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- New Report on U.S. Export Policy Provides a Road Map to Continued Economic Recovery and Job Creation
- Manufacturers Embrace Sustainability in a Competitive World Market
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Manufacturers Embrace Sustainability in a Competitive World Market
U.S.-manufactured packaging machinery is used in many industries, such as this food processing plant. A recent ITA study details how U.S. manufacturers are using sustainability as a strategy to remain competitive in the world market. (photo courtesy of Shuttleworth Inc.)
A new study from the International Trade Administration shows how U.S. manufacturers of packaging machinery are using sustainable manufacturing practices to respond to the multiple challenges they face in the world market.
by Padraic J. Sweeney
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. manufacturers are not exempt from those forces; they operate in global supply chains that face increasing demands for more sustainable products and services.
Innovative U.S. companies in the packaging machinery manufacturing industry 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 new 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
Some Key Concepts in Sustainability
EPR (extended producer responsibility): a concept also known as “product stewardship.” EPR holds that all parties involved in the various stages of a product’s life cycle, including its packaging, take responsibility for mitigating its environmental impact.
LCA (life-cycle assessment): a method for quantifying impacts associated with the sourcing, manufacture, distribution, use, and disposal of a product or product system. LCA is documented in ISO standards 14040 and 14044.
OEE (overall equipment effectiveness): a method for evaluating the effectiveness of a specific manufacturing operation by using three basic metrics: availability, performance, and quality.
TCO (total cost of ownership): a method used in many industries to capture the lifetime operating costs of capital investment. Lower TCO can result in greater sustainability, but it often requires greater initial investment in equipment, training, and systems.
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 United States in 2007. Most producers are quite 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 as a whole 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. 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 [polyvinyl chloride] and replacing it with maximally sustainable RPET [recycled polyethylene terephthalate].” 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 someone’s ‘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 United States and elsewhere, retailers such as Wal-Mart Stores, Safeway, and Tesco require similar documentation from their packaging vendors. The trend is likely to continue. Jack Aguero, vice president of Pro Mach, noted, “More and more, sustainability will be required of packaging machinery manufacturers over time.”
For More Information
“Packaging Machinery: Sustainability and Competitiveness,” the new report published by ITA, comes from more than a year of research and interviews. It examines the changing business environment for U.S. packaging machinery manufacturers, looks at sustainability as a means to gain competitive advantage, and offers case studies of five leading manufacturers in the sector. More information about the Department of Commerce’s Sustainable Manufacturing Initiative can be found on their website.
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 strong and 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.
Future Challenges to the 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, if poorly documented, 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 J. Sweeney is an international trade specialist with the Manufacturing and Services unit of the International Trade Administration.
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