Business quieter than one would like on the UK frozen food packaging front.

Business Quieter Than One Would Like On the UK Frozen Food Packaging Front

Simply put, the UK frozen food packaging sector - like the European industry in general - has too much capacity for the level of business that exists these days. As frozen food producers tend to reduce suppliers, the result is a highly competitive climate where price-cutting can strain profitability.

Some of those companies that borrowed heavily to expand a few years ago are now feeling the pinch as high interest rates and small orders don't add up to a healthy bottom line. Indeed, a number of packaging concerns on the Continent have been spun off from parent corporations or closed outright, as non-core businesses are being disposed of by decentralization-minded strategists.

However, those outfits that adapt to changing times stand best to hold their own or even prosper during a slow economy. For example, while the frozen and chilled food segments are relatively quiet compared to the booming 1980s, CMB Carton Systems plc reports winning a large contract from a major British ice cream packer.

The Swindon-based diobond and economy flap packaging machinery company is increasingly supplying those who produce own labels for the UK's leading retail multiples. "So, even during a recession we are active in this area," said Andrew Hazlehurst, commercial manager.

Elsewhere, things are admittedly quieter than one would like. But Hazlehurst looked on the bright side: "We're getting lots of inquiries as customers shop around to contain their costs. So when the recession does finally end, pent-up demand should bring many orders."

As for new products, in October CMB will unveil the C90 Junior, a downsized version of the high-tech C90 three-flap hot air closing machine. The new unit, which will run at speeds of 120 trays per minute, is designed for packers with lower volume requirements. The high-speed C90 is capable of pushing through more than 300 cartons during the same interval.

LMG Mardon

Quick Frozen Foods International traveled to Warmley to touch base with LMG Mardon, a leading European folding carton manufacturer. The division of Canada-headquartered Lawson Mardon Group Limited had sales of $206.6 million and earnings of $21.3 million last year, contributing almost 29% to total revenues.

With operations in the UK and Germany, business is split about 50/ 50 between tobacco and food clients. Among achievements on the frozen side have been the creation of receptor-equipped microwave chip (french fry) packs and triangular containers for pizza slices.

In addition to offering broad packaging services ranging from carton design to process development, the company supplies a comprehensive range of carton machinery such as the Mardon End Load (MEL) erector series. Also available are custom-built lines incorporating a mix of proprietary equipment, or specially-designed purpose-built systems.

It is clear that the Group is preparing itself for post-1992 growth opportunties in an economically integrated Europe. "But unity does not mean uniformity," Lawrence G. Tapp, president and chief executive officer, has pointed out. "The upcoming changes in Europe relate to trade liberalization: they will make it easier and cheaper to transport goods and services across international boundaries. They will not necessarily affect consumer demand; the varying array of tastes and preferences that contribute to Europe's ethnic and cultural diversity will likely remain unchanged. As in all markets, success will depend on being competitive, efficient, innovative and responsive."

With presence and focus, the Lawson Group intends to do just that. Noting that only the strong will survive, and only the best will be able to compete and prosper, Tapp added: "As the world becomes increasingly globalized, economic success will flow more and more from leadership. Being merely competent will not be enough."

SCA Packaging

QFFI visited the SCA Packaging Ltd. plant in Hartlepool, from which some 2 million corrugated boxes are produced weekly for outer packaging used in the food and confectionery business. About 12 [pounds] million has been invested there during the past several years, boosting capacity by 50% to handle the growing demand for frozen pizza, meals, and value-added chip products.

With the food industry as competitive as it is now, service has become much more important to customers, advised C. Ian M. Vine, branch director and general manager. That is why SCA has updated its computerized graphics department. Redesigns and new artwork are executed in quick order.

"Lead times on many jobs have shrunk from four or five weeks to as little as three days in some cases," said Vine. "If you can't act rapidly, you could be out of business."

Even with a diversified client list of 480, the effects of the economic downturn on Britain's frozen food industry have not gone unnoticed by SCA. "Fortunately, a significant percentage of our work is for snack food and confectionery accounts," noted the general manager, "and that kind of business is not affected too much by recession."

Thames Packaging

Michael Greisman, managing director of London-based Thames Packaging Co., reported that the economic slowdown has hit the domestic plastics industry especially hard. But thanks to a sizeable export market for its bag sealing machines, his outfit is doing alright.

Sales of the Saxon 5 unit, which employs continuous hot air to melt and pressure-weld the tops of open-mouthed plastic bags, have been good in the USA. The equipment is now being re-fit to suit USDA requirements, which will pave the way for doing business in America's huge frozen chicken sector.

Continental Europe remains a good market for Thames, with Spain being particularly buoyant. And with post-1992 EEC regulations calling for all plastic food bags to be properly sealed, continued good prospects are anticipated.

Greisman believes that the international frozen food industry will enjoy steady growth in the near-term. As for present conditions in the UK, he was philosophical: "One good thing about a recession is that it forces you to get much more efficient. And one must be very efficient to successfully compete in the global marketplace."

PHOTO : The Saxon 5 bag-closing machine gets the job done by employing hot air continuous heat-sealing technology.