Recession may drive investment in higher technology machines

As we continue into what is most likely a global recession, I am sure that many are concerned about the impact on sales of packaged goods, packaging materials and packaging machinery. No doubt there will be a quantitative reduction in sales of many products, but in addition, there will be a qualitative shift in what is being purchased. Those able to capitalize on that shift, will be best able to survive the downturn. I would like to suggest that one of the qualitative shifts will be back toward the purchases of higher performing and higher technology packaging machines.

I've lived through a couple of recessions, and people have fairly predictable behaviors. Among these behaviors are the tendencies to become more conservative, focus upon necessities and shop for value. These behaviors are in stark contrast to the behaviors of the recent past, where consumers have sought indulgent and fickle luxuries that manufacturers have been happy to supply.

Throughout history, one of civilization's goals has been to maximize the number of calories consumed for the least amount of effort. This is still the goal today in much of the less developed world. Contrast that to recent trends in our lives, however, where we actually expend additional effort (money) to acquire NO calories in our food and beverages. Our willingness to routinely pay $3 for a cup of coffee , $10 per pound for individually wrapped chocolate tablets, or $2 per pound for chicken that can be cooked without actually touching the raw meat are additional examples of behaviors that won't be sustained at current levels during a recession.

Each of these examples of indulgent consumer products, and many more that come to mind, are in fact supported by changes and enhancements to the packaging. This more indulgent packaging has often involved a transition from low cost, high speed packaging operations to more complex and less efficient ones. Take chocolate, for example. In less prosperous times, a larger bar was molded with scores so that we could break it apart into bites to be shared or saved. That bar was wrapped at high speed in a functional, tamper-evident fin-seal wrap that alone contained the consumer unit.

As manufacturers have tried to up-sell us on more indulgent chocolate, the packaging has changed dramatically. That same chocolate may now be molded into smaller bite-sized pieces. These pieces are then individually die-fold wrapped and a number of these are weighed or counted into a stand-up pouch which becomes the tamper-evident consumer unit. Manufacturing costs per pound are higher because more material has been consumed, requiring more operations to be performed on lower speed machines. The expectation is that margins will go up to more than offset the higher cost that the indulgent chocolate should command. If you haven't done so lately, take a walk through the candy section of your local grocery store or big box store and see what is on the shelves.

In recessionary times, this strategy won't fly. Beer, pasta, soup and other consumer staples will be purchased based upon real value, not perceived luxury. Shoppers will weigh the value of fresh vs. packaged foods and will take another look at the real value of organic and free-range vs. more efficient growing methods. Packaging operations will become less complex, with more emphasis on low cost and high efficiency. Packaging materials will become less about form and more about function. Machinery to support these strategies will rely on state-of-the-art technologies like motion control and mechatronics.

As we face uncertain times, investment in machinery may decline, but we will still see investment. Where recent investments have been more about luxury products, variety and consumer flexibility, I believe that investment in the near term future will be about machines that provide the highest possible operating speeds and efficiencies to bring consumers lower cost and higher value.

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Comments Thanks for a well reasoned reminded of what happen during the last two or three down turns. I agree with your comments. Posted by: Kent Adams on October 27, 2008 Great article written from an experienced perspective and not a "hopeful" one. Don't forget to tell your readers that it's still important to be "green" and possible to actually be both environmentally positive and reduce costs. Thanks...always great articles. Posted by: Phil White on October 27, 2008 I think you will also see an investment in taking better care of the workers who are left doing the things which automation and technology can't address. Posted by: chris miller on October 27, 2008 What you just mentioned is good, but what always happens is oposite , we always end up with higher value cost of any new efficiences brought up. Posted by: Ali S Omeri on October 29, 2008 Post a comment (If you haven't left a comment here before, you may need to be approved by the site owner before your comment will appear. Until then, it won't appear on the entry. Thanks for waiting.) Name: Email Address: URL: Remember personal info? Comments: (you may use HTML tags for style)