What do you get when you bring together six outspoken converters from around the world and pose questions on the leading industry issues of the day? A lively 90-min Converter Roundtable at this spring's Association of Industrial Metallizers, Coaters & Laminators annual meeting in Rancho Mirage, CA (right).

The participants included Bob Connelly, president/COO of Madico, Inc. (Woburn, MA); Bill Stratton, vp/director of Lean Six Sigma for Adhesives Research (Glen Rock, PA); Steve Jackson, commercial director for Camvac, a division of Amcor Flexibles (Thetford, UK); Dante Ferrari, operations manager at Celplast Metallized Products (Toronto, Ontario, Canada); Pradeep Tyle, senior president of UFLEX, Ltd. (Noida, India); and Eric Maercklein, sales/marketing manager for the Coated Products Business Unit of Brady Corp. (Milwaukee).

Converting: What one issue is the most important single challenge facing the converting industry today and why?

Dante Ferrari: The volatility of raw-material prices and availability that we have been experiencing over the last few years has certainly been a challenge. We prefer to dedicate more of our resources to product development and innovation to our customers but we find we have to dedicate a lot of resources to explaining why there's this volatility.

Eric Maercklein: From the coating perspective of Brady, globalization is a major challenge. Brady is in the process of opening foreign coating operations to provide better customer service. On the converting side, we already have operations in 35 countries. The primary concern we have going into the future is the development of new, proprietary products that we can sell in higher volumes that will enable us to compete and differentiate ourselves globally.

Pradeep Tyle: The more important challenge for us is margins, margins, margins. Most of our customers are not interested in hearing about our problem with margins. They're only interested in how to lower their costs with incentives and through other means. This doesn't work well. It's like you going to the gas station and telling them, “This is how many gallons of gasoline I'll buy, and this is the price I'll pay.”

Steve Jackson: My answer, from a European perspective, would be the environment. In the UK, the general perception is that packaging is waste; it just goes to the landfill. The industry's biggest problem is actually educating people that what we produce is good for the economy. Promoting packaging in the right way to consumers, the media and government is a big challenge in the next few years.

Bill Stratton: As a converter and p-s tape manufacturer, our biggest challenge is balancing the volatility in raw-material costs, labor and energy with the need to continue investments in R&D, product development, quality, process engineering and manufacturing capability to meet our customers' ever-demanding requirements. In electronics markets, for example, we're faced with cutting our prices every year while raw-material costs have skyrocketed.

Bob Connelly: We need to deal with the problem of “short-term” thinking when it comes to addressing any challenge. We need to value and sell the benefits that our industry's products provide, or our customers will inevitably look down upon them as “waste” or “something to be minimized” rather than to be used as a “value-adding” mechanism. Yes, we need to keep our costs in line, but we also need to take great pride in what we do, and make sure the value the products provide is understood by those that consume our products.

Converting: What action is your company taking to assure a global focus? How has the fall in the US dollar's value, or conversely, how has the rise of the pound, the rupee and the Canadian dollar impacted your business?

Stratton: Global markets are extremely important, especially for electronics and healthcare. The supply chain is spread around the globe, which requires us to have excellent coordination and communication. We have manufacturing in Limerick, Ireland, a sales office in Singapore, and a new representative office in China set up last year. The fall of the dollar has exacerbated the rise in raw-material costs but the rise in the Euro has offset those costs for our Ireland plant. It kind of balances each other.

Maercklein: We've tried to be a global manufacturer with a local sales presence. We've implemented a common ERP system so a customer anywhere in the world can source our products more easily. Because of the falling dollar, our foreign operations have benefited, however, our US operations have had pricing pressure on exports to countries such as Canada.

Ferrari: With our one manufacturing location in Toronto, it affects our ability to serve customers around the world, but we have several long-term relationships with global raw-material suppliers. Now, we've seen the Canadian dollar appreciate 60 percent, and it's been a real wake-up call for us to expand globally. We've focused on providing the best customer service—particularly to Latin America.

Tyle: We've established a marketing base, selling to 92 countries. To be global is a hard reality. You have to be near your customer. If you want to sell to the world, your marketing has to be global. Your sourcing of raw materials has to be global as well, irrespective of politics and the country of origin. Our sales to dollar-dominated countries have affected us greatly. Conversely, we try to source from places where the dollar has less of an effect.

Jackson: You have to be a bit of a chameleon. If you have global customers, you act like them. We buy and sell in pounds sterling and Euros. The fall of the dollar has been very good for us, actually, and I thank you.

