H U H TA M A K I
With blue chip clients like McDonalds and KFC, Huhtamaki SA focuses on packaging for the food service industry.
uhtamaki is a world-leading manufacturer of consumer and specialty packaging. Over the years, it has reinvented itself and has changed considerably from the business Heikki Huhtamaki founded (Huhtamaki Industries) in 1920s Finland. Its dedication to customers, however, has never waivered. As Group CEO Jukka Moisio puts it: “Over the years our company has reinvented itself and the focus of our business has shifted. Our dedication to customers has however, always remained our top priority - partnership and cost-efficiency being our main assets.” “Huhtamaki has a presence in 33 countries around the world, employing 13,000 people,” says Richard Trickett, MD of Huhtamaki South Africa, explaining that, locally, as well as globally, the firm “strives to be the company of choice” by consistently providing customers with “unmatched expertise, operational excellence and innovative thinking.” He says one word accurately captures what Huhtamaki is all about, further. It is in tune with customers and trends, and always strives for better. “As a leading global supplier, Huhtamaki is in tune with the times, we have to be,” Trickett says. Huhtamaki’s South African history and future is filled with regeneration, innovation and solid development. Operating from manufacturing facilities in Springs, Epping and Atlantis, the main focus is “creating packaging for the foodservice industry”, providing sustainably developed packaging, carrying some of the world’s most renowned brands such as worldwide blue chip clients KFC and McDonalds. “We are a one-stop shop to quick service restaurants, beverage vendors and caterers, and work with both the largest multinational organisations and smaller, local players,” says Trickett. A varied product range enables all types of food service operators to have “quality packaging” that supports “their needs” and offers “good value”, he adds. www.southafricamag.com
STRENGTHENING MARKET POSITION
Huhtamaki SA is divided into three divisions: Rigid packaging, Flexible packaging and Moulded Fibre packaging. “Our products play a vital role in the food and beverage sector and we have a wide range of cups, containers and lid forming technologies, offering a variety of shapes and sizes for a wide range of products such as convenience cups and tubs, hot and cold drink cups and lids, ” says Trickett. “On top of that, we can create custom solutions. “We can create completely new products or can revive interest in an established brand. “We are a leading specialist consumer packaging company that contributes to its customers success by helping them sell more,” he adds.
According to Trickett, in September 2008, the Huhtamaki group – from its headquarters in Finland – announced its intention to focus on packaging operations where it has a “competitive advantage and good market positions”. “Where do we have good positions? Definitely in moulded fibre products, flexible packaging, and the food-service industry,” he says. “As a group we decided to focus on operations in which we have strong know-how and technology platforms and business concepts that will allow Huhtamaki a continued competitive advantage.” This meant a complete review of operations and as a result Huhtamaki South Africa divested itself of ‘non-core’ business, namely
Our products play a vital role in the food and beverage sector
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its thin-wall injection moulding operation based at Roodekop in Gauteng. “We sold it to Polyoak Packaging,” says Trickett. “It fitted their strategy well and was an excellent purchase for them, adding to their portfolio. They purchased the business as going concern and the sale has ensured that the business received the necessary support to go from strength to strength.” This wasn’t the only ‘non-core’ asset Huhtamaki subjected to review. “We had a barrier film business, which was also noncore,” Trickett adds. “We did try to sell it as a going concern, but unfortunately the prices we were offered were not attractive enough. We had a couple of options: sell the business at a reasonable price to people who wanted to continue running it on our site or shut the business down and move out of offsite warehousing, which costs us a considerable amount of money, and convert that plant space – some 8,000sqm – into storage space. “We ended up taking the second option, as it was strategically the better option.” Such measures, and the focus on packaging operations where it has a “competitive advantage and good market positions”, has enabled Huhtamaki to compete, and survive, in a very tough trading environment. “We are now more focused and the group is certainly showing a willingness to invest in its core technologies,” Trickett says. “With
thoughts on the SA market, the World Cup has come and gone,” he continues. “There were high expectations of demand during that period, some of which didn’t materialise for many parts of the economy. For all of us supplying into the quick service restaurant side of the market, the one thing you couldn’t afford to do, for anybody in the supply chain, was run out of product. Everybody made sure they had stock for the upbeat scenario. Eventual demand, however, was only slightly up on the previous year. “Since the World Cup there has been a little bit of a hangover. Certainly consumers in SA continue to be cash-strapped. We are now moving into the peak season, summer is starting and Christmas is around the corner. There will be an increase in demand. I don’t think it will be much better than last year, but it is going to be what it is – there isn’t much we can do about it.” Huhtamaki is currently stockpiling in order to meet that increased demand, Trickett says. “The stock build is going well. Our big customers remain positive, although over the last six months or so they have certainly not been happy with the growth – there has been growth but it has been well below their expectations. We are prepared, we do run our facilities right up until just before Christmas and then we shutdown for two weeks and start up again in the New Year. The big challenge in December is that our
customers are all still serving quick service restaurant meals and there are only two delivery weeks; it is a very busy time. You have to get a normal month’s sales out in half the time. That is always a challenge.” Customers are increasingly demanding product Just-In-Time, he adds: “Everybody is looking at cash flow with greater scrutiny. We see people delaying orders, there is a trend to get product JIT, customers want environmentally friendly product, and there are many other trends emerging right across the supply chain.” By taking a JIT approach to inventory and product handling, companies can often cut costs significantly, he says. “Growth has been slow to return,” Trickett concludes. “I remain quietly optimistic. I think that we are going through a tough period. There is going to be growth, but it will be muted, gradual. We will not see the sort of double-digit growth we were seeing three years ago.” END www.southafricamag.com
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