It takes foresight to know when a company needs to diversify its offerings. In 2012, TC Transcontinental, a Canadian printing and French-language publishing group, recognized that its two core operating sectors —printing and media — were mature and facing a likely decline in the foreseeable future.
As a family-controlled company, TC Transcontinental’s profitable growth has always been a priority, says Melanie Montplaisir, manager of public relations and brand management. “We needed to create a long-term competitive advantage. We needed to diversify our operations to ensure our future growth.”
For that reason, the company began searching for new ways to expand its business. Their research led them to consider a move into flexible packaging. In 2014, TC Transcontinental purchased Capri Packaging, based in Clinton, Missouri. That move has been followed by a number of acquisitions, transforming the company into one of North America’s largest flexible packaging operations in 2020.
Recently, Thomas Morin joined TC Transcontinental as president of the company’s packaging sector.
In an interview with Flexible Packaging, he laid out the rationale for the company’s decision and described where the sector is heading.
“The Marcoux family and the François Olivier, president and CEO, have been smart in recognizing way in advance the need for diversification,” Morin says. “They recognized the printing and media is not likely to grow. The question becomes what will we do with what we know how to do. This is when the family and Francois took a step back and asked what industry is different, yet close enough, so that we can leverage who we are and be successful. This was when the decision was made to invest in the packaging industry because there are some existing synergies with our printing sector. We share many of the same suppliers and the same technology. We have the same connecting points with retailers.” They also recognized the domestic growth in the flexible packaging industry in the last five years.
TC Transcontinental analyzed different segments of the packaging industry, including metal, glass containers and folding cartons. However, the flexible packaging industry quickly stood out as making the most sense, given the production process was somewhat similar to publication printing (prepress, printing and finishing).
Ripe For Consolidation
The team also recognized that flexible packaging production was highly fragmented and ripe for consolidation. Morin says even the share of the top five companies is relatively small compared to the total market.
One competitive advantage the company has, according to Morin, is its ability to make decisions quickly. Remi and Isabel Marcoux, the family owners, and Olivier, the CEO, know everyone in the organization, he says. “They’ve visited all the sites and the team members know them. When it comes to making a decision, it doesn’t take long. They have that entrepreneurial spirit that allows the company to take risks and learn from our experience. They expect everyone to deliver innovative solutions and execute them. They are available for us.”
“What will make a difference for TC Transcontinental is scale,” he says. “Many competitors may have only one or two packaging facilities. they have limited scale when it comes to sourcing. Most are also geogrpahically constrained when it comes to customers.”
“We have scale thanks to the acquisitions we’ve made,” Morin explains. “Thanks to this scale, we are able to be competitive with what we buy, competitive in the way we sell and competitive in the way we develop new products.” He adds that the company spends at least 1 percent of its packaging sales revenues on inventing products and acquiring new technology.
Production Spread Geographically
The company has 25 production plants specializing in extrusion, lamination, printing and converting. TC Transcontinental Packaging offers a variety of flexible plastic and paper products, including rollstock, bags and pouches, coextruded films, shrink films and coatings.
In several areas, TC Transcontinental is an integrated supplier. For instance, the company makes its own flexo plates and makes many of its own films, as well as premade pouches.
Most of the company’s press lines are flexo, but they also have several HP Indigo presses. “The limitations of digital presses today is not really the quality,” he says. “It is the cost of the line versus the throughput, which is not economical today. The question is if we can combine technologies to deliver a product that is economical.”
Sustainability Is A Major Goal
Like numerous brand owners and packaging manufacturers, TC Transcontinental has signed on to the pledge to make its products 100 percent recyclable, reusable or compostable by 2025.
“There is no product we would invent today that wouldn’t be in line with this sustainability strategy, which the company has named their Green Innovation Process,” Morin says. “This is a huge agenda for us that triggers capex and technology decisions. We say ‘yes’ or ‘no’ on technology decisions that support the three pillars of our sustainability strategy.”
He identifies these three pillars or work streams as:
- Use of post-consumer recycled (PCR) resins. The company has already developed and commercialized 100 percent recycled and recyclable bags.
- Use of biopolymers that are compostable or biodegradable.
- Making any new product recycle-ready.
Morin sees the backlash against the use of plastic as a huge opportunity for any companies that can find a solution. “We are extremely determined to deliver against this promise and to help solve this issue.” At the same time, he says, the industry needs to communicate better on the benefits of flexible packaging and what it does for food safety and food conservation.
“Let’s be honest and look at the full carbon footprint of the different types of packaging. What is the real impact on the planet for the use of paper, glass and metal? Everyone focuses on packaging’s end-of-life, but we should not forget its entire lifecycle. At the end of the day, we need to stress the benefits of flexible packaging and repeat it again and again,” he stresses.
“In collaboration with our partners, we know now how to extrude films that will help us manufacture recyclable packaging. Now we need to think about going even further when it comes to closing this loop with customers. If we want to invent new films that are sustainable, we’d better be involved at both ends of the lifecycle.
“It’s a fact today that we cannot make every single package out of PCR. Now in five years, I believe there will be increased capacity in the market so we have more PCR. If we need to — and it’s part of our plans — we’ll do it ourselves. We’ll put place the right collection with the right customers and actors in the market so that we can manufacture our own PCR that fits with the products we have developed.”
Strategic Focus Planned
TC Transcontinental Packaging plans to focus its operations on nine very specific segments, although Morin declined to specify what those segments are. In doing so, he says the company can offer better performance in quality, service and cost perspective. This strategy means TC has consciously selected end segments and products and de-selected other segments. For example, their paper and woven polypropylene packaging operations were not strategic for the company, so they decided to sell these to focus their resources on the other nine segments.
As a consequence, he adds, the company will apply the same rationale to its acquisition choices. The businesses that Transcontinental will acquire will be supportive of those nine segments.
Morin says the bulk of TC’s customers are mid-sized companies. “There are a lot of start-ups and young companies moving very fast. Those customers with whom we are growing are primarily North or Central American and they are growing because they are innovative and launching new products. They differentiate themselves from traditional brand owners and they are still relatively small in comparison to the big brands.”
To serve customer needs, some Transcontinental facilities are highly specialized, focusing on only one or two segments. Some are fully dedicated to one type of product. However, Morin says, the plan from a manufacturing standpoint is to have a back-up site for every product they produce.
He emphasizes that specialization is more on the interaction with customers, speaking their language and understanding their needs and their cycles so that TC Transcontinental has the best supply chain response.
3 Factors To Be Competitive
When asked what factors are most important to be competitive in today’s flexible packaging market, Morin identified three key areas:
- Understand what the market is expecting and listen to what the customer is saying. The intent is to spend more time with customers and anticipate what their needs are because most customers are actually faster than a converter. It can take a year to assemble a new line, but it can take less than a year for the customers to invent a new product.
- You need to have the scale. Once you know what customers want, you had better be in position to do it, to buy what you need to buy, to invest in what you need to invest.
- Converters must be there for the long term. With the ups and downs of the industry, it takes some time to maneuver. For instance, with recyclable films, it is going to take some time to make sure converters get the right films, to build up the supply chains and to adjust the technology.
While TC Transcontinental has not made its transformation to flexible packaging overnight, the momentum certainly has carried it quickly down its chosen path.