PPT: Going forward with vertical integration
Plastic Packaging Technologies, a vertically integrated flexible packaging converter with locations in Kansas City, Kan., and Columbus, Ohio, serves the unique and varied needs of a broad range of industries, including the food packaging, pet food/treat, industrial, medical and agricultural markets. The company’s combined 175,000 square feet of production and distribution space houses an impressive array of printing, laminating, slitting/winding and bag/pouch-making lines. But as Plastic Packaging Technologies president and chief executive officer David Staker suggests, his company’s point of differentiation isn’t just about what each of those lines can do, but what that combined technology and capacity can do for a customer.
“We really are unique in that we are of a size and scale where we’re capable of leveraging the latest state-of-the-art machinery, technology and systems in multiple facilities to supply Fortune 500 customers,” says David Staker. “Yet we’re still nimble and provide tremendous flexibility and excellent speed-to-market with a high degree of expertise and service. You don’t often find that at converters of larger size and scale.”
Rolling up the sleevesAlthough Plastic Packaging Technologies’ roots can be traced back some 40 years, the current incarnation of the company was formed in 2002 with the purchase of Plastic Packaging Corp. by a Kansas City investment group that included Staker.
“The right word to describe that purchase was ‘opportunistic,’” says Staker. With the transaction, Staker-who previously left the legal profession to join the investment group-was extended an opportunity to lead the start-up company as president and recruit his brother Dan Staker, a civil engineer, to join the executive team.
“David and I were both pretty young at the time, and our dream, entrepreneurially, was to own and operate a business together,” remembers Dan Staker, executive vice president. “We’ve thrown everything we have behind the business and it’s become our lives now.”
While the leadership team immediately saw the potential of the new company and recognized the trends it would need to follow in order to generate success, none of its members actually had a background in the flexible packaging industry. Deena Stous, the chief financial officer, had come from professional service firm Ernst & Young. Dave Potter, Plastic Packaging Technologies’ vice president and general manager, spent 10 years with Hallmark Cards and 12 years with a pasta manufacturing company-a background that gave Potter and the entire executive team a unique edge.
“The biggest challenge, which was an immediate opportunity, was that as a buyer of packaging, I was always frustrated with lead times,” recounts Potter. “When I got here, I demanded to know why lead times of six, eight and 10 weeks were being quoted for finished packaging.” Potter and his colleagues rolled up their sleeves and within two months of Potter’s arrival, the company had established a supplier program and ultimately consolidated nearly all of its polyethylene purchases into one key supplier.
“We really embraced that supplier and worked to improve our lead times tremendously,” says Potter, noting that an improvement in inbound lead times directly translated into shorter lead times for customers. “Today, we get that supplier our film orders by Thursday at noon and he delivers 6:00 a.m. Tuesday morning. And that’s what was exciting to me, really getting into the nuts and bolts of the business to understand what the drivers were and then addressing those very quickly.”
Getting closer, looking deeperUnderstanding the nuts and bolts of its operation, as David Staker explains, is part of the three-pronged strategy that not only brings Plastic Packaging Technologies its success, but helps it to stand out among flexible packaging converters.
“We have brought a very professional, disciplined management style that, frankly, this business and this industry had never had before,” explains David Staker. Under its Strategy-Focused Operating Model, Plastic Packaging Technologies routinely tracks metrics, sets goals, assigns responsibilities and then constantly rechecks those metrics to understand its well-being as a business. “We share a lot of information with our associates, and we’re focused on aligning our people with a common mission, a common vision, and a shared goal in terms of how we define success.
“The second prong is to identify those strategic markets, products and customers that we believe represent the faster growing segments of flexible packaging,” says David Staker. He explains that while this helps to differentiate the company from hundreds of other companies in the highly fragmented flexible packaging landscape, this approach also bolsters the company in a diversified base of customers while providing the launch pad for future growth. To that end, as Potter explains, identifying and ultimately pursuing such key targets means much more than cashing in on a great opportunity.
“As a young, almost a rebirth company, we’ve established tremendous relationships that are not transactional in nature, but are rather strategic with our key customers,” says Potter. “We also do a very good job with mid-range and smaller nationally branded customers who don’t have all the in-house resources like logistics and technical people or packaging engineers. We’re able to step in and fill a lot of spots for them. Our future growth, to a great extent, is tied to that because once customers get that full package, they’re interested in expanding the relationship with us.”
The third, and arguably most admirable, component of Plastic Packaging Technologies’ approach to the flexible packaging market is its vertical integration, what David Staker considers a clear strategic advantage for all concerned.
“We really view our vertical integration of printing, laminating, slitting and pouch converting as a strategic advantage,” says David Staker. “We believe-and our customers believe-that our ability to perform all of those functions, from high-end flexographics to specialty pouch converting under one roof, has resulted in shorter lead times and more cost-effective delivery.”
