Cogs in the machine3 December 2020
Throughout 2020, the year of coronavirus crisis management, one of the consistently performing parts of the packaging supply chain has been machinery. Whether it is delivering goods that are not touched by hand so the virus cannot spread, or supporting the filling, forming, packaging and transporting of goods, machinery has been a fundamental cornerstone in the industry’s successful management of the pandemic. Jorge Izquierdo, vice-president of market development for the Association for Packaging and Processing Technologies, provides an overview of the current state of the US packaging machinery market and an insight into other global trends.
The global spread of the Covid-19 pandemic is the single biggest risk facing the world economy in 2020. Since February Covid-19 has spread rapidly – the damage to economic activity, both because of the virus itself and the policy response, is becoming larger by the day.
At the time of writing, the number of Covid-19 cases has increased at an alarming rate in the past few weeks. While the number of new cases in China seems to have topped out, the incidence is rising rapidly in the rest of the world (albeit from a much lower base), particularly in Europe, where second national lockdowns were announced in both France and Germany in late October.
This has been both a demand-side shock (with damage to travel, tourism and any activities involving large crowds) and a supply-side shock (with major disruptions to supply chains). Some have referred to the supply-side effects as a “human credit crunch”. However, global research leader Omdia assumes that this will be a U-shaped rather than a V-shaped cycle, with a sharp reduction in near-term growth followed by a slow recovery.
While the US economy will undoubtedly be hurt by the effects of the virus, Omdia believes that the momentum of the economy is strong enough to avoid a recession. On a calendar-year basis, it is now predicting 1.8% growth in both 2020 and 2021, compared with the previous forecast of 2.1% in 2020 and 2.0% in 2021.
Cause and effect
The increased focus on optimising machinery is partially due to the growing attention to depletion of natural resources. This has driven demand for environmentally friendly solutions and highlighted the need to improve efficiency.
At the same time, global economic growth is slowing, led by decelerations in international trade and manufacturing. In the US, for example, real GDP increased by 2.3% in 2019, compared with 2.9% the previous year. Increases in consumer spending, government budgets, and business and inventory investment were partially offset by a decrease in housing investment and an increase in imports.
There are three major factors contributing to the changes in global economic patterns. First, trade conflict between the two largest economies, China and the US, will have a profound impact on the global economy. On one hand, it will result in a significant trade and investment transition for countries with a similar export structure to China. On the other hand, the trade conflict between China and the US will continue to generate shocks to both upstream and downstream businesses.
Second, the potential risks facing financial markets will worsen the prospects for economic growth. Uncertainty surrounding global trade tensions and the turmoil over Brexit will take its toll, while the European Central Bank is likely to offer less support for countries in need as its quantitative easing policy ends.
Third, declining oil prices are likely to result in uneven economic growth across the world. The increasing supply and decreasing demand for oil will lead to stockpiling, while the unstable political situation in oil-producing countries casts a shadow over the market. This situation, which affects countries importing and exporting oil in opposite ways, will lead to differing levels of economic growth.
Packaging machinery trends
Amid this climate of uncertainty, there are a number of key trends influencing the packaging industry. In recent years, packaging machinery companies have increasingly embraced automation in their production lines to boost efficiency and productivity. These companies are now leveraging smart manufacturing to maintain a competitive advantage and meet their pressing business needs.
Robotics has also penetrated the packaging machinery market, alongside the evolution of artificial intelligence (AI), 5G and internet of things. Most recently, a technology known as ‘cobots’ – collaborative robots – has emerged as humanmachine interface (HMI) becomes increasingly prevalent on factory floors. Cobots are designed to be safer for humans to work in close proximity.
With regard to aftermarket success for original equipment manufacturers (OEMs), this depends heavily on providing exemplary service and having parts available when customers need them. To meet these goals, OEMs must invest in technician training, leverage value-added services and monitor inventory levels. Customer satisfaction is no longer a source of added value – it is a key differentiator and the foundation of business success for field service organisations. Companies are seeking solutions that will help maintain machine performance, but they rely on machinery OEMs to provide the services and support to do so. OEMs can seize the opportunity to address customer needs from the onset of equipment sales, and then continue to build and maintain the relationship after machine start-up. Organisations are turning their attention to implementing service capabilities that are aligned with client requirements, such as the adoption of fast and agile technology that is designed specifically for use in the packaging and processing equipment industry.
Other trends include e-commerce, which will become an increasingly important factor in the industry, forcing packaging to be designed to maximise packing space. It is also encouraging a transition from glass towards pouches and easily packable trays. Similarly, most industry experts foresee continued growth in the flexible packaging industry, fuelled by two developments: increasing consumer demands for convenient packages, and an industry push for sustainable, shelf-ready product designs.
