EU manufacturers regain market share through new business model
China enjoys around 23 % of the global packaging machinery market. Its competitiveness is based on low prices, which are a result of the inherently low cost of labour in the country. This situation has reduced Europe’s market share from 45 % in 2007 to around 20 % today, with the total loss of the low-end segment. Chinese success in capturing the market for low-cost packaging machines means it is now turning its attention to the rest of the sector. European manufacturers are responding by actively working to redress this state of affairs. A new way to do business The EU-funded IDEA.k (Industrial design easy assembly kit) project is helping European industry regain its share of the economy packaging machine market by developing a new business-to-business model based on the sale of self-assembly kits to regional dealers and focused on a high quality packaging solution. Mr Fiorenzo Donetti, Managing Director of project coordinator Mac Due SRL, says: ‘Redesigning machines as innovative ‘flat-pack’ kits enables European companies to compete with the low-cost non-EU manufacturers.’ Manufacturers like Mac Due traditionally designed, produced and delivered packaging machines for shrink wrapping products. The machine was supplied to a network of dealers, taking around 90 days from the original order to final delivery. Furthermore, if a technician was required to carry out servicing or other work, they needed to be flown from Italy, thereby incurring additional costs. Thanks to IDEA.k the client receives the machine direct from the dealer who assembles and delivers it within one week. Local dealers empowered This approach enables the cost of assembly to be transferred to the dealers and automatically adjusted to the country of destination, thus circumventing the issue of labour cost. The dealership can now also service the machine after undergoing certified training in Italy with the company, thereby giving them a larger profit margin and upgrading their role also to that of a provider of post-sale services and maintenance. Mr Donetti states: ‘The company gets a local dealer everywhere in the world with a technician who can do the job, while local dealers can put their own brand name on a machine that boasts the quality of a manufacturer like Mac Due, who has over 35 years’ experience in this field.’ In addition, the idea of someone local who knows how to service the machines can be extended to other industrial and more complex services. Not only is the kit less expensive to produce than using conventional business methods, it is also lighter, which makes it cheaper to transport and helps reduce its carbon footprint. Mr Donetti observes: ‘Now we can put 20 kits in a shipping container instead of 2 assembled machines and the savings allow the manufacturer to maintain a competitive price.’ Everyone benefits A study conducted by Mac Due indicated there were no particular intellectual property barriers regarding the exploitation of the IDEA.k packaging solution. It also showed that while unskilled assembly work will take place outside the EU, skilled manufacturing will remain in Italy, maintaining European industry’s well-earned reputation for producing high-quality machines. ‘Extending our network will help European business as the raw material is cut here using an automated laser cutting process, thereby providing a boost to the local economy,’ Mr Donetti concludes. IDEA.k therefore offers a reliable alternative business model to the EU packaging machinery sector, whose success paves the way for new opportunities for the entire machinery industry. The final result is a European product at a competitive price and high quality that benefits the manufacturers, the dealers and the end users.
Keywords
IDEA.k, manufacturers, packaging machine, business model, self-assembly, flat-pack kits
