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Expand and Deliver

From Hazardous Cargo Bulletin, September 2003

Jump to Skolnik coverage

With 54 million drums produced every year in Europe, it is disheartening to learn a mere 30 per cent of these are reconditioned after use. One man from the UK thinks he knows the reason why Europe is being slow to pick up on the importance of reusability in drums.

Industry veteran Phil Pease, chairman of the UK Federation of Container and Drum Reconditioners (FCDR) and European Reconditioners Association (SERRED), believes that UK reconditioners are facing "a real crisis". As the cost of proper handling and treatment of used industrial packaging continues to rise, the income from sales of the reconditioned product falters as producers use price cutting to fight for the market share.

Pease also notes that legislation is proving to be a problem in efforts to expand the UK's reconditioning programme, with the UK permitting a large volume of waste packaging to be cleaned within exemption criteria that he suggests "does not make any sense". To illustrate this, Pease refers to Schedule 3 of the Waste Management Regulations 1994. These regulations state that 1,000 tonnes of packaging or containers may be processed in a seven - day period providing that they are not made from steel, in which case one tonne may be processed in the same period. Pease's affiliates at FCDR are continually lobbying their MPs to redress the "gross imbalance".

Robert Speijer, commercial manager at Janus Vaten, reports that the past year has been a stable one for Dutch reconditioners and says: "Thanks to a strong euro and good economic situation, we have no reason to complain about business. Prices are stable but we do expect a small increase in prices for next year." Speijer also notes that "Competition in IBCs is strong." Janus Vaten has also been busy this year ensuring it has the correct technology to secure continued business success.

"This year we have concentrated on increasing production of our open top drums for the fruit juice industry, acquired a automatic loading station with a robot, improved and automated our open top line and installed two semi-automatic unloading systems," Speijer reports, proving that Janus Vaten is serious about reconditioning and is taking steps to equip their plant accordingly.

Vital Statistics

With regards to steel drums, Speijer like many others within the industry is strongly opposed to the use of drums with a controversial wall-to-end thickness ratio of 0.8x0.8x0.8 and comments: "For most products and exports they are in our opinion too thin. We cannot talk on the one hand about safety, quality and reusability while continuing to manufacture drums that are decreasing in their density." He goes on to say that, despite appearances and customer savings in the short-term, he believes that this type of drum is never going to be viable for reconditioning and using this type of drum will eventually cost customers more. "They are not suitable for reconditioning; our clients expect a thickness of at least 1.0x0.8x1.0, therefore we expect that we shall have to charge clients for collection of this type of drum." Customer behaviour is as ever demanding, and Speijer notes that: "Our clients expect higher quality, just-in-time service with smaller quantities per delivery in a shorter delivery time. There is also a greater trend towards outsourcing the work, as customers become less flexible." Customer demands are great, but Speijer believes that the company is meeting the demands and in return is giving an outstanding service, as it is a business that delivers results: "We accept and recondition around 97 per cent of all products presented to us. The remaining three per cent has to be sent to waste companies or we return the goods to the customer in order that they pre-wash the container."

Speijer is positive about the future for reconditioners, however, and believes an increase in the number of regulations will enable the business to survive. "Government backing for introducing more environmental regulations, will secure business for the reconditioning industry. We believe that as an industry we need to decrease our costs through increased automation, higher production quantities and reuse of our waste," he says.

Looking to the future, Janus Vaten has several key areas that it believes are worthy of attention, in order to secure its position as a successful reconditioning business. "We are committed to obtaining the ISO 14001 certificate, having already achieved the 9001 qualification; we are also focused on fulfilling the vast environmental regulations that the industry imposes," Speijer remarks.

Another key focus for the business is the consolidation of production along with increased efficiency.

Speijer reveals that his key customers for reconditioning include the chemical, oil, fruit juice, vegetable and linseed oil, ore and waste industries with the majority of customers stemming from the Benelux region, Germany and France.

Designer drums

The US produces 59 million drums a year and its reconditioning/production rate of 53 per cent compares favourably to that in Europe, highlighting that the US is somewhat more committed to achieving success in the industry. Skolnik Industries, which produces reconditionable drums, has seen its profile raised over the past year. Company president Howard Skolnik believes that customers and other drum manufacturers alike see the company as a "boutique manufacturer". He affirms this belief by commenting that "while most of our products do resemble steel drums, the specifications and options that our customers require make the end products a breed apart from the conventional look-alikes." Skolnik's experience as a vendor has allowed him to follow customer trends and he states that customers today are increasingly concerned that the reconditioned drum they are buying meets exact specifications before committing to the purchase of what is essentially a used product. Skolnik comments, "We are seeing more companies inspecting their drums for critical dimension tolerances, and customers are verifying that what they are buying meets the design and performance specifications for the product." This suggests that trust is one factor the industry is still struggling to overcome. However, a bigger problem still faces producers such as Skolnik in the competition from manufacturers of steel drums that endeavour to continually decrease wall thickness ratios.

