Personal Observations from the Floor of NPE 2024

I had the opportunity to attend this year’s NPE in Orlando, where I saw some interesting developments that I think are worth sharing. Most of the OEMs and aftermarket suppliers we use at BottleOne exhibited at the show, and virtually every one of them had something new to offer.

The show was massive, and I would challenge you to name a category of equipment or materials that you couldn’t find. The show was very well attended, as always, by technical, engineering, and operations people at every level from resin through finished product.

As an educational opportunity, this show has no peer in the Americas. Having missed the normal cycle for this show in 2021, there was also some pent-up innovation on the show floor.

I am always fascinated by how trends manifest themselves in finished products.  The two trends that jumped out at NPE were sustainability and verticality. 

First, sustainability. I had the opportunity to spend some time with a CFO for a bottle converter, and she had an interesting observation on sustainability. She said about 80% of bottle buyers talk about sustainability, but only about 20% are willing to change their buying habits to move the needle for their company.

That is not hypocritical in any way. Buyers must be comfortable with the sustainability vernacular before they embrace the change costs to accommodate sustainability actions. That is just human nature.

Armed with that subtle but meaningful observation, I looked through that lens as I walked the show. What I found was the 80/20 ratio inverted at the packaging equipment OEM level. It seemed like every feature, benefit, and new offering was denominated in terms of sustainability.

Even production speed, the sexiest dimension of packaging equipment specification, was articulated in terms of its sustainability benefits. Faster equipment brings economy of space, labor, and production costs, but also reduces the factory, logistics, and carbon footprint of the finished product.

There was no inference required, it was on the lips of every salesperson I spoke to. The first conclusion is simple, the OEMs have embraced the certainty of sustainability’s place at the table of the capital decisions of their customers.

That embrace puts them ahead of the customers, correct? Not exactly. I believe that buyers of finished plastic products (like bottles and preforms) might embody the 80/20 talk to action ratio, but the buyers of the equipment to make those products are already making decisions based on sustainability.

My conclusion is that capital equipment purchasers are inclusive of sustainability in very high numbers. OEMs have answered the bell with well-articulated capabilities and benefits. Retail and consumer pressures are needed to move bottle buyers out of the 20% category.

The second trend was verticality. When planning growth, companies consider three dimensions, similar to an xyz graph. Growing horizontally (the X axis) means that you sell the same products to more users. That means you open new geographies and support the new territory with farther reaching logistics and customer service.

Companies target horizontal growth when they have or expect to have excess production capacity. Market share of the served territory is their benchmark.

Vertical growth (the Y axis) is selling more products to the existing customer base. Verticality requires investment to sell new products to old customers. Success is denominated by share of customer spend.

Vertical growth requires entirely different things than are required for horizontal growth. In verticality, the customers have been chosen, and the company adds products to service those customers.

Horizontal and vertical growth require very different strategies and investments. Many companies dream of growing in both dimensions simultaneously using some unified growth strategy. That is a great dream.

The third (Z) axis is innovation. Innovation can create growth with existing customers as well as open new customers in new territories. Like the horizontal and vertical growth dimension, innovation requires its own growth and investment strategy.

The innovation axis operates on its own business cycle, much less interdependent than the horizontal and vertical axis’ dynamics.

An observer can watch M&A activity in the packaging space and get a great idea of which axis the big money is backing. The market, in general terms, will be flexing on one axis and contracting on the other. While M&A is operating at the 70,000 ft altitude, capital equipment manufacturers operate at ground level.

I have believed that since the pandemic, the packaging equipment market is flexing in the vertical dimension. I saw that flex from BottleOne OEMs at NPE. Tech-Long exhibited a compression closure machine that I have never seen from them previously.

It was built to be compact, indestructible, and complimentary to their existing equipment lines. Clearly a vertical play. SiPA exhibited a rotary platform that was new to me as well and looked very interesting. Additionally, SiPA had a new model on the floor for R&D work.

As you look around the industry, most of the lab machines do not carry a SiPA badge. It’s another vertical play where an OEM expanded a product offering to grow their share of spend at existing customers.

Verticality was not limited to equipment suppliers. I spent some time with a resin producer who has invested in selling a PCR version of their resin to converters. I have always been a big fan of this development, wherein a BottleOne converter can buy resin with PCR already compounded into the blend. I would argue that our segment is currently in a vertical flex.

My WOW! Award at NPE goes to Husky. They were running a  HyPET HPP6e 400 system producing a lightweight 5.89 gram, 100 percent rPET preform with a 4.5 second cycle time on a 144-cavity, 45-pitch mold. This individual platform can kick out a billion parts per year.

That is an astronomical achievement. Five or ten years ago that was considered a four minute mile type of barrier, and they blew right through it … on the NPE floor for the world to see.  I wouldn’t have believed it if I hadn’t seen it myself.