Connelly: I think to be effective in a global marketplace you have to be very effective in the day-to-day “blocking and tackling” of your business: quality and service. You have to serve global markets from within those markets with local employees and sometimes plants. With currency exchange, you have to be prepared to take advantage of it or hunker down if it turns against you. If you try to control things that are out of your control, you'll drive yourself crazy.

Converting: How has your company been impacted by the sustainability trend?

Jackson: In my area of fresh-produce packaging, we have a sustainability manager who's looking into what we can do to promote sustainability because all of the retailers are asking for solutions from our customers. For Camvac's materials, a clear barrier is now expected.

Tyle: In India, we're trying to educate the government and the consumer, especially about laminates. We're reprocessing all our waste materials and encouraging collection and recycling of these post-use waste laminates. Flexible packaging is 20 percent of the Indian market, so we're promoting its advantages over other forms.

Maercklein: Because many of our products are durable, permanent labels, we're less concerned about recyclability of our products. Instead, our sustainability efforts are focused on saving energy, reducing waste and improving efficiency with lean manufacturing, using thermal oxidizers, and getting ISO 14000 certification. We've established a global benchmark for environmentally friendly practices based on US standards. If we operate, open or acquire a facility outside the US, we upgrade the work practices to comply with the US environmental and worker safety standards.

Stratton: As a coater, we use a lot of solvents so we're working with the Pressure-Sensitive Tape Council on the Maximum Achievable Control Technology (MACT) standards. We're also working with release-liner recycling companies to move waste to recycling rather than to landfills and looking at ways to avoid generating waste in the first place.

Ferrari: With the cost of energy so high now, it makes sense to do some things that in the past weren't economically feasible. CPGs want sustainability in packaging through layer elimination, source reduction, PLA films. Let's not kid ourselves, they're not going to pay more for the package, but they are willing to compromise. If we make a more sustainable package, maybe a shorter product shelf life is really okay, as long as it has the right look and feel.

Connelly: These are all salient points. Sustainability can be defined in many ways. If a product is more durable, more long-lasting, less wasteful, these factors are the concern of all the manufacturers here. You need to avoid working in businesses where the mentality is a “disposable product.”

Converting: Regarding the US economy, how do you see the coming year for your markets and your business?

Connelly: Something as huge as the US economy is just out of your control, so when you strategize about what your company should do, you need to find complementary businesses. When one market goes bad, often another gets good. You need to find the spot opportunities that you can take advantage of. You want to be one of the hunters, not one of the hunted in these situations.

Maercklein: For converting, we're clearly seeing a slowdown in the US economy, so we're focusing our efforts on strategic markets that are continuing to grow. We're also reaching out globally to foreign markets that are doing well now and should in the future.

Ferrari: If you're in overflow toll converting for other people, that's a really tough place to be right now. As with Brady, we've tried in the past few years to have proprietary, branded products on the market. You want to control your own business; you don't want to be reliant on other people.

Stratton: We've seen our construction markets decline while other areas such as healthcare are doing well. On the other hand, we do a lot of customer-driven, custom product development—that's our business model—and for us, it's more executing of these unique opportunities that can overcome a general downturn.

Tyle: I can't do anything about the American economy. Our business is organized to take advantage of opportunities wherever they exist. If we have the right innovative products, they will sell despite tough sales environments.

Jackson: What happens to the US does tend to transfer to the rest of the world, particularly to Europe. If we hear there's a recession in the US, what happens in England? People immediately stop spending money. Yes, it's going to be a difficult market, but at the same time, there are, as Pradeep said, many other places we can sell our metallized laminates to.

Converting: If your company could significantly reduce its costs, how would you most likely use the savings?

Jackson: We'd likely try to win back some business we couldn't go after before. Secondly, we'd certainly invest in new machinery, probably in the metallizing side. And we'd invest in product development because it's something that would keep us all going forward. When you're struggling with cost containment and margins, product development tends to get left out first.

Tyle: For us, our first investment would be in the latest technology and capital equipment. We believe the future of the flexible packaging and converting industry is dependent on the latest equipment.

Maercklein: We look at this from the opposite perspective. In terms of reducing costs, we'd probably invest in even more methods and technology to keep reducing costs.

Ferrari: Any excess capital we'd gain would go into more innovation and product development, depending on the cost of that capital.

Stratton: We'd invest in strengthening our capabilities to provide customers with value-added products that pay off dividends in the longer term.

Connelly: My first priority for spending is to invest in the Intelligence Quotient of our company and its employees, investing in the people. Machinery can be too dedicated and if markets change, they are inflexible. People, on the other hand, are innately flexible and can learn to help your business by Six Sigma and lean manufacturing.