Single use is no use

The production of containers that have a wall thickness of 0.8x0.8x0.8 poses real problems for reconditioners as they strive to promote their services. Skolnik believes that introducing thinner steel drums poses problems on several levels. "Drum failures due to material handling are directly related to the metal thickness of a drum. I am very opposed to a drum of 0.8 mm construction, especially when used for dangerous goods. In addition to high in-field failure ratios, these drums are designed for single use, and not to be reconditioned." This provides the industry with a further problem to overcome: the creation of a drum that is manufactured with no intention of reuse. Skolnik goes on to elaborate his position. "This is effectively a waste of raw material and ultimately reduces the raw material that reconditioners need to produce their products." This highlights the fact that drums of this nature are not purely seen as competition by reconditioners and their affiliates but as direct obstacles. The possible repercussions of customers switching to thinner drums on a long-term basis are potentially disastrous, fears Skolnik: "When customers experience high failure rates with these thin-walled drums, they will not return to thicker walled drums. Rather they will most likely move to another form of packaging. This means the short-term savings of thin gauge actually results in the long-term loss of future drum users." Should the trend continue in this way, a highly volatile period for drum users and manufacturers seems certain to lie ahead.

Business as usual?

Looking to the future, Skolnik is uncertain what market conditions will emerge from what is already a changeable climate, with the business community "plagued by the unknown". Steel tariffs also pose a threat as and when they end, as Skolnik predicts: "We are trying to do business as usual, but while the introduction of steel tariffs did require us to raise the prices of our products, I am starting to be concerned that when the tariff is over, our customers will be asking for price decreases. In fact during the tariff period, so many other raw material, utility and labour expenses have risen, we are not able to offer any decreases." The possibility exists that more and more customers will be pushed into purchasing cheaper, thinner drums once again because of price - a vicious circle for manufacturers and reconditioners alike. As seems to be the norm, when a customer accepts an increase in price they demand an increase in service and this is no different at Skolnik. "Transit damage has become a major issue for our customers," Skolnik explains. "They will not accept drums that are scratched or dented due to transport. Thus, more substantial packaging prior to shipment is being requested. Boxing, bagging, wrapping and palletising are the norm amongst our shipments. Though adding to the cost, the structural and cosmetic integrity of each drum is now of great importance to our customers."

Whiter than whiteIn light of its ambitious plans

for the next financial year, Delta Containers looks certain to continue to prosper and maintain its reputation as a leading reconditioner for intermediate bulk containers (IBCs) and drums. Suppliers of new and reserviced IBCs for the transport of dangerous goods, the company also follows this through with a laundry service exclusively for used packaging previously holding dangerous goods. Sales and marketing director Adam White says Delta has ambitious plans for expansion, including the construction of a new washing plant for L-ring drums and a completely new building housing a cleaning line for IBCs, scheduled for completion in 2004. Also on order is a new step-frame trailer, ordered to maximise efficiency and capable of carrying empty IBCs three high. "These will allow us to offer very competitive delivered prices to customers buying large volumes of reconditioned containers or who have large laundry requirements." White explains. The market for reconditioners is going through volatile times, he believes, not entirely eased by price cuts being implemented by IBC manufacturers. "In the short to medium term prices are going to continue to fall under pressure from new manufacture price wars. However, prices can only go so low for so long." The bottom will have to fall out of the market at some point, as "manufacturers' pockets for sustaining losses are not infinitely deep." White believes Delta Containers will avoid being caught in the drag of this dilemma due to "the development of a new, efficient plant".

Return to sender

Delta also reports a healthy increase in the number of users of the return ticket schemes it takes part in on behalf of a variety of companies. Amongst others Delta boasts Mauser, MIPI, Fustiplast and Greif as customers. In addition to this service the company also offers its own individual container collection service via the website, offering free collection of used containers from anywhere in the UK and Ireland within certain conditions. White believes the way forward for businesses operating in the recycling industry is to accessorise existing services by offering additional services of benefit to customers. Delta has already begun this process by offering services such as " 2.5 year UN testing, IBC tracking software, free-of-charge container collection service and rebottled containers". Continuing the total package ethos Delta is aiming for, the company has reacted to an increase in customer enquiries regarding the safe transportation of their dangerous goods and accordingly has employed a Dangerous Goods Safety Advisor (DGSA) to ensure customer concerns are fully investigated. The next year for Delta is to be fully focused upon broadening the product spectrum, with the development of the plant certain to be a key focus alongside the effective positioning of the company as a market leader.

Echoing the concerns of White is Doug Silverman, director of marketing, of Hoover Materials Handling Group, who believes the future of drum and IBC reconditioning is uncertain, and will remain so until services offered are improved. He believes it is critical that methods are found to drive down the cost of the reconditioning process. "Reconditioners will need to find ways to clean more containers, faster with less scrap," he comments. He also reinforces the notion that price is a key area of concentration, should reconditioners hope to have their output be taken seriously as a credible alternative to new containers. "When the cost differential between new and reconditioned containers is negligible, end users will always choose the new container because of higher quality and uniformity," he warns.

Silverman underpins this notion as an area that Hoover will target in order to maintain its position as a dependable reconditioner. "Our growth plans will focus on developing new products and offering new services as customer needs evolve." The focus on new products is underscored with the announcement this month that Hoover is to hand over its Industrial Packaging Business Unit to Mauser. The German company looks set to strengthen its market position through the acquisition of Hoover's blow-moulding operations, including Hoover's limited-use IBCs facilities in Ohio and Alabama in addition to its plastic drums plants in Arkansas and North Carolina. The company will retain operations in Nebraska. Company president Ernie Mathia remains upbeat about the implications this takeover has for the company: "The sale of our blow-moulding operations allows us to focus our efforts on our core business and long-term strategy. Hoover will continue to manufacture the high quality metal and rotationally moulded products our customers expect from us. Additionally we plan to grow our presence in other products serving the liquid and dry material handling markets." With so many companies now realising that looking forward is imperative for the survival of the reconditioning industry, this should lay the foundations for a strengthened reconditioning industry.