unPACKed Podcast: Can Legacy Equipment Keep Up with Sustainable Packaging?

Sean Riley: You are listening to UnPACKed with PMMI, where we share the latest packaging and processing industry insights, research, and innovations to help you advance your business. Hi, and welcome to UnPACKed with PMMI. I'm your host, Sean Riley. In this episode, we welcome Greg Berguig, President of PAC Machinery. He discusses what the shift to sustainable packaging has meant for legacy equipment, its costs, and the impact and need for collaboration across the supply chain, particularly with an eye towards flexible packaging. He shares insights on the challenges, opportunities, and innovations that are shaping the future of sustainable materials in packaging. Let's have a listen. So with all the fancy introductions out of the way, welcome to the podcast, Greg.

Greg Berguig: Tanks, Sean.

Sean Riley: So we're talking newer materials, sustainable materials, running on basically legacy equipment. So what are the most common challenges that customers face when they're attempting to run these sustainable materials on legacy packaging equipment?

Greg Berguig: There are really two aspects. One is sustainability when it comes to something around compostable, right, like compostable materials, and so what happens is you can have issues around the sealing layer and getting a good seal on those materials. That tends to be trickiest. They have a polyethylene sealant layer, so either I'm sealing straight polyethylene, or I have some type of laminate there, or I have something with some type of coating, and it's PE-based. So when you switch to a different material, that could be something corn-based, something sugar-based, it could be something seaweed-based. I've seen there are some really cool seaweed films out there now, getting that to seal properly on legacy equipment. I think for the most part that's not too much of a big deal because you can adjust your temperatures and pressures, figure that out. Where I see a bigger issue is when we get into sustainability, especially in flexibles, where they want to move from a product that maybe it's not recyclable today or it is recyclable, but it's store drop-off recyclable to something that's curbside recyclable, and that's the biggest challenge. When we say curbside recyclable, that usually means some type of paper or fiber based material, and think about when you're at the grocery store and you're checking out and you want a paper bag versus a plastic bag, there's a lot of physical differences to that bag to get the same strength out of from a plastic based film with a paper-based film, I have to typically go thicker. I have to do things to make it stronger so it's much more rigid. File legacy packaging machine, take a flow wrapper, for example, that's designed for thin and flexible films. If I need to run a rigid paper, I need larger diameter rollers, different angles, and bends things so the paper doesn't tear. So that's the number one challenge that I've seen when it comes to curbside recyclables. The second, running at the same line speeds, paper is typically thicker, so it takes longer to transfer the heat to whatever sealant layer is on there. So that maybe runs a bit slower, doesn't really matter if I can't get it to run to begin with.

Sean Riley: Okay. Do the companies that try to make these switches usually come back to the OEMs before they attempt this or do they, I'm just curious, or do they attempting beforehand?

Greg Berguig: What I've seen in our sample size is that they tempt it beforehand because typically by that point they've had... It's not like a new machine.

Sean Riley: Exactly. That's what I was thinking.

Greg Berguig: When you're in the first, what I call out of the box, the first 90 days of running it, maybe 180 days, they haven't taken full ownership over the equipment. They still have the manufacturer involved in this and that. Once you've had a machine for a couple of years, you've got your maintenance team, you've got your trained personnel, so they typically try it themselves, and if it doesn't work, then they come back to the manufacturer and say, "Hey, this doesn't work. What do we do?" And we've experienced that where we had to design some, we were successful in this case, some modified some parts, some rollers, some things like that to retrofit it, to go from actually a plastic-based film to a paper-based film.

Sean Riley: You touched on things that are affecting the equipment. When we make these switches, what are the cost implications of switching to sustainable packaging materials and how do companies manage or offset those expenses?

Greg Berguig: That's a great question. So it depends. Do they already have a piece of equipment, or are they investing in a new piece of equipment? If they have it, obviously, there are downtime costs and transition costs, right? So that's the first part. And then when you're actually running, it could be running slower, so that's one cost. I'm not as productive with the equipment. And then obviously, the material is more expensive when going from plastic to paper. For the most part, it's double-digit increases. It can depend on what they're doing. There are some ways of offsetting that. One example is maybe I was running a three or four-mile poly-based film, and with paper I can run something thinner, so I'm using less material, but it tends to be more expensive. People aren't going to use a more sustainable material or curbside recycling. That's really where I think we should focus on because it's cheaper, right? They're doing it because there's a brand, there's a marketing reason to do it.

Sean Riley: Yeah. Exactly.

Greg Berguig: You have the ops folks, they want to invest. They've been tasked to become more productive. They want to invest in machinery that is what I would call material agnostic, so it can run paper or plastic-based films.

Sean Riley: Do you see a lot of it coming down from marketing, and are they even involving their operations before they make these decisions?

Greg Berguig: Yeah. Typically, it is a marketing-driven initiative. We're talking about truly consumer-evident transformations where there wasn't just a line at the bottom of the packaging. It was obvious there was a big splash made around it. It could be putting in some post-consumer recycled content so that the consumer might notice the difference. But really, I think the biggest one is going from plastic to paper-coated stuff. I've seen paper-based curbside recyclable films or paper that doesn't look anything like the paper you've seen today, almost mimicking plastic-like properties. I would expect that at PACK EXPO in Las Vegas, we'll start to see more materials out there. At the last Interpack I saw that, at the next Interpack we'll see that. Europe is obviously ahead of the US in terms of this for sure. Just go to a European grocery store and look at the packaging. But will you also see, Sean, that a lot of companies might offset that added cost by being more productive by investing in machinery that will give them higher output? So switching over to a vertical-form fill and seal or a horizontal flow wrapper or something will give me that 50, 100 packs a minute, and a lot of the incremental costs of the material will be offset by lower labor costs per package.

