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A Global Look at Business in the Days of COVID-19

Three CEOs of leading manufacturers of packaging and processing machinery and equipment met virtually with PMMI to discuss strategies in conducting their operations amid the pandemic affecting today's world.

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When he called on his colleagues from The Netherlands, Martin Prakken, and the United States, Mark Andersen, to toast with “a glass of good Italian wine,” Ricardo Cavanna anticipated a scenario where companies’ operations return to normal and markets react positively. The director of the Cavanna Packaging Group extended this invitation to his colleagues during the April 22 PMMI webinar to discuss the obstacles and opportunities companies are experiencing in the midst of the current COVID-19 crisis. But Ricardo Cavanna is clearly aware that before a toast to the end of the pandemic can be raised, effort and creativity will have to overcome this situation. "It may take a couple of years to return to previous levels of business, but we have the opportunity and the need to be resilient," he said with conviction.

Clearly, resilience shines in the strategies designed by participants in this Conducting Business in Uncertain Times webinar organized by PMMI, to face an environment marked by limitations and restrictions. The scope of their operations and their companies’ presence throughout different continents infuse their opinions during the meeting with a global view of the current situation of the packaging and processing machinery manufacturing industry, and of many of its clients.

Cavanna Packaging Group has its four plants in operation. Two in the North of Italy (close to Milan), one in Brazil, and another in Georgia, United States. Blue Print Automation, --company specialized in packaging process automation solutions directed by Martin Prakken-- has its plant at Woerden (Netherlands) operating, as well as its two plants in the United States, one in Colorado and one in Richmond, Virginia. ProMach, participating in the webinar through its CEO, Mark Andersen, is a leading manufacturing group of packaging and processing equipment across the entire industry spectrum, with numerous plants around the world in countries such as Brazil, China, Canada, France, Italy, Belgium and the United States. All of them are currently up and running.

Industry Remains Active

Before eliciting the opinions of the three business guests, Jorge Izquierdo, PMMI Vice President of Market Development, presented an industry overview based on the surveys, polls and interviews PMMI has conducted in recent weeks among its members. In general terms, they reveal that most companies are working (83%), with capacity use levels of up to 95%; a smaller percentage (13%) have closed their offices; and only 3% have ceased operations at their plants.

In continuing their operations, factors such as teleworking and the use of digital remote communication resources have been fundamental to solving obstacles such as the denial of technicians’ access to clients' plants, reported by 68% of the companies surveyed, as well as the denial of entry to sales staff (87%). During the first weeks after the isolation measures, the industry experienced concern for disruptions in the supply chain. However, "Things have now stabilized," as PMMI’s Vice President for Market Development, Jorge Izquierdo, reported. He noted that at the time of the last survey, 39% of PMMI members consulted reported some degree of disturbance in their sourcing processes.

An interesting point raised during the webinar led by Izquierdo was the rebound in requests for quotes and new orders that the surveys evidenced for the week of April 13 to 20, which may indicate some degree of security by industry clients. "It seems that, in general, industries are finding a way to stand firm and work," Izquierdo opined, before giving the floor to the participants in the digital seminar.

Sharing Strategies

On the question of how they are operating in the midst of the pandemic, the response by Martin Prakken, Director of BluePrint Automation, highlighted the continuous activity taking place in plants on both sides of the Atlantic, supported by a high percentage of employees who work from home. Prakken also pointed out compliance with strict safety measures: "We have a lot of space in the plants, and we can maintain an adequate distance of 1.5 meters between workers in the assembly departments." These safety provisions are complemented by innovative practices such as keeping doors open to avoid the need to touch their handles, and mechanisms to open them by using the shoulders when necessary.

Regarding Italy, the second country to be affected by the pandemic, Ricardo Cavanna commented that an effective measure taken by Cavanna Packaging Group executives was to anticipate government decisions and initiate a two-week voluntary quarantine, and operating with a high percentage of administrative employees working from their homes. "In 24 hours, we managed to place 70% of the office staff on telework, and two days later all the rest." This anticipation also included the closure of the plant during two weeks, as a way to ensure that staff could verify during that period if they were infected or not. After this closure and the voluntary quarantine, work was resumed with 90% of workers and employees, who are performing their tasks with the necessary safety elements and precautions, and are subject to routine body temperature controls. These same procedures were applied at the plant in Brazil, with like results.

Measures similar to those implemented at Cavanna Packaging Group and BluePrint Automation have been established at ProMach plants around the world. "At all facilities, we have scanners that take employees’ temperature on the forehead when they check in ... Our people are doing what is necessary to serve our clients that fill supermarket shelves, which is something really extraordinary,” noted Mark Andersen. Furthermore, safety is guaranteed at ProMach plants with the use of masks, gloves and protective suits. Managers, however, have felt that these elements would be better used in hospitals, and have turned to designing alternatives such as Plexiglas walls that allow temperature readings without putting those who perform the task at risk. They have even used robots to take these measurements.

Top Left: Ricardo Cavanna, Top Right: Jorge Izquierdo Bottom Left: Martin Prakken, Bottom Right: Mark AndersenTop Left: Ricardo Cavanna, Top Right: Jorge Izquierdo
Bottom Left: Martin Prakken, Bottom Right: Mark Andersen

In places where the coronavirus has attacked with force, such as China, northern Italy, New Jersey and New York, the measures have allowed continuity of operations. “Everyone is healthy, and the factories are working,” reported ProMach’s director. “In summary, all our large number of facilities are in operation. The peak of the pandemic has already passed in China, and we hope that the same will happen in North America soon," he added.

