Monday, June 8th, 2015

A Simple Matter of Visibility: Brand Owners Amplify the Plastics Industry’s Voice in Congress

US CapitolYou wouldn’t think it’d be that difficult for a $380-billion industry to get its message across on Capitol Hill, but the voice of plastics doesn’t go unheard for a lack of size or influence (and certainly not for lack of trying). The issue is more that, to many lawmakers and American voters, the manufacture of plastic materials and products is opaque. Many consumers don’t even know where plastics come from. These materials have become so ubiquitous in modern American living that they’re considered as much a part of the landscape as the purple mountains majesty and amber waves of grain.

The fact that plastics are everywhere is key to the industry’s success and a testament to its ingenuity, but it’s a blessing and a curse. Plastics play a vital role in the economy, but to get the industry’s voice heard from a regulatory perspective, plastics has to educate policymakers and officials who, consciously or not, take the plastics industry for granted.

Brand owners play a key role in amplifying this message, and doing so yields its own benefits, according to SPI Brand Owner Council Chair Jay Olson, manager, materials engineering & technology for John Deere. Olson joined some of his suppliers and other members of the plastics industry supply chain on Capitol Hill recently to help advocate on behalf of plastics and clarify the vital connection between regulations upstream and how they ultimately affect brand owners and their customers.

“They don’t necessarily recognize the names of the manufacturers or the smaller companies, so having us participating with the discussions brings instant recognition,” Olson said. “The meetings I had, they were both with legislators in rural districts, so when I said John Deere they instantly knew that it’s part of the agriculture in their district, and they say the connection of the whole supply chain and how it’s important to the end customer, and voters and jobs.”

SPI Brand Owner Council Chair Jay Olson of John Deere, Inc. (R) SPI FLiP Vice Chair Annina Donaldson of Maxi-Blast, Inc. (L) discussing the plastics industry supply chain in a recent meeting with a congressional staffer.

SPI Brand Owner Council Chair Jay Olson of John Deere, Inc. (R) SPI FLiP Vice Chair Annina Donaldson of Maxi-Blast, Inc. (L) discussing the plastics industry supply chain in a recent meeting with a congressional staffer.

“Most of the jobs are created by the smaller companies anyway, but they don’t have the visibility that brands do,” he added. “They like the visible; they don’t always see the invisible.”

Olson used the example of material deselection as a regulatory volleyball that is aimed further down the supply chain but could have serious ramifications for companies like John Deere, depending on where it lands. “With material deselection and the regulation and restriction of certain chemicals that go into the materials, that increases our costs and it makes our sourcing decisions more complex,” he said. “Say on a tractor, the fuel tanks are all plastic for a number of reasons: cost, lightweight, flexible. If we have to go back to steel, it increases our costs. It increases quality problems in the factory, so the net value to the customer of deselecting a material that we’re dependent on affects the final customer.”

Any company in the plastics supply chain can try to illustrate this to lawmakers and regulators, and many of them do, and do so successfully, but having a brand owner’s name recognition goes a long way toward getting the message to stick.

This isn’t a charitable endeavor on the part of brand owners either: using the power of their brand name to aid their suppliers ultimately helps the brand owner’s business as much as it helps the supplier. “We can be successful if we can help our suppliers be successful,” Olson said. “With all of the regulatory issues that they have to deal with that we don’t necessarily have to deal with… today we just say, oh that’s a supply chain problem. That’s the process some brand owners prefer, but it’s really everybody’s problem.”

Wednesday, May 13th, 2015

SPI Member Phoenix Technologies Seeks to Move Forward by Integrating Upstream

A photo of Phoenix's new wash line.

A photo of Phoenix’s new wash line.

Vertical integration as a business strategy has always been risky, a fact never more thoroughly illustrated than when Apple upset the natural order of the computing industry in the late 1970s by churning out units more efficiently than its competitors by using a host of independent contractors, rather than its own vertically-integrated production line.

Plastics isn’t necessarily the computing industry, and the world that Apple revolutionized was different than the world of today. Vertical integration still can present business risks to companies as an expansion strategy, but the plastics supply chain continues to be driven by the needs downstream, which is to say, driven by their brand owner customers.

Brand owners are looking for improved product quality, and a lower carbon footprint. To meet those needs, plastics companies are looking for greater control over their supply chain, hoping to make the changes necessary to meet customer expectations, whether they’re for product quality or for more sustainable and efficient manufacturing attributes. Vertical integration can offer them that control.

Case in point: SPI Member and SPI Recycling Committee Executive Member Phoenix Technologies International, a leading producer of recycled polyethylene terephthalate (rPET), recently announced an $18 million expansion to enable upstream production integration—the company will add a new proprietary wash line, partially replacing its need to engage a third-party wash operation to create clean flake. Previously, Phoenix typically either purchased clean flake directly or sourced it from baled bottles which have been reclaimed from curbside collection, and then engaged another company to wash it. With the new line, they can skip that last step, allowing them to take the dirty PET, wash it into clean PET flake, and recycle it into rPET.

