Visy saves costs in Thailand

VisyFood Plastics of Australia and Visy Packaging (Thailand) decided they needed to be where its customers were, recently opening a custom- designed facility in the Hemaraj Industrial Estate (Rayong) on the Eastern Seaboard.

The multi-million-dollar operation, opened in October 2009, provides packaging to Visy clients around the world, 80 per cent of which are in the food industry and include Dole, Coca-Cola and Heinz. More than two-thirds of output is sold to clients in Thailand, with exports going mainly to the US and China markets.

In making the decision to invest in Thailand, Simon Shale, company director and general manager of VisyFood Plastics and Visy Packaging (Thailand), says the key motivation was to be where the customers are. Prior to establishing the Thai plant, Visy was manufacturing multilayer plastic barrier cups in Australia, exporting to Thailand to be filled and exported to the US consumer market.

To maintain its edge, Visy Packaging (Thailand) will be pursuing the right times and the right penetration routes for potential new products and services. But the biggest factor in any expansion decisions will be how customers can benefit from them.

Clean and automated

The facility’s clean manufacturing process uses state-of- the-art systems to produce thermoformed barrier plastic cups. Production is fully automated and includes an operation of sensory cameras and precision robots. Once the line is set up, the machines run themselves. Staff only has to put a roll of polypropylene back on every hour or so, and check now and then to make sure things are going along smoothly.

Processes include extruding plastic in up to 13 layers, which helps the plant’s thermoforming machines produce more than 1,200 cups a minute, or 1.2 billion pieces a year.

In addition to being ultra-high-tech, the factory is fully air-conditioned to help ensure there is no contamination. It follows strictly the HACCP food-safety management system for elimination of any biological or chemical risk from improper materials, production or handling.

“I can guarantee customers that our cups are untouched cups,” Shale said. “Others will take things off the line manually, but this plant is all automated.”

With virtually zero waste, as the processes work the scrap back into the material used, the factory is also very environmentally sound. A reduction in reject rates to 0.015 per cent has enabled reductions in scrap. The relocation and process improvement for Visy has reduced cost, which has been passed on to the client. In 2006, cups were made from 1.4mm sheets; now the company is able to supply at 1.1mm, which also results in less waste.

The plant uses Australian technology. The R&D work is also done in Australia, with the focus currently on extending the performance of the plastic cup.

Thai food

Many factors were behind the decision to locate in Thailand. Perhaps the biggest reason was to be closer to deep seaport and its main customer, fruit giant Dole Thailand, which it was servicing previously from Australia. Dole has benefitted from cost savings due to lower Visy production costs.

Nor can it be ignored that Thailand is the sole net food exporter in Asia and one of the top five food exporters in the world. The food processing industry in Thailand has been growing at approximately 13 per cent per annum in recent years and is comprised of more than 10,000 food-processing companies, including Nestlé, Unilever, Dole, Betagro, Kelloggs, Kraft, PepsiCo, Proctor & Gamble, Ajinomoto and EFFEM food (Mars).

More than 80 per cent of the raw materials used by the country’s food industry are locally sourced. Thailand is currently the world’s largest producer and exporter of canned pineapple, pineapple juice and concentrates, processed chicken, canned and frozen seafood, rice, and frozen and processed shrimp. Steady growth is foreseen for the Thailand plant.

“Visy is aware that Asia is calling,” Shale said. “We will be investing more and more. In fact, we have rights from Hemaraj to quadruple our size here.”

Besides being the food basket of Asia, Thailand is also what Shale calls the region’s safest entry destination for investment. Part of this is the attractive combination of skilled, low-cost labor in the country.

Hemaraj also played a role in meeting the company’s requirement for a rental facility at first, with an option to buy later, as a means of minimising initial capital. Operating in Hemaraj Eastern Seaboard Industrial Estate (Rayong) also provides proximity to the Laemchabang deep-water port for shipping easily to Australia, China and around the world. Moreover, the estate gives the company quick access to raw materials, such as polymers and plastics in nearby Map Ta Phut. All of this makes good business sense, as such savings enable Visy Packaging (Thailand) to pour more funds into technology, automation and innovation. This in turn results in better products and services for customers. “We become more profitable by making our customers more profitable,” Shale said.



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