SPA 89th Conference October 2015 - Report
The SPA’s Chairman Tim Gray opened the 89th Conference, held at the Forest of Arden Marriott Hotel & Country Club in Birmingham. The Conference was well attended by 67 delegates representing 51 box plants and 28 suppliers.
The Macro-Economic Outlook Update from KPMG was delivered by Economist Dan Aylward, who engagingly summarised their view that:
• The UK economy has continued to benefit from strong demand, with consumer and business confidence high. UK net incomes are rising and business investment is forecast to rise.
• However, UK productivity has been subdued and manufacturing sector output has not yet fully recovered from the 2008 Great Recession.
• Although the UK is not too exposed directly to China, the ramifications of a further slow-down could affect export markets whilst exchange rate movements are also not favourable.
• Emerging economies and those who are significant oil exporters are projected to see reduced growth or outright recession this year.
• Conversely, net oil importers and developed economies should see modest growth in 2016, including a recovering Europe.
• Businesses should understand and communicate the potential impact of a Brexit to its stakeholders.
Raj Bhardwaj gave a Market Update for the Corrugated Industry:
• The living wage (which is set to rise by 40% by 2020) will adversely impact average margins for the corrugated industry. Hence there is real merit in considering investment in lean manufacturing and / or new machinery.
• Recycled containerboard costs rose in August and should (based on the supply-demand balance) rise again. However, there seems to be a market dysfunction in the form of German independent containerboard makers being nice to their box plant and sheet feeder clients – who are struggling financially with the repercussions following the introduction of six new corrugators into the market. As a result, a potential second recycled price increase is struggling to gain traction.
• What subsequently happens to box plants’ material costs depends on: whether they enjoyed decreases when paper prices were on the way down; the net impact of new box making and sheet feeding capacity and suppliers’ chosen strategies for the coming months.
Eric Findlay Jr. gave a Supplier Spotlight on CMC International, who are global consultants and suppliers of new and used box making machinery.
They have long-established agencies in Russia, South America and Vietnam; giving a global service at a local level. CMC employ a consultative approach with their clients and aim to match the right customer with the correct machine to suit their needs.
They provide consultations and services in the following areas: used corrugated machinery; new corrugated machinery; buying or selling a machine; machine inspections; machine valuations and machine stock clearance.
Andy Ely of TUV Ltd gave another engaging yet sobering Health and Safety Update, which included:
• Guarding must be effective, not easily defeated, cover all operations and be formally checked regularly.
• Machinery risk assessments must cover everything, not just production operations: setting; inspection; maintenance and cleaning.
• “Live working” should be avoided or subject to suitable control measure such as reduced speed running, SSOW / permit to work.
• New laws mean that certain classes of self-employed persons will be exempt from health and safety legislation, where their work does not pose a risk to others. However, Andy’s advice is not to accept this from any suppliers coming on site to SPA members – everyone has an obligation to observe the highest levels of diligence when it comes to H&S.
• A new and improved COSHH e-tool has been launched online by the HSE, which takes you step-by-step through potentially hazardous materials and what you should be doing about each of them.
The inestimable Andy Barnetson of the CPI gave an overview the CPI’s Promotional Activities and how you do your bit to help our industry:
• The CPI’s promotional team publish regularly via conventional media and social media. The Twitter account @CorrugatedCPI has 1,047 followers and there is a Facebook account for a younger audience.
• A consumer survey by YouGov last year confirmed that 57% of people preferred paper-based packaging.
• There are also regular features in Packaging News as well as press releases that are picked up by the likes of the Brunton press and the Know It All packaging newsletter. Corrugated industry colleagues are welcome to use parts or all of these press releases.
• Paperworks started as a CPI-led school programme, which has five modules for differing age groups. Information can be found on the CPI website: http://www.paper.org.uk/paperworks
• We need your help – yes you! You can help by identifying an appropriate person at your local school and flag up the Paperworks website so they can access the relevant lesson plan and other supporting information. Our lesson is the Design and Technology lesson for 11-12 year olds.
Tim Gray, Chairman presented New Member Certificates to Cheadle Group and Contact Group:
Neil Osment of NOA Ltd and Nick Kirby of Swanline gave a presentation on Market Trends, looking at Digital Print on Corrugated:
• The UK market for digital print is already circa 100 million square metres in size and is forecast to continue growing dramatically. Hewlett Packard are aiming to take 10% of the market in due course (i.e. circa 400 million square metres), which will offer significantly enhanced margins for box makers in the 25-30% range.