“Combining the total supply chain, from bale to final pellet, and its processes, will allow us to optimize both the wash and flake processing components in ways that we could not when clean flake was coming from external sources,” said Phoenix President Bob Deardurff in a press release. “The new wash line also will enable Phoenix to fine-tune critical manufacturing variables so that we can better deliver processing and performance attributes of value to our customers.”

An added benefit, one that speaks directly to the demands brand owners, is that by adding its own wash line, Phoenix will be better able to manage its own environmental footprint, specifically by allowing the company to determine how much water it uses in the wash process and reduce the amount of fuel that’s used to transport materials from one location, to a third-party provider, and back again. The new line will be located in close proximity to Phoenix’s existing manufacturing plant, helping them reduce carbon emissions intrinsic in their production process. Phoenix already uses less energy per pound to manufacture rPET when compared to virgin PET; the new line further contributes to a reduction in their environmental footprint.

Again, what this integration grants Phoenix is more control over the production process, which in turn translates into a better, more rapid and ultimately more profitable response to the sustainability and product quality demands of brand owners. When the wash line becomes operational, they’ll be able to control another aspect of their business and scale it in such a way that it decreases their environmental impact while maintaining, or even enhancing, service delivery and product quality.

In short, Phoenix in many ways is reacting to a brand owner need by integrating upstream. It’s trite but, as brand owners continue to tell the plastics supply chain to jump, vertical integration seems like a uniquely appropriate response.

Tuesday, April 28th, 2015

A Simple Shift in Shipping Regulations Could Net the American Economy $27 Billion in Annual Savings

Truck in portThe shipping economy operates adjacent to the manufacturing economy, and increased efficiency in either can often yield benefits in both. The advent of plastic materials decades ago enabled trucks to carry more products for longer, all while using only a fraction of the fuel because of the lightness of plastic materials.

That’s just one example, and the industries have traded innovations back and forth for decades. Most recently, however, a new industry group comprised of some of the biggest names in the shipping world is doing its best to save manufacturers money. The Coalition for Efficient & Responsible Trucking (CERT) counts Conway, Estes Express Lines, and UPS as members, among several others. The group has only one goal: a five-foot increase in the maximum length of trailers used in double configurations, from 28 feet, to 33 feet.

The idea is elegant in its simplicity, but could still have wide-ranging effects on a multitude of sectors. According to CERT, under the current 28-foot limit, trucks routinely “cube out before they gross out,” which is to say they fill all of their available volume long before they brush up against the 80,000 lbs. gross weight limit. This, simply put, makes shipping much less efficient, and saddles businesses with $27 billion per year in avoidable, additional shipping costs. Congressional authorization to extend the trailer length to 33 feet could put those costs back in the pockets’ of companies and consumers.

It’s a practical solution arriving at just the right time for the shipping economy and those industries that depend on it. “Every year, millions of tons in goods are sent across roads in shipments that don’t quite fit in a 28-ft. trailer, but aren’t nearly enough to require a full 48-ft. or 53-ft. trailer,” CERT says in a fact sheet. “As a result, more than 6.6 million avoidable truck trips occur every year. This inefficiency is only expected to worsen: over the next decade, less-than-truckload (LTL) shipments will grow from 145 million tons to an estimated 204.6 million tons.” Before that happens, however, CERT, SPI and its other industry partners are hoping Congress authorizes the five-foot extension.

More than just reducing inefficiencies and putting $27 billion back into the economy, CERT’s suggested legislative fix will also yield significant environmental benefits. By eliminating those 6.6 million unnecessary truck trips that currently happen each year because of the currently outdated regulations, extending the length of the trucks would result in 204 million fewer gallons of fuel being used by trucks, and reduce carbon emissions by 4.4 billion pounds per year.

If you need any more reason to support CERT, on their website they note that their simple suggested legislative change would eliminate 1.3 billion miles in truck traffic nationwide, making the 42 percent of the nation’s highways that are congested much clearer, and preventing 912 crashes annually.

SPI supports CERT’s plan and stands behind their efforts. The entire $375-billion plastics industry stands behind them and looks forward to repaying the favor through innovation.

Thursday, April 16th, 2015

Arizona Plastic-Bag Bill a Necessary Step toward Limiting Needlessly Burdensome Regulatory Complexity

FPA_2012_winner-Hilex-Poly-KrogerLast year the National Association of Manufacturers (NAM) estimated that the federal regulatory compliance burden for U.S. manufacturing companies exceeds $2 trillion on an annual basis. That’s a staggering figure on its own, but it pales in comparison to what the total eventually would be if every company had to comply with standards, laws and regulations that varied from locality to locality.

The last Census estimated that there were just over 77,000 local governments in the U.S. (excl. school districts). If the cost of compliance for manufacturers is $2 trillion now, what would it be if every one of those local governments grafted their own regulatory scheme on top of what’s already present at the state and federal levels?

