Paper, Film & Foil Converter

You Get what You Pay For, or Caveat Emptor.

July 16, 2010

Yup… the old adage is true. All things being equal, you get what you pay for. Since my days at Cryovac, Mobil Plastics, James River Corp, et al, and then consulting with many, many companies, I have seen the full gamut of quality in the blown film / cast film / extrusion coating and laminating / packaging / converting industries. The larger, more reputable companies offer excellent quality products and excellent service at a price commensurate with those attributes.

It is a well known business model in academia that any company offers only three things to its customer: Quality, Service & Price. Over the long term, each company can optimize only two of those three attributes. The classic example is the French restaurant compared to the fast food restaurant. The former optimizes quality and service and sacrifices price, i.e., charges more for its services. The fast food restaurant on the other hand, offers lesser service, but at a better price. It is possible to optimize all three variable in the short term, especially with government subsidies, to capture and entire market and put your competitors out of business. The Japanese did this in the electronics market in the ’80s. However, that strategy of excellent quality and excellent service at the lowest price is not sustainable in the long term. The same holds true in the converting world.

Quality comes in two flavors: Quality of Design and Quality of Manufacturing. End users of barrier films for example expect to receive the product that was designed and made to exacting specifications, without deviation from those specifications. It is possible to design a flimsy product, but build it to specifications perfectly, which results in a well built flimsy product. It is also possible to design a tough, durable product, and manufacture it with poor quality control techniques so that the product is a sometimes-functional, sometimes failing well-designed product. Let me give an example to illustrate.

A small co-ex barrier blown film/bag manufacturer wants to compete in the food packaging industry. Let’s just say it chooses to produce films for the cheese industry. The supplier meets with the end-user, mutually agrees upon a product construction, materials, and other specifications. Knowing it must compete with the larger players in the industry, who have excellent quality and excellent service, the small blown film house must enter the market with a lower price strategy. It does so, but quickly realizes that a 10-15% gross margin is insufficient to cover all expenses, including routine maintenance, quality control equipment and personnel, a maintenance shop, proper personnel, etc., etc. The converter then realizes that the fastest (and maybe only) way to increase profits is to reduce raw material costs. The most likely candidate is the costly EVOH layer, which the converter reduces from 15 microns to 6 microns. It does this without letting the end-user know of the change. So, down the slippery slope it goes.

Not possible you say? I was just an expert witness on a case in which this was the exact situation. It did happen, and it does happen all the time. Buyer beware. There are many things that happen when the EVOH layer is reduced by 60%. The obvious is that oxygen transmission increases (gets worse) due to a thinner layer. This means that extruder screw speed is 60% less, which means that the bulk residence time in the extruder is much longer, which means the EVOH is exposed to more thermal history, which means that it degrades into bubbles, gels and carbon at a greater rate which is further detrimental to product quality.

This supplier only measured film thickness, and occasionally bag burst strength, and it did so manually at that. It had no test equipment, no good manufacturing practices, and no preventative maintenance. It eventually went out of business, and left a domino effect of destruction in its wake.

Caveat Emptor (Let the buyer beware). More on this later.