At the time of writing this article it is not yet possible to predict how long and how deep the cuts will be and to which parts of economic life after the pandemic.
Current short-term effects of the crisis draw a very different picture in the packaging industry. Due to a sudden change in purchasing behavior, certain consumer goods are experiencing a short-term sales boom. In addition, more emphasis is put on the protective properties of packaging. In addition to avoiding the spread of infection, the main priority is to increase the shelf life, especially of food. Business models that are already seriously questioned, such as the delivery of frozen foods or the slow development of delivery services for online grocery orders, are experiencing a growth and sales boost.
As a result, consumables for packaging printing are experiencing an extraordinary boom. The manufacturers of flexographic printing plates and inks are experiencing increased sales. However, manufacture of solvent-based inks is disrupted by supply bottlenecks, with solvents such as ethanol especially needed for disinfectants.
This contrasts with a downtrend in capital goods. Manufacturers of printing presses, be it for flexo or digital printing, are losing orders which they believed certain to close.
These are either postponed without reschedule or cancelled completely because cash flow becomes extremely important in the crisis. Solvency, particularly toward employees, is rightly preferred to an investment, with its risk and sustainability even more difficult to assess in the current environment than in normal times. As a result, a number of manufacturers have introduced short-time work and are putting the brakes on costs.
But which basic lessons can be learned from the crisis and how do these lessons help to resume business or strategically reposition it in the future?
One lesson we’ve learned is to question established supply chains, especially the geographical vulnerability of these chains. For the supply of consumables, it is for example a challenge when pigments for packaging printing inks are manufactured in China, binders in the U.S. and printing inks in France for a customer in Germany. In addition to the time-delayed failure scenarios of the raw material manufacturers due to the delayed regional spread of the pandemic, logistics challenges suddenly emerge, which are caused by sudden reductions in global freight capacities as well as regional and local restrictions on movement due to border controls and curfews. This will certainly lead to a reassessment of safety stocks.
A second lesson is the use of home office and digital communication tools. Prepress, in particular, involves digital tools and databases. Nevertheless, previously the work took place almost exclusively in shared offices, since personal contact, exchange and coordination were seen as essential.
With the data and packaging designs created in the home office, which were coordinated by video conference with the managers of the brand owners working in their home offices, plates have to be produced that are then delivered to the packaging printers. This may be well at the moment, but what if a processing device fails? In addition to the critical supply of spare parts, there may also be problems with service technicians, especially if travel restrictions are maintained for some time. It suddenly becomes apparent that automation, and especially digitization, is only rudimentary in the area of flexographic plate processing.
Will there be a solution to these lessons? And, if yes, will the answer be limited to flexo?