Sean Riley: That kind of segues into what I was going to ask, which is what's the determining factor or the most significant factor in determining whether I can retrofit what I have, and that's going to be sufficient, or I need a full equipment upgrade or a complete replacement. Is there some way to determine that before you necessarily have to make the commitment to new machinery?

Greg Berguig: Yeah, absolutely. I think you need to identify what material you want to run, so get an idea of what you want to do. If we think about paper, for example, a 50-pound paper performs very differently from a 40, 30, or 20-pound paper, so the thinner you go on the paper, the more plastic-based films it might react with. So, figuring that out involves the manufacturer of the equipment as early as possible.

Sean Riley: And if they're not picking, they're basically having to make a commitment to a new material? They don't know how that's going to evolve. Maybe they're only using that for a couple of years. How much of a problem is that going to be going forward for the equipment?

Greg Berguig: Another great question. I think it's easier to work backwards. If I have a machine that runs plastic or some type of polyfilm and I'm switching to paper, for the most part, that paper-based solution should be able to go back and run the plastic with some minimal changes. I started a project with a customer last year, and by the time we did the retrofit, some new materials came out on the market that kind of changed the game, but you have to start somewhere. You can't just say, "Oh, we're just going to wait and wait and wait."

Sean Riley: Okay. With that kind of shift in mind, everything's going sustainable, policies are coming into place with producer responsibility, things like that.

Greg Berguig: Yes.

Sean Riley: How is that influencing you guys? Are you designing and innovating that in going forward? Is it a kind of learn as you go and then design going forward?

Greg Berguig: Yeah, I think we are trying to expose ourselves to as many materials as possible and test those. Whether or not we have a customer, me personally, on conversations with material manufacturers, whether that's paper, whether that's some other sustainably sourced films and whatnot all the time, just to make sure we factor that in, because you never know what the customer's going to ask you, and you never know what the size of the opportunity is going to be. But I think we've been able to meet those challenges for the most part. One customer may have this set of requests. I think in the e-commerce logistics space, we've got some customers with some paper-capable machines that are currently running poly-based films with the idea that they might transition some of what they're doing. A lot of this transition is not 100%. It is, "Hey, let's say I mail apparel in a bag and my singles might switch to paper-based materials." There's a nice brand story around that, but they won't change everything over.

Sean Riley: I touched on it, but how big a role is the government and regulatory pressures playing as it started slow, but now more states are jumping on board, so are they accelerating the transition to sustainable packaging?

Greg Berguig: EPR, extended producer responsibility, is certainly critical. Not to mention other types of bans on single-use plastics and stuff like that. So I think it's there. It's going to play a role. Personally, I haven't seen anything that shows that it's a deciding role and that we're doing this because of that. Because, as we know, regulations can change very quickly.

Sean Riley: And it's state by state. It's not at the government level.

Greg Berguig: Exactly, and who knows what's going to happen. I think it should be kept in mind, but I think it's more of a marketing brand decision. We have one customer who's installing some machinery now for putting things into paper-based curbside recyclable bags from single-use plastic, and for them, it was a corporate-wide mandate that by X period of time, everything was going to change over, end of story, and if they made that mandate, they are sticking to it. They're a multinational, so I think that's important. We think about sustainability, and there are a couple of different reasons why one might want to be more sustainable in their packaging. People talk about plastic in the ocean and the pollution, and this and that.

Sean Riley: Always.

Greg Berguig: If you're here in North America, that is probably not the problem you're trying to solve. It is a global issue, but for the most part, I take it that I'm going to put it in the garbage or I'm going to put it in the recycling. I have it available to me. It's going to go in there. It's going to go to a landfill, it's going to go to compost. I have an easy way of doing that. You think about much of the world, think about a lot of third-world countries and developing countries, people don't have access to that, and that is really a huge issue where they don't have the infrastructure, and what big brands, like the one I mentioned to you, they said to me, "Hey, we're multinational. No, we may not have a problem in the developed world in Europe and North America, but the things that we do get implemented in other parts of the world, we're present in Africa, we're present in Asia, we're present in all these different places, so that change in packaging will impact countries like that where it is a real issue."

Sean Riley: Interesting. Yeah. Our infrastructure, people will complain, isn't the greatest. It doesn't solve every problem but is light-years ahead of many other countries.

Greg Berguig: Correct.

Sean Riley: What has to happen beyond that and across the broader supply chain to support this sustainable packaging so that it gets up and running? Isn't this kind of stop-start, herky-jerky situation we're in now?

Greg Berguig: I think, like many things in life, it comes down to communication and communicating where you've been, where you want to go, and bringing the right parties to the table. We hear this over and over again. You get your material supplier with your equipment supplier, with your ops teams, with your marketing team, get all those people talking, and you can really quickly solve issues as opposed to trying to do it on your own with just internal resources or without having everyone in the development process.

Sean Riley: Right. I appreciate you coming on here, Greg, and giving us the lay of the land on dealing with sustainable materials, with legacy equipment, with equipment going forward, and across the supply chain. So thanks again.

Greg Berguig: My pleasure. Happy to do it, Sean.

Sean Riley: Thanks for listening to this episode of UnPACKed with PMMI. If you liked what you heard, be sure to follow or subscribe on Apple Podcasts, Spotify, or wherever you listen. That way, you won't miss any of the industry insights coming your way. While you're there, we'd really appreciate a rating or review. One more, visit pmmi.org/podcasts for all of our past episodes and additional resources. Thanks again for tuning in. I'll see you next time.