More plant closures loom – news commentary by Andy McCourt
Pemara is the iconic success story in Australian label printing, having been started in a Melbourne garage in 1978 by Peter McNamara who still chairs the company. His son Andrew is general manager and Kerry Avery is technical director. Industry estimates are that Pemara produces just over 10% of Australia’s labels.
For many years, Pemara was one of Ko-Pack’s leading customers when letterpress ruled labels. More recently, Gallus has been the narrow-web press of choice for Pemara, whose client list is the who’s who of corporate FMCG brands. Digital has also proved successful with HP Indigo presses catering for the short-run label sector.
As Pemara’s reputation grew, it found expansion into Asia became necessary and opened plants in Malaysia and Vietnam where their corporate clients could experience the same high quality label products to address SE Asia’s growing consumerism. Pemara was one of the pioneers of in-mold labels where the label fuses to the container at the point of molding rather than being applied later.
Over 200 staff are employed by the Pemara Corporation and turnover is thought to be in excess of $50 million pa.
So why does such a successful company close a major manufacturing facility in Australia’s largest market? The answers are still not clear as emails to Pemara have yet to be answered but sources close to its Sydney operation say it’s a re-alignment of assets to address changing market conditions. The label equipment – including a not-so-old Gallus EM410 line – is being split between Pemara’s Notting Hill, Melbourne headquarters and its SE Asian plants. The Sydney jobs are mostly gone.
Major FMCG brand owners are looking increasingly to Asia for low-cost production and this may also be an influence on Pemara’s decision since if, say, a Proctor & Gamble type company moves its production offshore; the only way to keep their label business is to follow them.
The news comes at a time when two other long-established label printers have made major changes. Briginshaw Brothers is believed to be merging with AC Labels and pharmaceutical packaging/labelling specialist P& I is set to become part of the Visy group.
My Call
Consolidation continues unabated. The label and packaging sector has been somewhat protected from this consolidation as it has been expanding at well above the commercial offset sector. But things are changing and changing fast. Last month we saw the announcement of Tetra Pak’s closing its total manufacture in Australia and shifting production to Thailand. It appears Pemara’s situation is different as it is a ‘re-alignment’ and the firm still maintains a major manufacturing facility in Australia but the trend for major corporates to abandon manufacturing in Australia will dictate that those who provide the packaging services will have to ultimately do the same or lose the business.
Currently there are entire biscuit and sauce manufacturing lines on auction sale owing to Kraft’s re-alignment of Victorian manufacturing operations.
It seems that the brand masters of the universe have made the decision that the ‘miniscule’ Australian market can be catered for by major-league manufacturing in Asia and this covers packaged food products as well as textiles, clothing, footwear, cars and so forth. The federal government is inactive and impotent to arrest this trend.
Sadly, we can expect more manufacturers to offshore and take with them the printing, packaging and labeling that goes with their goods.
On the upside, it does open up opportunity for ‘niche’ manufacturing where Australian made and packaged goods service local markets. Dick Smith’s ‘Temptin’ chocolate biscuits and other FMCG products are an example.
Globalisation is real and happening but sometimes it can appear that, just like interest rates, its going bananas.
