Lesson- 27 Economics of plastic packaging

27.1 Introduction

A plastic material is one which is a solid at ordinary temperatures and allows appreciable and permanent change of form without losing its coherence on the application of pressure and/or heat. The share of plastics in the packaging market has been growing at remarkable pace, partially replacing paper, glass, and metal. Because of their unique combination of properties, plastics have expanded the packaging industry to sophisticated levels.

  • Plastic containers are light weight, breakage resistant, transparent, flexible, squeezable, moldable in complex shapes, easily colored and printed, retortable, sterilizable, reusable, and recyclable.

  • Plastics have many positive tradeoffs within their array of versatile properties, including easy processing, good mechanical properties, large range of processing temperatures, lowest density among packaging materials, and (for better or worse) they are permeable materials.

27.2 Economic factors of Plastic packages

The prices of packaging containers depend on the type of material and desired shape of container. Complex conversion processes (e.g. blow molding, coating, and laminations) add to the cost of the finished package. Price of packaging products is affected by the costs of raw materials, technology competition, vertical integration and opportunities in material substitution. Prices are affected by domestic economic conditions, recessions result in oversupply and growth cycles strain production capacity.

27.2.1 Development cost

Main factors determining the cost of a package can be classified as follows.

1. Identification of package characteristics that takes into account the nature of the product, FDA requirements and customer’s needs.

2. Concept search; when several types of packaging material can equally serve the same goal, at least two different packages must be considered.

3. Design to provide the best combination of material, shape, size, appearance, color, special features, and product’s shelf-life.

4. Preparation of package models to provide a basis for evaluation and even customer research.

5. Fabrication of samples to test the package in real situations.

6. A sample evaluation program may be necessary to assess extreme processes and market conditions, i.e., rough handling or high temperatures.

7. Preparation of cost analysis and specifications taking into account results of the sampling program.

8. Test marketing to evaluate on a small-scale the whole development plan from package production to logistics and consumer satisfaction.

9. Design and specification refinements that may be necessary to improve the original concept.

10. Tooling for production including, but not limited to, molds, litho plates for caps, and containers.

27.2.2 One- time costs

One-time costs are the expenditures that are made only once during the expected time of the package.

1. Machines to make the containers, which may include, e.g. a bag former or blow molder.

2. Supplier molds or dies for the packages, caps, secondary packages.

3. Printing plates, dies or cylinders.

4. Packaging line equipment or replacement parts.

5. Equipment installation.

27.2.3 Package material costs

1. Resins or films to make the container.

2. Packaging for inbound shipment

3. Inbound freight

4. Storage and handling the package material from the supplier to the packer’s filling lines

5. Waste factor from damage and loss during container production, filling, or printing

6. Sampling and inspection

27.2.4 Packaging machinery costs other than one-time

1. Rental or lease of equipment and machines

2. Services and maintenance

3. Amortization of purchased machines, auxiliary equipment

4. Energy and utilities

 27.2.5 Packaging process costs

1. Direct labor

2. Indirect labor

3. Overhead

4. Incidental materials

 27.2.6 Distribution costs

1. Storage handling and warehousing.

2. Outbound freight.

 27.3 Main factors for cost analysis of plastic package

27.3.1 Rigid container

Food grade resins are more expensive than the general purpose grade since they require sanitary process conditions, and limitations in the use of scrap and reworked conditions. In the case of polyvinyl chloride (PVC), the addition of heat stabilizer, color, and plasticizer almost double the price of the raw resin.

27.3.2 Injection molding (IM)

IM is used for producing containers and parts, i.e., closures that require high precision in their dimensions. Main cost components of injection molded pieces are

1. Plastic resin(s)

2. Mold and cavities; the mold cost is amortized over a million pieces

3. Molding processes (labor, energy, and overhead)

4. Scrap discarded or grounded for re-use

5. Assembling, finishing, and/or decorating

27.3.3 Blow molding

The most common resins for blow molded containers are: high density polyethylene (HDPE), thermoplastic polyesters, polystyrene and PP. They make up 90% of the market. Rigid blow-molded containers, primarily bottles, are widely used in beverages, food, medicinal products, cleaning products, and many other applications. Compared to glass containers, the cost ratio of polyolefin resins to glass is 1.4 to 1. But plastic containers’ lower weight reduces transportation costs, and can more than equalize the raw material cost between polyolefins and glass containers. As a rule of thumb, the price of bulk shipment in large boxes of blow-molded bottles of natural HDPE is about 3.2 times the price of the resin at the molder’s plant. Smaller containers, 360 ml have a slightly higher factor while larger containers of 3.75 l are lower. Colored containers cost more depending on the formulation and number of pieces produced.

27.3.4 Thermoforming                       

Thermoformed packages are made from sheets of thermoplastic materials. Polyethylene, PVC, Ionomers, PETG, polystyrene, and cellulose acetate are common plastics used for thermoformed packages. The cost of thermoformed packages includes:

1. Cost of resin

2. Cost of fabricating the sheet

3. Alternatively, price of purchasing the sheet

4. Thermoforming equipment, mold, and trimming tools (Thermoforming molds are less expensive than blow molding and injection molds.)

5. Thermoforming operations that include heating of sheet, forming the container, and trimming it off

6. In the case of a blister package, heat sealing the blister to a paperboard, normally 0.015 in thick (380 μm)

7. Other costs associated with waste handling, e.g., regrinding and re-extrusion (Laminated structures are eliminated or included as reground layer; scrapless thermoforming substantially reduces the waste.)

8. Post-forming costs including stacking, packing, and shipment

27.3.5 Flexible Packaging

Flexible packaging can be presented with high quality surfaces printed by flexo, gravure, offset, or letterpress processes. Since there are several plastic materials that can be combined with foil, paper, and a variety of surface treatments, the number of flexible structures is very large. Total investment for manufacturing the web of material including the printing is very high. From the standpoint of using a flexible structure, the material cost is related to the flexible structure composition, which in turn is determined by the product characteristics, storage and transportation conditions, and shelf-life requirements. The cost of flexible packaging materials is usually expressed per area of structure, m2 or 1000 in2. The costs can be expressed by unit of package or “repeat.” 

Last modified: Saturday, 3 August 2013, 10:58 AM