Huhtamaki CEO tells how to lose one’s shirt

August 20, 2008

paper02_web.jpgCombining paper and packaging production may seem like the obvious union, but head of Finnish packaging maker Huhtamaki said it proved time and again to be a money loser and his company will not go that route.

Huhtamaki manufactures a wide array of food and beverage packaging and other packages for industry. It buys raw materials from forestry companies and converts them into packages.

“Over time, paper and packaging companies have been together in many instances, and in most cases they lost their shirt in this combination,” Huhtamaki Chief Executive Jukka Moisio told Reuters Paper Summit in Helsinki.

Moisio said Huhtamaki would remain a converter and not get into the basic materials business of the pulp and paper companies. “One has to be pragmatic.”

While paper making is a global business, producing packages is local because it makes no sense to transport packaging around the globe, he said.

“From the logical point of view and how you operate, the paper industry is global, so you make paper reels … and that can travel to Asia or back. (When) you make packaging, you have to actually respect that the packagings cannot travel very long. So you actually have almost an opposite way of looking at the world.”

Moisio said that Huhtamaki’s strategy is to focus on the areas where it has knowhow and competitive advantages and to follow its customers around the world to places where it can supply them locally. “Packaging is a multi-local business,” he said.

Huhtamaki’s peers include such packaging manufacturers as Pactiv and Bemis of the United States, UK group Rexam, Australia’s Amcor.

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