Wall Street has lost control on Down Stream Process in Flexible Packaging Film Extrusion & Lamination in North America
Many large players in the converting films production segment have grown to the point of ‘Diminishing Returns’ in their business cycle. In North America, this is self-evident in Sales dollars for the small to medium size film extruders that haven’t lost control of their total Sales/Service process. It’s interesting, and almost reassuring for me, to note from the ‘old school idealistic perspective that private equity and Wall Street do not truly have the final say today for consumers in the North American Converting Films segment for Flexible Packaging.
My point here is simple, and straightforward. Just because a large ‘known’ domestic flexible films extruding and laminating company can do everything, and be everything, for an Oscar Meyer, Land-O-Lakes, Coca Cola, Kraft or Dietz & Watson, etc. in North America – doesn’t mean that they can adequately ‘Service’ the needs of said known giants, and leaders, in this segment. Sales Revenues are a vital river, and many of the extrusion/laminating producers/leaders, as far as production goes, have lost sight of the forest from the trees. They have simply become so big that their internal process itself has become the Trojan horse within their own Cathedral walls, as a Profit Center. If this wasn’t the case then the door to their currently Commercialized business wouldn’t be a publicly known motivated discussion – with alternative competitive, viable, and qualified sources of supply. Yes, service still counts, and so does Time Value from the Finance perspective. This evident ‘inability to initiate’ by these well respected producers in North America for Flexible Packaging and Converted films has literally started a Paradigm Shift in the supply chain that is just entering the Tremor phase. In Seismology, tremors lead to earthquakes. In the Converting / Flexible Packaging Film extrusion/lamination universe of North America this is where we presently find ourselves on the Richter scale of inevitable supply change today.
As I look back on my life in Flexible Packaging, I can proclaim with confidence that I should have dropped out of my Undergraduate Business School studies after taking one class: Management 101. The second chapter contained one theory that has been relevant since the dawn of Cave Men. This was that Demand always dictates to Supply. The high, and expected ‘Demand for Service’ – is the ultimate cornerstone – to any longstanding and mutually beneficial Flexible Packaging / Laminating converting film relationship. Arrogance, born of time and habit, uncorrected within these Cathedrals of film supply, has led to complacency in their process. Being politically correct in their internal IT systems response process – has taken the drivers seat – to common sense logic in this regard domestically in North America. It has become the equivalent of highly aggressive cancer cells situated within the Lymph Nodes of these bastions representing hundreds of millions of pounds (of film) sold per annum. This corporate behavior begs to suggest that these actions, and the shared negative perceptions of their customers alike, apparently serve to have no incentive to cure this operational malignancy presently eating them from within.
In sum, Time Value, and Supply & Demand always have, and always will, dictate success or failure in any business relationship. It has become apparent that these two basic financial and managerial principals have been lost somewhere beneath the pile of ‘Other Priorities’ for our politically correct and technologically superior over-fed domestic production film giants in North America. Simply put, the Customer always dictates. Try convincing them otherwise to prove a point, and see what happens. All the Marketing and Innovation dollars spent will not, and never will, compensate for dollars lost in day to day Operating Efficiencies. Thus, the dawn of a New Age of agreeable, customer friendly, alternate sources of Flexible Packaging Converting / Lamination Film supply is now upon us in North America. The domestic Big Boy producers (who presently control this market segment) have no one to blame but themselves for it. They have ignored the basic principles of good business, and trusted the judgment of Private Equity & Wall Street instead.