scale to ward off competition. EuPC’s programme, therefore, puts the major emphasis on the crucial connection between ‘competitiveness’ and ‘innovation’.

 

 

“To succeed in developing sophisticated products demanded by the modern consumer, firms must make co-operation – with other converters, their customers and academic institutions – the cornerstone of their approach,” he adds.

 

EuPC plans to prepare European terms and conditions of sale for plastic products that will regularise buying and selling and strengthen the position of member companies in their negotiations with major customers. A network of trade specialists will be set up across Europe to monitor the dumping of products on the EU market and escalations in raw material and energy costs.

 

Growth of in-house operations

Hole-in-the-wall operation poses yet another threat to the independent rigid plastics sector. In common with other suppliers, Britvic now operates this way. It says bottle-blowing has become increasingly important, as it significantly increases the density of materials transported to its factories, reducing cost and minimising the environmental impact through reduced vehicle movements. 

 

Other advantages include improving space utilisation within Britvic’s factories, as storage requirements are condensed, as well as a dramatically reduced time cycle from raw material to finished packaging, which improves the consistency of packaging quality and reduces waste and waste potential.

 

 

Over the last 18 months, Britvic has invested £8m in expanding its in-line bottle-blowing capacity in a range of packaging sizes across its manufacturing estate for brands such as Pepsi, Tango, Robinsons and Fruit Shoot. The equipment enables injection-moulded pre-forms to be transformed into finished product containers through a process of closely controlled heating and expansion, using high pressure compressed air at speeds of up to 36, 000 bottles/hr.

 

“The enabler for these developments has been the progressive improvement in bottle-blowing technology, reliability and efficiency,” says Britvic's factory manager Matt Thewlis. “Britvic has been at the leading edge of this technology for the last six years and has seen progressive improvements in both yield and, perhaps more importantly, energy efficiency for conversion.”

 

 

Polimoon Packaging managing director David Taylor is pragmatic about this trend. “Bringing production in-house has come back into fashion as more and more brands look at other cost and efficiency savings ideas due to the external factors influencing their businesses,” he says. “Moving production in-house is just one of their considerations and is probably more relevant to those with medium to high volumes of single designed products.

 

 

“The plastics industry is going through a tough time at the moment. Retailers are certainly getting more aggressive with their purchasing due to consumer demand for constant innovation and cost reduction,” adds Taylor. “Far Eastern countries, such as China and India, are also increasing competition within the smaller components markets, with larger components, such as bottles, being developed in Eastern Bloc countries like Poland. I believe this competition intensity will level out as the developing countries go through their growth periods and will then start to catch up in costs and wages as their economies become stronger.” 

 

 

Polimoon has taken advantage of this trend with an aggressive acquisition programme, growing from five sites in nine countries to 29 sites in 13 countries since 2000, with further acquisitions planned. “As with any business, especially in the current climate, Polimoon has been through fluctuations at sites resulting from macro and micro influences. It has the support of a group network, purchasing power and potential capital investment, coupled with the ability to identify and satisfy customers’ needs,” says Taylor. 

 

Smaller companies, he believes, may feel the environmental pressures more – particularly where their economies of scale for purchasing are not too strong or the size of their customer base is small.  

 

Covering the ground

The RPC Group is another of Europe’s leading manufacturers of rigid plastics packaging, with products covering all three major processes – blow-moulding, injection-moulding and thermoforming. The company has nearly 50 sites in operation in 12 countries following the acquisition of the Crown Risdon plants. Its overall annual growth rate year-on-year since 2000 [excluding acquisitions] is six per cent. 

 

 

“With such a wide spread of factories, employing different technologies, using different materials and supplying different end markets, it is inevitable that some will perform better than others at certain times,” says chief executive Ron Marsh. “This is one of the main strengths of RPC, as under-performing sites can be offset by the sites that are doing well. Equally important, RPC has demonstrated the ability to turn around loss-making factories. For example, of the 12 Continental Plastics Europe factories acquired from Schmalbach-Lubeca in 1997, three of the most significant loss-makers are now among the most profitable within the RPC Group.

 

 

“Our decentralised structure, with sites specialising in particular technologies and supplying specific market sectors, is key to our success. Flexibles have a good story to tell in terms of light-weighting, but rigid plastics also perform well in this area, particularly when compared to metal and, more specifically, glass.”

 

 

As for the future of rigid plastics, Marsh says PLA is the way forward for RPC. “The arrival of new resins will make an important and growing contribution over the years. As concern grows over the diminishing of natural resources, such as oil, the arrival of these alternative resins will mean that consumers will still be able to enjoy the benefits of rigid plastics packaging.”