When a vertically integrated converter of flexible packaging wants to expand in a new direction, there’s only one way to grow, at least geographically speaking: horizontally.
That’s what St. Johns Packaging Ltd. (SJP), Saint-Jean-sur-Richelieu, Canada, near Montreal, has done the last several years in gaining solid footholds in two key, diverse global market regions: China and, more recently, the United States. A wholly owned SJP converting plant in Kunshan, China, was started up in 2007 (see China sidebar p.00). In November 2010, SJP announced its acquisition of North State Flexibles (NSF), Greensboro, N.C.
These moves represent a cohesive, proactive response to an evolving market.
“With all the consolidation within the food and personal care industries, there are fewer and fewer customers, but they are larger companies,” explains Marc Leclair, SJP vice president and managing director. “Customers appear to rationalize their supplier base by relying on no more than two or three key suppliers. It is necessary for a company of our size to rationalize on supplying a limited range of products to a limited number of very large customers.
“Quality and competitive prices are pretty much taken for granted by our customers and target customers,” he continues. “The only way we can truly distinguish our North American plants from those of our competitor’s is by being more flexible and responsive. We have very few customers and can therefore adapt to their every need. Whereas it wouldn’t be possible for a company our size to deliver optimal value to 100 different customers, we do think it is realistic with 15 to 20.”
It’s this kind of vision that has led the company to dramatic growth. SJP’s 2010 sales were $80 million, doubling over the last five years. Adding two operations outside of Canada to its three manufacturing facilities within pushes 2011 sales projections to around $100 million USD, Leclair says.
The acquisition of NSF unlocks opportunities in the U.S. “We are a Canadian company, but over about the past 10 years we have been targeting the U.S. market more and more,” explains Leclair. “We now export 50 percent of our Canadian production to the U.S. To further develop that market and gain a better competitive advantage, we sought to acquire a U.S. converter.”
What’s a good fit for SJP is also good for NSF, according to NSF’s former owner Battle Wall, who will join St. Johns Packaging (USA) Ltd.’s board of directors. “We are excited about joining the St. Johns Packaging Group,” says Wall. “Although we are very proud of the success we have enjoyed as NSF during the past 13 years, I am convinced that our suppliers, associates and customers will benefit from our integration into St. Johns’ North American operations. The combined group will be bigger and stronger, capable of supplying more products, services and value to the world’s two biggest flexible packaging markets (North America and China).”
Leclair feels NSF was a custom fit for SJP in several ways including its personnel and solid production capability. “NSF has very good capabilities including prepress, printing, laminating and converting for bags and pouches,” he says. “It is strong in markets that we are interested in developing. We have a lot of customers with operations east of the Mississippi River and are in a much better position to supply more value to them.”
The NSF acquisition brings both complimentary and new capabilities under the SJP banner. For one thing, NSF’s printing and bag making operations match up perfectly with SJP’s. “We have identical printing presses and same bag making machines so from that aspect we’re getting bigger at what we already do,” says Leclair.
The pairing also brings SJP new technologies and methodologies it did not have before, in prepress, flexographic plate-making and lamination via Comexi Nexus solventless laminators.
Finally, NSF adds pouch-making capability. “Stand-up pouches and side-gusset pouches are the future of flexible packaging,” observes Leclair. “NSF’s three pouch-making machines are very interesting to us.” NSF operates pouch-making machinery from Karlville and Totani America.
A Mix of Markets and Packaging StylesThe acquisition of NSF changes the breadth and mix of SJP’s packaging portfolio both for its packaging repertoire and end-use markets. Leclair notes that its plants in Canada and China have a mix of 75 percent food packaging and 25 percent personal care packaging while half of NSF’s output is for personal care markets. “NSF is more diversified and brings other product markets,” adds Leclair. “For example, pet food, lawn and garden, textile and apparel. This creates more overall opportunities for us.”
With a portfolio rebalanced with NSF, now about half of SJP’s overall output targets food, lawn and garden end markets. The other half comprises packaging for personal care products that include diapers, feminine hygiene, and wet wipes.
“We basically supply the leading North American baking companies as well as some of the top personal care companies,” says Leclair, who sees a common thread in these diverse markets. “All these customers are seeking to capitalize in improved flexographic technology to develop designs that make their product stand out on the supermarket shelves. Companies are investing more in packaging, printing and graphics.”
For example, one of the food segments for SJP is in the baking industry, where 9- and 10-color printing and metallized bags used for fresh sliced bread in Canada.
A Wicked Amount of Wicket BagsIt’s for fresh sliced bread and a range of personal care products that one finds SJP’s most popular packaging format: wicket bags, a format the company has produced for more than 40 years. Representing about 75 percent of the company’s output, wicket bags are manufactured in every one of SJP’s five converting plants.
The converted bags are mounted onto 200- to 400-count wickets-U-shaped metal or plastic spools-and are boxed, and shipped to customers. The wicket bags are typically placed by customers onto automatic fillers that use air to open up the bags and insert the product before the bag is closed.
