Or is it? When a drum is a product that has remained largely unchanged for the past century, what differentiates it from the others available on the market?
Drums don't sell themselves. Much as the simplicity of a cylindrical 210-litre unit in either steel or plastics is attractive to some, other factors such as price, manoeuvrability, durability, safety, standardisation and availability have more of an impact on the customer's taste. The following paragraphs explore what customer-led demands are shaping drum markets and how companies are presenting their products to make them stand out from the rest.
Visy reports that its Australian industrial packaging markets are performing well with particular development in its New Zealand market, as dairy export sales have risen in the region. Catering primarily for petrochemical, chemical, agricultural, dairy, mining and explosives industries, the company boasts one of the widest ranges of dangerous goods approved containers in the industrial packagings industry.
"Our small, medium and large drums are subjected to frequent quality checks," says marketing analyst Teresa Papile. "As well as offering drum reconditioning services, we work with our customers to develop appropriate collection systems to close the loop on our packaging. In terms of dangerous goods legislation and its impact on drum specifications, the company works intimately with all customers." All drums and packaging products are barcoded as a security measure that enhances the container's traceablility.
Steel suppliers have very much a monopoly of the Australian market, which is a constant pressure on Visy's profit margins. Furthermore, natural disasters are having an impact on plastics drums sales. "Australia is currently experiencing a drought, which has been running for approximately 18 months now," explains Papile. "This has had a significant impact on sales to agricultural customers. The drought has more heavily impacted the sale of our plastics 20-litre cubes more so than our steel drums.
Both contrived and natural setbacks, however, do not deter Papile from asserting that, "Drum sales remain strong and Visy will continue to be a strong force in the Australian and New Zealand drum markets."
Thai manufacturer and Mauser licensee Plastic Drum Industries (PDI) might well be needing a name change in years to come as intermediate bulk containers (IBCs) start to take off in Asia. Although demand for IBCs is currently quite low, government talks spurred by concerns for the environment about a tax on packaging are beginning to force users to look at more packaging options and designs that are more conducive to reuse.
PDI's plastics Mauser drums are designed for reuse, so the company sees these taxes as an opportunity to increase sales. Multitrip IBCs will also be an answer to reducing packaging waste but, as yet, there is not the container handling infrastructure in place to let the 1,000-litre units proliferate.
"In this part of the world, the plastics L-Ring drum offers more flexibility than IBCs," says PDI managing director Thongchai Ampiegulwatana. "This is due mainly to the smaller market and the fact that most customers have problems in handling IBCs. As in the developed countries, IBCs will have more share of the market in the future and we will be part of this when the time comes."
Plastics raw materials prices have increased as the possibility of a war in Iraq makes economic conditions unstable. Severe local competition in the jerrican business has put further pressure on PDI's profit margins, but Ampiegulwatana has not been disheartened. "To overcome this, we will have to acquire a machine with a higher output and which uses less labour." New contracts in the food sector have further buoyed this optimism.
A new long-term military contract for custom-made 45-litre containers is keeping Francis Ward busy back in the UK. Best known for its reusable rotationally moulded plastics drums, Francis Ward has just become an active part of industrial packaging market consolidation in its acquisition of Bison IBC Systems (see page 41). The company had shown signs of IBC-envy in the past, when it infiltrated the rigid IBC event RIBEX two years ago (HCB November 2001, page 47) to exhibit the diminutive 50-litre all plastics Wardsquare. Bringing a range of 1,000-litre IBCs to Francis Ward's product range, the company is setting itself up to capture wider industrial packaging contracts.
Managing director Jonathan Wurr is not optimistic about domestic markets, where UK manufacturing is continuing to decline. The weakening of the pound relative to the euro, however, has allowed Francis Ward to become more competitive in the French and Irish plastics drum markets, where customers are currently trialling drums.
Fending off competition from IBCs, European plastics drum giant Polimoon believes that substitution of drums with IBCs is levelling out, as suppliers still need the flexibility of smaller volume unit shipments.
"In actuality, Polimoon had a very successful year in 2002 in terms of turnover," says marketing executive Lisa Walker. "The business climate is contracting and weaker players are being squeezed. We expect 2003 to be challenging, but also have a good foothold in the food industry, where we still see growth. The successful distributor relationships we have built up also contribute another stabilising factor to our order book." The company's agrochemical container range (see page 41) contributes further to its success.
No stranger to the importance of cargo security issues, Polimoon is well prepared to provide secure containment options for a customer base that is concerned about the dangers of terrorism. "Polimoon has a documentation tracking system which traces containers back to the original sale and customer," says Walker. "Our containers can carry products such as sulphuric acid, so we've always taken cargo security issues very seriously.
"Only last week, our quality department were assisting the police in tracking down an organised team of diesel thieves operating in the Midlands. We could pass on detailed records regarding the history of the stolen containers and guide the investigators on how to use the Pira registrations system in tracking this sort of theft."
Battling raw material price hikes, the costs of insurance increases and the impact of the climate change levy, Polimoon is taking a proactive attitude to protecting its bottom line. New 'Ecowarrior' software has been introduced to drive efficiency into factory production and energy usage and a drive on customer services is presenting customers with a reliable product tailored to individual logistics systems.
