full order books, high levels of investment and an optimistic outlook. now there&rsquos a sentence that you might want to read again bearing in mind 2012 is supposed to be a year to batten down the hatches. but in the contract packing sector, the story is markedly different. rodney steel, chief executive of the british contract manufacturers and packers association bcmpa, says &ldquoas i speak to members, almost without exception, they have got very full order books. the tough economic times are likely to benefit the copacking industry rather than not. it&rsquos obviously tough, but there are more people outsourcing.&rdquo it&rsquos refreshing to encounter a segment that spots opportunities during downturns. so why is this the case and are there any clouds to spoil contract packaging&rsquos sunny outlook according to steve whitehouse, managing director of strategic packaging consultancy spc, in these tough times, customers want to use financially stable businesses to reduce potential risks. his firm works with a number of copackers and other packaging suppliers. &ldquothis is why, in recent years, copacking has increasingly been done with major logistics providers. but customers are also realising that some of those firms do not necessarily have the expertise or resources to match customers&rsquo needs.&rdquo the result, he suggests, is that professional contract packers are coming back into play, by investing in equipment and accreditations. logistics providers are themselves investing in contract packing operations to retain core business. granby marketing services managing director jo varey says that while the desire to reduce cost as been a major factor driving business overseas, quality is also very important. &ldquosome of the work that&rsquos been sent offshore comes back and the quality is not great. in the long run, that can actually increase costs if the product has to be reworked,&rdquo she says. &ldquothere are also transport costs that need to be taken into account. it&rsquos important to understand the entire supply chain.&rdquo furthermore, for retailers, having a supplier that is not located too far way is important they can be nimble and react quickly to changes in shoppers demands. of course, the fact that work has returned to uk manufacturing from china does not mean that international trade is no longer important. for example, logistics firm akw, which has invested £150,000 in new equipment for its contract packaging division, is offering inspection services for firms targeting overseas markets with specific standards. there is also the possibility for contract packers to win business from foreign firms selling into the uk. lenham storage specialises in storing imported foods and a contract packing operation has been a natural extension. managing director keith abrehart says &ldquoas more goods for the uk market are manufactured overseas, that has increased the opportunities for ukbased copackers. this stems from the desire of the foreign producer to limit the number of countryspecific lines being exported, and so the products are repacked or wrapped within the uk to suit the home market.&rdquo experience and knowledge the need to reduce costs &ndash and a wariness to invest &ndash is certainly at the heart of the outsourcing trend. &ldquothere&rsquos reluctance among some companies to invest in capital equipment, particularly for new products,&rdquo says steve nicholls, managing director of complete core. but, copacking is more than just manufacturing. &ldquopart of what we do is work with entrepreneurs&rsquo enquiries to bring extra experience and knowledge to improve the design efficiency of a particular packaging medium. we can see how to approach the manufacturing to offer the lowest costs,&rdquo says nicholls. and a critical element to copacking is staff. one potential headache in 2012 is the agency workers regulations. this legislation came into effect last october. after 12 weeks&rsquo employment, a temporary agency worker&rsquos employment conditions are the same as for staff that have been directly employed by the company. spc&rsquos whitehouse says &ldquothe regulations may increase costs and reduce flexibility, but good companies had been working on this andwill not be impacted too heavily.&rdquo of course, all firms will be bound by the regulations and, as such, they will create a level playing field. complete core&rsquos nicholls says the firm has fostered excellent relationships with suppliers to be able to adapt staffing levels as necessary. &ldquoto get the best people, you need to offer a good working environment and we have worked to develop labour that know us and enjoy working with us.&rdquo granby&rsquos varey adds &ldquohistorically, we worked with agencies, but it ultimately wasn&rsquot working for us as we didn&rsquot know who was on site. we&rsquove now got a directory of workers we can call on, meaning we can take on additional resource at short notice.&rdquo logistics firm widdowson group says it has considered a number of options to ensure that neither the business nor the agency workers were compromised by the new regulations. &ldquounfortunately, nobody in our business has a crystal ball, so what&rsquos around the corner in terms of usage is unknown. all we can do is respect and abide by the regulations and continue to deliver an uncompromising service to clients,&rdquo says operations manager clarke robinson. if the sector is confident going forward, what are the areas of particular growth the bcmpa encourages its members to be more professional and many seek certifications such as brc certification. complete core, for example, is licensed with hm revenue and customs and can handle alcohol. the bcmpa&rsquos steel suggests that members are also increasingly thinking about organic certification. &ldquoit&rsquos ultimately down to the firms to decide exactly how it will affect their market, but there&rsquos certainly more demand for organic and we&rsquove seen quite a big increase in the number of sales enquiries,&rdquo he says. olympic opportunity widdowson&rsquos robinson echoes the view that uk companies are beginning to look at more natural based products, particularly in cosmetics. he also points out that 2012 is shaping up to be a year of major events, starting with the queen&rsquos diamond jubilee and the london olympics games. &ldquothese occasions will have an impact on a wide range of products that are currently offered in standard formats,&rdquo he says. &rdquo there seem, then, to be a lot of good things for copackers to look forward to, and further investment is on the cards as firms seek to build on the available opportunities. benchmark packaging, for one, has earmarked £500,000 to spend on management, facilities, processes and new products in order to further develop its contract packing division launched last year. spc&rsquos whitehouse says &ldquothe year ahead will remain a tough one, and companies will have to remain lean and efficient to survive. but there are opportunities out there for those capable and willing to invest. for those who can invest in the right areas, they will ultimately take advantage when recovery does eventually arrive and there will be good prospects for growth.&rdquo if the outsourcing trend continues, it would suggest that an improving economy could mean the future is very good indeed for the contract packing sector. key challenges in contract packing economy the economy is likely to remain very tough in the coming year and no sector is likely to escape unscathed. that said, contract packing is perhaps more resilient than most and will be looking for increased outsourcing from major clients. agency worker regulations the regulations, that came in last october, have the potential to increase costs and reduce flexibility, a particularly important factor in contract packing operations. further information on the regulations is available from the department of business, innovation and skills website. it makes it even more crucial for copackers to build and maintain their relationships with customers, both new and existing, to stay ahead of their rivals. the year in copacking january 2011 wasdell packaging orders new equipment to expand new facility february easypack boosts capacity with kodak platemaking upgrade to replace ageing equipment march chester medical solutions achieves ps90002001 certification and follows a £500k investment may bluefrog invests £40,000 in steam tunnel and sleeve applicator in a bid to target the drinks sector june benchmark packaging announces plans to invest £500,000 in a new contract packaging service july belpac targets aggressive expansion over the next three years after buyout from jeyes august codex solutions acquires the assets and staff of premier contract packers september sca contract packing solutions awarded quality management system iso 90012008 certificate october wasdell packaging buys storage and distribution specialist quantum straightforward november akw invests £150,000 in steam sleeving machine in an effort to beef up its contract packing offer december f t short spends £50,000 in equipment and promises to &lsquorevolutionise relabelling&rsquo with investment december expac announces its plans to invest £1m in facilities after moving to a new site contract pack in numbers £750,000 amount invested by complete core to move to new site 16 new members of the bcmpa in 2011 20 increase in sales leads circulated by the bcmpa to its members compared to 2010 1,400,000 number of temporary workers in the uk
