Page 36 - Packaging News magazine November-December 2022

FOOD PACKAGING
Baby steps amid supply chain crisis
Jamestrong Packaging’s series of investments in high-tech plant capacity enabled the canmaker to weather the perfect storm of challenges that hit the infant formula market in recent times. Karen McKenzie reports for PKN.
For consumers already facing short- ages, empty shelves, higher prices, and purchase limits set by retailers, the clo- sure of Abbott was disastrous as they could not source formula to feed their babies. For an industry already failing to meet demand, it was the straw that broke the camel’s back.
OPERATION FLY FORMULA
As the first major initiative in response to the crisis, President Joe Biden invoked the Defence Production Act and launched Operation Fly Formula. This initiative authorised the use of Department of Defence contracted commercial aircraft to pick up infant formula from overseas that met US health and safety standards to get it on to store shelves as quickly as possible. At the same time, the FDA announced that it would streamline approvals so that more overseas companies could make such shipments.
As the Biden administration pulled out all measures to remedy the crisis, formula producers worldwide stepped up to help. It has been widely publi- cised that Bubs Australia recognised this unique opportunity and was the first to submit an application to the FDA. Due to a strong control of sup- ply chain security and having complete control of its wholly owned production facility, Bubs had sufficient stock and was able to take steps to increase the level of future production immedi- ately. With the plant moving to a 24/7 operation running three shifts a day, the company could meet the demand and prepare for the future, but what of the packaging suppliers? It is not only the infant formula industry that has faced challenges since the pan- demic; the industrial world, already reeling from the US-China trade war and the drawn-out impact of Brexit, faced new challenges as factories ceased or reduced production, and cargo remained in warehouses or on the docks. Covid-19 affected the econ- omy worldwide. While many industries suffered, the metal-packaging indus- try experienced extraordinary global growth, and the subsequent rise in demand for raw materials created a global challenge for the metal packag- ing industry.
THE CHALLENGE FACING JAMESTRONG PACKAGING
For Jamestrong Packaging Australia, the challenge was real. According to Michael McAuliffe, key account
IN 2019 PKN Packaging News reported that Jamestrong Packaging had opened a $15million canmaking
facility in Auckland, New Zealand, fol- lowing increased demand for infant formula. The new facility was in addi- tion to existing high-care infant formula can manufacturing plants in Hornby, Christchurch and Kyabram, Australia. Over a three-year period, the invest- ment in these facilities, along with a $13million state-of-the-art KBA Metal Star printing press in Milperra, NSW, was in the region of $52million.
The upward trajectory of the infant formula market in Australia and New Zealand and the increased demand from international markets, espe- cially China, saw formula dubbed as white gold as the rush showed no signs of slowing down. As management at Jamestrong took steps to capitalise on the continued local and offshore demand, they had no idea that they were positioning themselves to weather a bigger storm that lay ahead.
THE PERFECT STORM
The pandemic, strict formula import regulations and widespread supply chain issues, all compounded by a nationwide recall by the largest infant formula producer in the US, created the
perfect storm resulting in a national shortage of baby formula in the US. Baby formula was already affected by pandemic-related supply chain prob- lems when Abbott Laboratories issued a large-scale recall and ceased production due to possible bacterial contamination after two babies allegedly died after consuming Abbott formula.
Historic strict trade restrictions and high import tariffs created an enor- mous market concentration in the US formula industry, with ninety per cent of formula being produced by just four companies, of which Abbott accounts for over forty per cent.
Above: Located in the heart of Victoria’s food belt, the Jamestrong Kyabram plant has a strong food safety culture as the largest supplier of decorated infant formula and nutrition powder packaging in Australia.
36 ❙ NOVEMBER – DECEMBER 2022
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