Machine modifications are needed to achieve sustainable packaging goals, but some of the challenges producers of consumer packaged goods (CPGs) face when moving to more environmentally friendly materials provide opportunities for OEMs to explore application details with customers. Secondary packaging machines such as conveyors must be able to handle material reduction strategies, including the use of lightweight corrugated sheets. Virgin fibres are being replaced with post-consumer recycled (PCR) materials, causing issues with case erecting, packing and adhesion. Line speed is also impacted with increasing amounts of recycled content in corrugation, requiring a broader tolerance range.
Eliminating or reducing corrugated materials requires innovative bundling and shrink-wrapping solutions. Machines need to run different style boxes to accommodate sustainability strategies, such as using the right size container. Case packers with a smaller footprint can help achieve sustainability goals through a reduction in energy usage. A more efficient process of unpacking the contents of a pallet and repacking them into different sizes or variety packs is also necessary, with a focus on reducing material usage. Shrink film proprieties change as PCR content increases over virgin materials, and machines need to handle both. Machinery needs to be optimised to enable the smooth processing of recyclable PE laminates and coextrusions, which have different machine handling requirements. Reduced adhesive melting points in case erecting and sealing to minimise material usage.
Trends in secondary packaging
Expanding SKUs, sustainability and the growth in contract services are important drivers for a number of trends that are dominating the secondary packaging space. First and foremost, secondary packaging in the digital age is being defined by the expanding use of automation, specifically robotics. In addition, brand manufacturers are increasingly rethinking the structure, material and composition of their secondary packaging designs.
Consumer desire for sustainable products is driving a larger movement within the segment, with manufacturers seeking new materials, higher PCR content and formats that align more closely with consumer sentiments. These trends have, in turn, created challenges for brand manufacturers in their secondary packaging operations, as alterations and modifications must be aligned with machine capabilities and production strategies.
The end of the line has long been a home for emerging automation strategies. For many brand manufacturers, secondary packaging is the first area to see significant deployment of automation technology. The repetitive tasks and continuous movement of secondary packaging lines make them well suited to be early adopters of advancing automation. As a result, the end-of-line – and especially secondary – packaging systems tend to be some of the most highly automated operations on a production line. This is reflected by the participants in PMMI’s ‘State of the Industry US Packaging Machinery’ report from August 2020, with 67% of respondents stating that their end-of-line operations are already heavily automated. Despite this high level of automation, manual labour is still a crucial aspect of secondary packaging, with 21% of respondents stating that some of their operations still rely on human labour. The continued reliance on manual operations has proved particularly challenging given the ongoing labour shortage in manufacturing, pushing many companies to continually seek innovative and cutting-edge automation solutions.
Despite the prevalence of automation on secondary packaging lines, manufacturers still see significant room for the expansion of automated technologies. The faster but often shorter production runs, caused by SKU proliferation and the growth of the CPG industry, have kept manufacturers cognisant of the fact that even more automation will be required to meet future production goals.
Indeed, 85% of participants stated that they are still looking to expand their current portfolio of automation solutions in secondary packaging. This expansion of automation technology focuses on the challenges created by the growing business of brand manufacturers and the ongoing lack of labour hampering manufacturing. Nearly two-thirds of CPG producers surveyed (65%) state they would like to achieve faster changeover through automation upgrades to keep up with the pace demanded by production schedules.
In addition to improving changeover efficiency, manufacturers are looking to modernise their quality control systems, with 45% of participants planning to implement automated vision inspection systems. These functional improvements and upgrades are often multi-pronged strategies that require investment in both hardware and software.
Beyond this, manufacturers are looking for comprehensive automation additions to improve efficiency – not only within secondary packaging operations, but also operations upstream and downstream from these processes. This is reflected in data provided by report participants, with 25% stating that they are seeking greater levels of line integration within their secondary packaging operations to better coordinate production and minimise downtime.
When it comes to specific automation technology, robotics has been a dominant force in secondary packaging. Tasks such as feeding secondary cartons, pick-and-place case packing, and a variety of palletised configurations require a high level of precision and speed, capabilities that are perfectly suited for modern robots. Manufacturers are also well aware of the advantages that robots can bring to secondary packaging operations, with 75% of participants reporting that their secondary packaging lines are using robotics for some tasks.
Even with this high rate of usage, manufacturers continue to predict future expansion of robotics, with robots and cobots expected to be seen on 95% of all secondary packaging lines within ten years.