• The market is there; it is now a massive education process.
• People don’t yet appreciate what can be done with digital. End users typically enjoy a new product development lead time of just 24 hours, whilst avoiding expensive origination costs for print plates. The quality is excellent and printing speeds are picking up impressively.
• Integrated plants are not the pioneers, the early winners are those much lighter on their feet.
Les Pickering of Quadrant5 Consulting gave a presentation on the Why and How of Lean Manufacturing:
• Les gave an overview of lean manufacturing best practice from box plants around the world, who continue to raise the bar on operational efficiency in areas such as set times and run speeds. In doing so, they represent competitors who are pulling ahead – you have to work hard just to keep up with them.
• He highlighted the value of the visual workplace by going through a number of examples.
• A key theme is the importance of being organised and structured to minimise waste and hence cost. First and foremost, it’s critical to ask your operators to be disciplined in doing their job (e.g. putting away a broom in its designated area).
• The seven deadly waste areas are: defects; overproduction: inventories awaiting further processing or consumption; unnecessary over-processing; unnecessary motion of employees; unnecessary transport and handling of goods and waiting.
• Les sees digital print as a sophisticated, game-changing opportunity for box plants to make more money by giving customers what they want in terms of dramatically faster product development and minimal quantities whilst offering an excellent print quality. In turn, Hewlett Packard is deeply committed to learning how it can help to extract even more efficiencies in the printing process.
Alan Millar of Acumen Consulting gave a presentation on the SPA’s Lean Manufacturing Programme:
• An initial one day Lean Health Check, which is entirely SPA funded.
• After the initial one day Health Check, there is coaching, consultancy and leadership and management development being offered as part of the SPA’s Lean Programme.
• Hence the full SPA Lean Programme aims to get you started on your lean journey, with Alan working with box plants to embed best practice over 20 consultancy days over a 12-month period.
• The Business Growth Service seeks to effectively offer English businesses heavily subsidised (i.e. up to 50%) expert help to support business growth as well as leadership and management. Alan is approved by the Business Growth Service and can hence work with English SPA members to gain access to this financial support to help facilitate the delivery of a lean manufacturing programme.
Richard Cummings of HR Insight presented an update on the National Living Wage / Minimum Wage:
The forthcoming introduction of the minimum living wage will see the minimum wage of £6.70 rise to £7.20 in April 2016 and gradually increase to £9.00 per hour by April 2020.
Not only will this see the base level of salaries rise, but there are likely to be knock-on increases for more senior employees.
Hence HR Insight recommends the following proactive actions:
• Review team structures – notably consider reducing supervisor levels.
• Consider time and motion studies.
• Invest in modern equipment.
• Plan now for these costs and the impact on the P&L.
• Consider banked hours to cope with busy / quiet periods to reduce overtime.
Tim Gray, Chairman gave an update on the SPA’s Best Practice Initiatives… “What are they, how do I get started?”
1. The SPA offers free Standard Terms and Conditions of Employment as well as policies which are legally-compliant.
2. The SPA also offers up to date Terms and Conditions of Sale as well as longer term contracts.
3. Support with introducing a cost-effective BRC/IoP Programme which would take you right up to pre-assessment.
4. Support with introducing FSC and supporting you thereafter.
5. A one day Health and Safety Audit, delivered by TUV.
6. The SPA Lean Programme involves 20 consultancy days over a 12-month period, which can be reduced by 50% by funding available to English companies.
7. The SPA Board Grade Calculator is available free of charge to support the introduction of performance packaging.
8. The SPA Abaca Dashboard.
9. 35 SPA members have averaged a tax credit of £57,000 each using the SPA’s R&D Tax Credit Scheme, which is a service that’s available free of charge.
10. Sales Managers’ Masterclasses are available free of charge.
11. Five Star Accreditation mops up all best practice into one initiative.
The Conference ended with a discussion on the UK Corrugated Industry Trade Show 2016.The current thinking is to jointly run a Trade Show in September next year with the CPI and AICC. Trade Shows will be every two years at a larger venue, with a cost that is potentially somewhat higher than this year – but hopefully not by a great deal.
The day was rounded off by an evening’s networking.
Copies of all the presentations are available to download for members from the SPA website.