The substrates used are mono- or tri-layer low-density and linear low-density PE blends followed by eight or 10-color printing. That’s followed by application to the wickets using equipment from Hudson-Sharp Machine Co., a supplier of servo-driven wicketers. SJP operates more than 50 wicket machines. Speeds range from longer-run orders produced at 400 bags per minute and short runs for promotions or special requirements at rates down to 150 bags per minute.
Other than the increasing use of reclosure features, Leclair says there have been little structural changes to wicket bags over the years. “It’s a mature product in a mature market,” he opines.
New All ‘Everything' ExtruderSJP has made investments in each of the major converting steps starting with extrusion. System wide, SJP operates 9 blown extrusion lines with a total capability of 40 million pounds per year. One of the newest is a Windmoeller & Hoelscher (W&H) Varex 3-layer extrusion line started up in December 2010 at the company’s St-Jean-sur-Richelieu plant near Montreal. It offers a throughput of 1,800 pounds of resin per hour and is initially producing low-density polyethylene and linear low-density polyethylene films used mainly for personal care markets.
“This state-of-the-art technology allows us to manufacture advanced films with unprecedented versatility, precision and consistency,” says Leclair. “It has automated, menu-driven changeovers. Quality, gauge control, everything is a lot better with the newer extruders.”
It also permits SJP to go after more sophisticated, customized applications. “This allows us to get much better output in productivity or to go after more sophisticated products: we can manipulate the texture of the film, give the outer layer more slip and the inner layer less slip,” says Leclair. “Customers want to have their products stand out on the supermarket shelves and are always looking for glossier or textured film. With this extruder, we can do just about anything. There is a lot of testing being done with our customers to develop innovative new products with that extruder.”
Flexographic printing is one of SJP’s basic strengths: It currently operates 15 flexographic printing presses, including three 10-color Novoflex gearless presses from W&H and one 10-color gearless Fischer & Krecke Flexpress from Bobst.
Another technology that SJP is developing is High Definition flexo-printing where it is pushing flexo printing from the current industry standard of 100-133 lines per inch to the 175-200 lines per inch range.
“That would match the resolution of gravure print,” Leclair says. He also points out the crucial role of all aspects for HD printing including separation software, printing plates, and inks.
Ongoing trialing involves three customers. Leclair expects commercial introductions of HD flexo-printing the first half of this year followed by commercial production the second half of the year.
“Everything in flexible packaging is evolving very fast, it’s an exciting time where customers are keen to capitalize on new technologies,” he says.
Leclair believes that the company’s business model is unique. “There are more Asian companies trying to export to North America, but as of yet they do not have operations in North America,” he says. “Obviously we have a lot of competition from North American competitors, but most do not have the low-cost offshore operations as we do. In our target market, we do not know any company capable of offering the best of both worlds like we do.”
As a company on a mission centering on customers, St. Johns Packaging will continue to explore new opportunities to bring value and cost savings wherever that leads. FP
For more information:St. Johns Packaging Ltd.
(450) 349-5871; www.sjpack.com
Bobst Group North America
(973) 226-8000; www.bobstgroup.com
Hudson-Sharp Machine Co.
(920) 494-4571; www.hudsonsharp.com
Karlville Development Group
(305) 533-1051; www.karlville.com
Totani America Inc.
(920) 632-7319; www.totani.co.jp/en/
Windmoeller & Hoelscher Corp.
(800) 854-8702; www.whcorp.com
‘Made in China' Translates as Quality, Savings for CustomersIn 2007, St. Johns Packaging established a wholly owned operation in Kunshan, China, located outside of Shanghai.
SJP bought the land, built a 54,000-square foot plant, and installed extrusion, printing, and bag-making machinery to supply wicket bags for bread and personal care products.
The biggest reason for doing this is one of the oldest: cost savings. For predictable volume SKUs and long lead-time orders (8 to 12 weeks), SJP can source the materials from the China facility at a cost savings for customers, according to Marc Leclair, vice president and managing director. For shorter lead time and just-in-time orders, the company can produce the packaging from its four U.S. and Canada plants.
“It’s a business model to develop the North American market even more,” summarizes Leclair.
The solution also answers concerns over overseas product quality. The plant offers the same level of vendors and materials as its North America operations and the plant meets Food and Drug Administration and American Institute of Baking (AIB) standards for food contact packaging. Also, 25 Kunshan managers and top operators were trained for a year in St. Johns North America plants, and those domestically trained personnel instruct new hires in China.
“We have the same capabilities in China as we do here, so this is basically ‘transplanting’ an audited and certified U.S. operation into China,” offered Leclair. “It all comes down to lead time-if it’s long enough, then it’s pretty much a no-brainer for customers to have the packaging made in China.”
While the U.S. remains its most attractive market, Leclair feels that China, with around 1.4 billion people, presents an emerging market for flexible packaging. “We established this presence as a leadership role because in all of China there are only 10 flexo presses,” states Leclair. “We are confident in our ability to establish our operation as China’s most reliable printer of flexible packaging products.”
This approach in the expanding world of flexible packaging means materials “made in China” may one day translate to mean cheap, not cheaply made. FP