Securing the Supply Chain

Some webinar audience members raised concerns about the state of the supply chain for manufacturers of packaging and processing machinery, and the restrictions and cost hikes resulting from limitations in air travel. The responses by the PMMI members were broad and varied.

For Mark Andersen, large suppliers with a global presence are operating normally and supporting the operations of ProMach facilities around the world. "We also have smaller suppliers, with whom some intermittent suspensions occur, due to closures or temporary interruption of activities." In cases like these, ProMach has reacted by looking for different sources or designing new ways to maintain its operations. "Most of the time we have been able to overcome these situations and continue manufacturing our machines and serving our customers," said Andersen.

Ricardo Cavanna shared Mark Andersen’s concerns with closings, work suspensions or reductions in production volumes by some of his suppliers. A second issue, however, worries him more: “Most small- and medium-sized suppliers will be affected by cash flows. This is the main point for everyone, from the customer and throughout the supply chain, so it is to be expected that there will be significant delays in deliveries." These delays could cause problems later, leading Ricardo Cavanna to share a lesson learned by his company with his panel colleagues: “We are working hard on the legal issues, preparing a plan to deal with these problems. It is something that is affecting all companies in the world, because we are facing a global problem.”

For Martin Prakken, the situation looks more favorable. “In our case, we have run with better luck. We do not anticipate problems in the supply chain over the next two months, nor do I see the financial difficulties Ricardo is referring to.” His calm outlook also extends to the company's operations in the United States. “I do not know what will happen there in the next two months, but we feel at ease because most of our suppliers have factories in different places and countries, and have been able to face the situation." A problem, however, does arise for BluePrint Automation due to the inability of its technicians to access customer plants. “This generates an accumulation of installation work, and at some point they will all have to be done at the same time. Then, it might be we do not have the capacity to do it,” observed Martin Prakken.

Working Closely with Clients

Companies’ relationships with their clients in the midst of the pandemic was one of the topics posed by Jorge Izquierdo to the webinar participants. He wanted to know what alternatives are being used for technical assistance, sales and acceptance tests, among other activities that normally require face-to-face visits.

Martin Prakken pointed out that the use of communication tools such as Skype, Microsoft Teams and others have made it possible to meet many clients’ needs, sometimes with their active participation. "We have been able to complete some simple installations by allowing customers to perform them online, backed by our field technicians," said the director of BluePrint Automation.

Despite a certain level of disbelief from clients in the use of digital tools, for Ricardo Cavanna the investments made in this field have demonstrated their importance in these times of isolation. "I think we have all put a lot of money into digital tools, although not everyone believes much in them," said the director of the Cavanna Packaging Group. Yet the efficiency of these solutions has already been demonstrated in the operations of the Italian company. "I think coronavirus is changing the world and our approach, which is very interesting. In the past two weeks we were able to digitally complete a priming and setting up, and I am pleased to have developed it and shared it with the client.” The closeness of digital media has been beneficial for Cavanna Packaging Group, although, at the same time, “We miss the opportunity to shake hands with our customers and look at each other.”

Mark Andersen remarked these are uncertain times for some of his clients, who do not feel confident about the advisability of investing without knowing what will happen next semester. But there are also a large number of projects going forward for ProMach plants, which they work on intensively via telephone and digital media. “Frankly, we may have better business contacts over the phone than we would by traveling to places. Our activities are fine, as are the quotes we are sending out.” Andersen believes, however, that one of the pandemic’s most severe impacts is taking place in the food service sector, an important customer for manufacturers of processing and packaging machinery.

For many machinery customers in the food industry, some aspects of their operations are related to the service sector, where they are seeing closures and suspension of activities. “And this is a sector that we frankly need to look carefully at… our clients that serve the sector, and also co-packers, are facing serious concerns. Should they convert their food-service packaging production capacity to retail point-of-sale packaging, and will they invest in that conversion? It is necessary to help them resolve these issues, and the sooner the better,” the ProMach director pointed out.

Is the Time for the Toast Approaching?

Despite the differences in the pandemic’s impact on different sectors and industries, and the varied deadlines and expectations for their recovery, signs of improvement are beginning to appear. It may not yet be time for a toast like the one Ricardo Cavanna mentioned, but in many countries plans are being drawn up and implemented to reopen businesses and services. At this point, the three PMMI members participating in the webinar revealed their differing expectations.

"I would say that until last week activities have been quite healthy, even with requests that exceeded my expectations," said Martin Prakken, referring to his perception of a return to a certain level of normality in operations. “But there is no forward-looking perspective for food service companies or restaurants in The Netherlands. There's something called smart isolation here, but we have no idea what the government is going to do." The environment is also uncertain regarding companies’ investments, many of which express that "We are not investing because we do not know what will happen in the coming months," the director of BluePrint Automation pointed out.

"The truth is that nobody knows for sure what the recovery will look like," said Mark Andersen, while highlighting the possible consequences that some degree of deterioration in consumer purchasing and economic capacity could bring to many of his client companies. "If there is really going to be an extended period of unemployment at levels of 15 or 20 percent, it will impact everyone, and consumer packaged goods companies will also suffer," said ProMach’s director.

On a more personal, human and social note, Ricardo Cavanna concluded his participation in the PMMI webinar by stating that, “We do not have to consider this crisis as a war against anyone or against the virus itself. It is the first time in history that we have been faced with the notion of a global and common resilience challenge.” Projecting his expectations of achieving a recovery of normality in life and business, the director of Cavanna Packaging Group added that, “It may take a couple of years to return to previous levels of business activity,” and invited his panel colleagues and attendees to share the thoughts of Pope Francis, who said in a recent speech: "We can get out of this crisis, but we will succeed only if we do it together, without leaving anyone behind."

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