Encouraging new opportunities for manufacturing growth in this country will require our legislators to think not merely of taxes, but of new regulations as well. “America’s regulatory framework is in need of a serious reboot,” SPI President and CEO William Carteaux said in the wake of the NAM report. “Comprehensive reform is necessary to allow the nation’s manufacturers to grow their businesses, hire more workers and keep America competitive abroad.”

“A modern regulatory regime based on scientific, technological and economic realities, rather than outdated facts, emotion and hearsay, will ensure the safety of workers, consumers and the environment while still fostering the innovation and job growth that manufacturing is poised to unleash,” he added.

Tailoring this regime to create adequate protections for individuals without overburdening manufacturers with redundancies, needless complications and laws based on bad science will require thoughtful analysis, enactment and implementation, not the broad-stroke, more-is-always-more approach that seems to be popular among so many activists. To this point, Arizona Senate Bill 1241, signed into law this week by Gov. Doug Ducey, is a small but meaningful victory in the battle against baseless overregulation and arbitrary statutes that make compliance a minefield for businesses.Bag2Bag-in-store-160w

By ensuring that the authority to regulate packaging and auxiliary containers rests in state capitols and not in the hands of local governments, SB 1241 certifies that businesses will have to comply with only one set of regulations in Arizona, rather than 432 different sets: one for each local government in the state (excl. school districts). It’s a pro-business bill that precludes the creation of a patchwork of new regulations. More than that, by heading off potential regulatory threats, businesses can plan for the future without worrying that new, increasingly segmented regulations could inhibit them. SB 1241 is a sign that Arizona understands how important that certainty is to business when making investments and moving forward. By providing that certainty, they’ve made it easier for companies to concentrate more on growing their business and creating jobs and less on future compliance challenges. Hopefully other states will follow in Arizona’s footsteps.

Monday, April 13th, 2015

Telling the Plastics Industry’s Story through…Food Packaging Compliance?

SPI’s Project Passport aims to make life easier for brand owners, plastics manufacturers and materials suppliers and is part of an open discussion about science, industry and consumer safety.

FoodPackaging_StockPhotoBrand owners are often correctly viewed as the conduit through which the consumer speaks to the rest of the plastics supply chain. The crazy, upside-down world in which they operate is a demanding one, where information is more available than ever before, and yet confusion continues to run rampant throughout the supply chain, starting with consumers, particularly when it comes to something as ubiquitous as the packaging in which their food is stored.

“The public is understandably confused by the conflicting messages they receive about product safety,” said Kyra Mumbauer, SPI senior director, global regulatory affairs, “and when people  get confused about the safety of the packaging their food comes in, they typically ask the brand owner, whose name is on the package itself, who then asks the manufacturer, who then asks the materials supplier before an answer is finally provided.”

Many of these requests for information go beyond what’s required from a regulatory standpoint, which only complicates the process for diligent materials suppliers and plastics manufacturers that are doing their best to assuage the concerns of their customers. “There may not be a common level of education about what is required from a regulatory standpoint,” Mumbauer said. “But if everyone that has to convey their compliance information has a baseline, then that will lead to a reduction in the number of redundant or unnecessary questions that get asked.”

For brand owners seeking information from their suppliers about the compliance of materials that went into their packaging products, the practical aspects of acquiring and sorting this information can be daunting. At the very least they’re an unnecessary time drain. “You can get 13 different letters from your suppliers that look totally different,” Mumbauer said. “It can be really time consuming and there’s no simple way to organize those documents.”

At least, there wasn’t until now.

2015-project-psspt-4cProject Passport, the latest resource from SPI’s Food, Drug and Cosmetic Packaging Materials Committee (FDCPMC) seeks to provide “a more consistent approach to communicating vital compliance information to customers and consumers in a way that’s clear, complete and easy on the eyes.” In its current form, Project Passport’s Guideline for Risk Communication for the Global Food Contact Supply Chain is comprised of three separate components, each of which offers packaging suppliers a key tool to help them communicate the safety of their products to companies and consumers further down the food packaging supply chain:

  • An Example “Food Contact Declaration of Compliance” Form – The form is generic by design so that it can be adapted to different products marketed in various jurisdictions.
  • Instructions – These basic explanations and sample customer assurance statements provide the context to help companies complete the form quickly and effectively.
  • Quick Guides – A series of topical guides is interspersed throughout the document on select topics to provide added clarity on the instructions.

These tools will make it easier for brand owners to make sense of what goes into their packaging products, while simultaneously making it easier for companies to sell their products globally by preemptively addressing the compliance concerns of their potential customers. “New regulatory affairs professionals marketing a product globally can look at this and see what they need to be conveying to their customers,” Mumbauer said, noting that Project Passport currently is designed to address the needs of U.S. and European Union regulatory authorities, and that while complying with these two jurisdictions typically qualifies a product for sale in most countries in the world, as participation increases, Project Passport will continue to expand as well. “By promoting wide adoption of this form and this guideline we’ll have a more consistent approach to communicating information,” she said.