When Mark Rose scans the long rows of cardboard cereal boxes that line grocery shelves, he sees huge green packaging opportunities for his plastic manufacturing company, Richmond, B.C.-based Layfield Group.
Rose, general manager of Layfield’s Flexible Packaging division, maintains it doesn’t make sense to have both cardboard boxes and plastic film liners that hold the cereal, when recyclable liners alone would suffice. “There’s no reason to have both,” he says. “It’s like wearing two sets of headphones or two ties.”
1.5 lbs. of flexible packaging is equivalent to 50 lbs. of glass packaging, 6 lbs. of rigid PET plastic packaging or 3 lbs. of aluminum packaging. And, one truckload of flexible packaging is equal to 26 truckloads of glass packaging. – Layfield Group
Layfield, which specializes in making high-quality films that are thin but strong, is now preparing to sell its new cardboard-free cereal packaging concept to major American cereal makers. It’s just one way that plastics manufacturers are working to reduce the environmental footprint of food packaging.
“For a lot of people, plastics are seen as a big part of the problem,” Rose says. “In reality, plastic is really part of the solution. If you look at applications where plastic is used, there are very few opportunities to find a more environmentally friendly alternative. But it’s got to be used responsibly and there’s a lot more we can do with it.”
Innovating from sea to sea
Similar thinking is going on at the other end of the country at IPL Plastics in St. Damien, Quebec. Sustainability in food packaging is “a prevalent trend with all of our customers, both large and small,” says IPL’s president and CEO Jan Lembregts.
As an example, IPL has developed Trustpack, an innovative square-shaped recyclable and reusable polypropylene container that maximizes space. It allows for up to 40 per cent more containers to be delivered on a pallet than round ones of similar size.
“There are a lot of round packaging products on the market because they’re easier to make,” Lembregts says. However, “a square container is more sustainable,” results in lower transport costs and allows retailers to put more products on store shelves.
Layfield also preaches the virtues of flexible plastic packaging as being far more environmentally friendly than other packaging solutions. “When you look at it from the carbon footprint standpoint, product packaging ratio, landfill impacts, energy consumption and CO² emissions, it’s significantly better,” Rose says.
He also notes that while most plastic packaging is recyclable, not enough of it is getting recycled. For example, bread bags, grocery bags, plastic shrink for bottled water and cucumber film are all recyclable, but their light weight provides little motivation to recyclers who can make more money on heavier products like glass bottles and aluminum cans. To improve that situation, the industry is trying to get governments to establish programs to boost curbside plastic-film recycling and better recycling programs for retailers and industry.
Investing from north to south
Layfield conducts most of its manufacturing at its Richmond plant, but the 400-employee company also has offices in Edmonton, Calgary, Toronto, Seattle and San Diego and distribution facilities in Tennessee and Australia.
On the food and beverage packaging side, the company makes everything from shrink sleeves (a thin film that’s labeled and fitted on bottles) to flexible stand-up pouches, which are growing in popularity. From 2009 to 2010, global demand for stand-up pouches increased by seven per cent.
New markets and new demands
Layfield exports about 40 per cent of its food and beverage packaging products to the U.S. and Mexico and all of its sales to those countries are supported with accounts receivable insurance from EDC.
“EDC has helped us insure receivables in markets where we would typically be a little bit shy to go because of credit concerns,” Rose says. “We just insure all our international receivables as a risk mitigation measure.”
The company is now exploring South America for export ventures, but will have to first overcome such hurdles as language and understanding tariffs in the region better.
When it comes to dealing with customer expectations, “they are looking more and more for efficiency along with environmental friendliness,” says Rose, whose company includes Pepsi among its clients.
“Our society really overpackages,” he says. “By just building better quality plastic, you’d be able to save tons of money, reduce your carbon footprint and have more efficient packaging.”
Lembregts of IPL Plastics notes there is a growing international trend to reduce the amount of plastic in packaging that is being driven by environmental and cost concerns. “The key to our success is coming up with innovative solutions in the area of sustainability or product design.”
For example, the company’s new Trustpack container not only features a space-saving square shape, but a tamper-evident design that gives it its namesake. “In food packaging, it’s very important that if a package is opened, you can trace that. Trustpack significantly increases food safety.”
Privately held IPL concentrates on food packaging, material handling and environmental products and employs 850 people at its plants in St. Damien, Edmundston (New Brunswick) and, since last year, Kansas City (Missouri). The new operation has led to growth in its Canadian plants too. “It’s easier to sell Canadian-made products in the U.S. if you have a strong U.S. presence,” Lembregts says.
“We believe there is plenty of opportunity in North America for gaining market share and bringing innovative new products to market.”
In this vein, the company developed a high-end process that allows clients to eliminate the need for labels on square plastic containers by building decorations into the plastic itself through an in-mould labelling process. As a result, says Lembregts: “You have a sustainable product because it’s square, superior decoration for branded products and shelf presence, and a design that’s innovative and cost-efficient.”
Although the company faces the same hurdles as other Canadian exporters, such as a high dollar and freight costs, its innovative products and niche strategy give it a competitive edge. “We believe that we have a really good possibility to bring new and innovative products to smaller, more niche markets, where we can be an important player.”
Back at Layfield, Rose is confident we could soon be looking at our cereals in a new way, once it convinces a large cereal manufacturer to adopt its footprint-reducing box-free packaging. “I think what’s going to happen is that one of them is going to tip. Once a major manufacturer changes over, other ones are going to have to follow.”
Investing in firms with world-leading potential
IPL Plastics is a key growth firm in the portfolio of Novacap, one of Canada’s leading private equity firms. The Novacap Industries platform invests in middle-market companies in traditional industries that have the potential of becoming world leaders and helps them accelerate their growth by developing their markets, technology and operations. Novacap also has a Technologies group that focuses on the ICT sector.
Novacap and EDC have been partners since 2000 and today EDC is an investor in three of Novacap’s funds across both the Industries and Technologies platforms. EDC has also co-invested alongside Novacap on other projects and provided financing and insurance products to many of Novacap’s portfolio companies.