"The business climate for 2003 does look very challenging but Polimoon is approaching the year as an established market leader," says Walker. "In terms of management, we continuously tune the products and benefit from a foothold in niche food markets. We know we have an excellent product set and we price competitively with our industrial packaging peers. 2003 is going to be raising the game for suppliers in terms of customer service and this is an area where Polimoon holds a vanguard position."
In the US, war talk is boosting sales of Skolnik Industries' steel drums, favoured by US chemical and military markets as specialist and trustworthy containers for dangerous goods. "We sell to just about every major commercial, industrial and governmental market, and yes, the potential of war does have a bittersweet effect on our sales," says president and chief executive officer Howard Skolnik. "We don't want war, but it does bring on more business.
"Domestically, the preparation for war is apparent and the US Department of Defense (DOD) is enquiring and purchasing supplies," he continues. "Few companies manufacture the products bought by DOD and Skolnik is one of the manufacturers of these products. Few foreign companies have contacted us regarding military supplies, but we believe that this will change, should war ensue."
Skolnik drums are designed for durability in handling and much of this is derived through using thicker drum walls. While many steel drum makers are keen to lightweight, this is not an option for a manufacturer dedicated to dangerous goods containers. Product development at Skolnik is focused on making open head drums more user-friendly, with fast and easy alternatives to bolt ring closures; creating more effective closure systems; keeping a flexible approach to container dimensions in order to meet the needs of unique filling and transport requirements; developing containers with generous metal wall thickness; and creating containers that "boost customer confidence in the value of using steel containers".
"As global industry evolves, the steel drum continues to lose some markets and gain others," Skolnik muses. "In a way, it is a testament to the adaptability of steel drums. Furthermore, because of their relatively low cost, high durability and worldwide familiarity, I believe that although the packaging market is expanding with alternatives to steel containers, the steel drum will continue to be the most used packaging in the world."
This is certainly the case in Japan, where steel drums continue to be the packaging of choice, according to Nippon Steel Drum (NSD). "Steel drums are considered to be more convenient and advantageous from the viewpoint of economy, handling and customers' plant conditions," explains executive counsellor overseas business, Michio Utsumi. Supplying 80 per cent of its drums to the chemical sector, 10 per cent to the petroleum sector and five per cent to the paint industry, the company has seen increased consumption of steel drums in the chemical sector over the past year.
"Some customers may have speculated that the price of petroleum products will become higher, and therefore there seems to be a possibility that the purchase of additional containers is causing a temporary increase in orders," says Utsumi. "Drums of 1.2 mm body thickness steadily occupy about 84 per cent of new drum shipments in Japan. Leakproof drums, with a high degree of cleanliness are required from the view point of safety and to meet the growing sophistication of goods being contained."
A market-facing operation is another factor explaining NSD's large share of hazardous materials customers. "NSD positively provides technical services to customers as to quality-related issues of drum and drum contents, by offering advice, solutions, studies and analysis of container quality through its very own Technology Development Centre," says Utsumi.
Expecting an uncertain economic outlook in 2003, Utsumi anticipates a gloomy forecast for sales of drums as domestic customers continue to struggle in the recession and the export-related business that boosted last year's figures tails off. The company expects to increase the price of its steel drums as a reaction to an increase in sheet steel prices.
German drum maker Hemeyer Verpackungen has a network of production locations serving markets in Germany, the Netherlands, Belgium, Denmark and UK. Keeping freight costs low by locating manufacturing sites close to customers, the company can also offer shorter lead times on orders. Favourable exchange rates have made the UK market more active in past months as well. These factors make for an important advantage in an industry under pressure from other forms of industrial packaging as well as suffering from the general European economic malaise.
"Especially the increasing costs of raw material and growing competition following a decrease in drum consumption, are putting pressure on our profits," plant managers Simone Thijssen and Rolf Raimund Blohm agree. "The conglomerate of steel suppliers is playing a favourable game and they have the potential to keep raw materials prices as high as possible. To fight against them is to run against the wind and the only way overcome this is to be better than the rest."
Hemeyer's commercial performance was better in 2002 than 2001, but the instability of government and Europe's poor economic outlook for this year is preventing the company to invest in its production facilities this year as previously planned. "The demand for drums will remain stable in 2003 and we are confident that we will increase our market share," says Thijssen. "But margins are still under pressure and that means we will have to cut costs and be very careful where purchasing is concerned.
"We aren't afraid of what will happen," she continues. "We have a strong and versatile position in the steel packaging market. Our product range is as wide as it can be in terms of steel packaging. We are producing drums, taking them back and reconditioning them and manufacture steel pails and conical and cylindrical drums. Our business in reconditioning plastics IBCs is growing.
"Hemeyer is family owned and independent. No shareholders decide upon certain values and we are flexible enough to guide ourselves through the market and the following times. Therefore we will always play an important role and we will be a strong and reliable supplier for our present and future customers," Thijssen concludes.