The players and processes at PPT
After printing, the film moves to one of the company’s three Nordmeccanica solventless lamination lines. “Much of what we do in terms of providing value involves developing the combinations of films and structures that yield high barrier properties” to preserve the product inside, says Dan Staker. “What we do from a converting standpoint is often the most innovative part of our packaging, but the barrier properties in the lamination and preserving product on a shelf for a much longer period are very important.”
Once the printed and laminated films are processed on Plastic Packaging Technologies’ slitter/winder lines, they’re set up for final bag/pouch conversion into a plethora of supported formats. Such structures include stand-up pouches, three-side seal pouches, quad-seal and flat-bottom box pouches, back-seam bags, side-weld, wicketed, leak-resistant and tamper-evident packages. Press-to-close zippers, Pactiv’s Slide Rite closures and laser-scoring further add to the lineup of innovative bag and pouch features.
“One clear industry trend is that packaging today is used to market and sell the product, not just package it-functionality is a big part of that,” notes David Staker. He further explains that stand-up pouches began gaining traction ten years ago and merely having a pouch isn’t enough to gain consumer attention. “Today, it’s about asking, ‘What are the features of the stand-up pouch?’ Does it have slider capability? Is there laser scoring for easy tear off? Does the bag sit well and cube out on the store shelf like the box pouch does? All of those features have become very important.”
While Plastic Packaging Technologies traditionally turns to a diverse number of suppliers for its machinery and material needs, its selection of bag and pouch-forming machines is unique in the sense they’re exclusively manufactured by the Totani Corp., a fact David Staker is clearly proud of.
“We have a very good relationship with the Totani organization and we really believe theirs to be the world’s leading pouch-making equipment,” says David Staker. “Our relationship with Totani has been mutually beneficial and it has enhanced our business tremendously.”
Continuing growthPlastic Packaging Technologies certainly places a great deal of emphasis on close customer relations in its quest to fulfill its mission statement: “Build a great business.” To that end, the converter spends as much time going back down its own supply chain and reinforcing relationships with suppliers as it does working on behalf of a customer’s supply chain. This, according to Potter, is central to his company’s ongoing success.
“If you look at a lot of corporate mission statements, they’ll talk about great employees and stockholders, but they’ll always slap on suppliers on the end-it’s like an afterthought,” says Potter. “But if you really embrace your suppliers as a partner, you’ll find there are great assets and resources in your suppliers, service providers and equipment manufacturers.
“That said, we have great relationships with Totani and PCMC and continue to build on that with Ashland for adhesives and Danafilms on polyethylene, for example,” continues Potter. “Suppliers keep you better informed of what’s going on in their business and they bring a lot of resources to the party. That helps our business and overall education.”
Going forward, and even with the 2009 acquisition of its Columbus plant [see sidebar] Plastic Packaging Technologies plans to continue growing its business by honing the metrics- and relationship-focused strategies that led the company this far.
“We have maintained a laser-focus on doing what we know how to do very well-vertically integrated printing, laminating and pouch converting,” says David Staker. “We’re not adding any process or capabilities there that we really don’t already know very well.”
One thing the executive team at Plastic Packaging Technologies does know is that the future for flexible packaging looks bright, and they're pleased with their position to grow in it.
“We think there’s a great opportunity to continue growing in flexibles-the fastest growing segment of the packaging industry-with the products and markets we have expertise in,” says David Staker. “We work very hard on optimizing our manufacturing operations and maintaining very high standards of quality and consistency. And we'll simply continue to do so in order to support the company’s continued growth.”
Paper Converting Machine Co.
SIDEBAR: PPT makes key acquisition to continue growthFor its entire 40-year existence, including seven years under the current management team, Plastic Packaging Technologies worked out of only one shop. That changed in October 2009 when the company acquired the assets and facilities of Cello Poly, a virtually identical flexible packaging manufacturer in Columbus, Ohio.
“It’s a business that had a long-standing, good reputation for providing high-quality printing, laminating and converted packaging,” says David Staker, president and chief executive officer for Plastic Packaging Technologies. “The business was very complementary and the packaging capabilities there were very complementary. “They had an experienced, proven team of associates and they had established relationships with key customers, products and markets that fit nicely with our own in Kansas City.”
Historically speaking, most of Plastic Packaging Technologies’ expansion had been organic, internal growth as opposed to growth originating out of mergers and acquisitions typical of many flexible packaging firms in recent years. While Plastic Packaging Technologies’ acquisition of Cello Poly was something of a small departure from the steadily increasing output of sales that had brought the converter this far, Staker points out the acquisition really improved the company's strategic redundancies as much as it did annual sales.
“It provided us with a second manufacturing facility in a key part of the country for business contingency planning purposes,” says Staker. “An increasingly big part of serving large, national customers is having redundancy of operations or business contingency plans. This second facility-with additional 10-color printing and laminating with a proven track record-provides us with that.”