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Jul 06, 2012

Packaging industry holds many opportunities

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While the South African packaging industry is facing challenges like many other sectors, it is capable of successfully competing in global markets and packaging companies should aim to turn challenges into opportunities, advises paper and plastic packaging manufacturer Mpact CEO Bruce Strong.

“South Africa is not second-rate in any way with regard to the design and application of packaging,” he asserts.

He points out that several South African packaging companies, including Mpact, compete in the WorldStar Packaging Awards every year, adding that they often win in many categories.

Mpact and fellow South African packaging companies, Nampak and Uniprint Labels & Packaging, won awards for food and beverage packaging in 2011.

Strong acknowledges that there are many challenges facing the industry. These include the high cost of administered services such as electricity and municipal services, as well as skills shortages.

Another challenge is the export market. While foreign companies, which export packaging products to South Africa pay no duties, countries such as Brazil, among others, impose duties on South African packaging exports.

“We are engaging with govern- ment about this on an ongoing basis. “We are not asking for protection, but fair play. I think government is realising the significance of this challenge,” says Strong.

In terms of skills shortages, he believes that the packaging industry should look to skills development as a way to bridge the skills gap.

Further, Strong states that, for South Africa to reduce its unemployment rate and create more jobs, it needs to develop its manufacturing sector.

“Gross domestic product (GDP) has, to a large extent, been driven by services in the recent past, rather than by manufacturing,” he notes.

The total value of South Africa’s packaging industry is around R43-billion, contributing about 1.5% to South Africa’s GDP. Plastic packaging contributes about R20-billion a year and paper packaging R12-billion a year, with the balance made up by glass and metal packaging.

Not only is the packaging industry a significant employer, it also assists in the beneficiation of the country’s natural resources, says Strong.

“Packaging materials are produced and manufactured locally from local materials, which is a tremendous benefit to South Africa in terms of economic growth and job creation.”

Strong notes that, in the absence of adequate packaging, countries will face product waste that negatively impacts on economies.

“In developed countries such as the UK, about 3% of the produce that is grown or produced in the field is lost between the point of production and the point of consumption.

“This is in comparison with developing countries, where product waste can be as high as 40% as a result of inadequate packaging materials and poor infrastructure.

“Packaging has a critical role to play across the entire value chain and in establishing food security, which is a global issue,” says Strong.

He

stresses that one type of packaging cannot be considered as uniformly better than another, as each type has different applications and fills a different need in the market. “There is a continuous migration from one type of packaging to another over time, such as from glass to poly- ethylene terephthalate (PET).

“This migration is driven by several factors, including cost, the effects that a certain type of packaging has on the environment with regard to its recyclability and its carbon footprint, the application of the packaging material and the safety it offers consumers.”

Strong says PET packaging has come a long way over the last 20 years, as the technology to mould PET into a suitable packaging form was not available at that time.

“As a packaging material, PET has the advantage of being lightweight. For example, a 500 ml glass bottle weighs 400 g, whereas a 500 ml plastic bottle weighs only 40 g.”

Mpact is actively pursuing PET recycling projects and adds that the economic value of this material is significant.

“The recycling sector in general contributes to job creation in the informal sector – people who collect PET packaging materials for recycling can get up to R2.20/kg. While this may not seem like much, it is a lot to people who would otherwise struggle to survive. These people can earn R100 or more a day,” says Strong.

He adds that South Africa’s recycling sector employs in excess of 100 000 people, many of them in the informal sector.

Meanwhile, Strong says

retail- ready packaging has become a popular trend in the industry, as it offers retailers reduced handling, resulting in increased efficiencies.

Edited by: Chanel de Bruyn
Creamer Media Senior Deputy Editor Online
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