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.
In 2019 PKN Packaging News reported that Jamestrong Packaging had opened a $15 million canmaking facility in Auckland, New Zealand, following increased demand for infant formula. The new facility was in addition to existing high-care infant formula can manufacturing plants in Hornby, Christchurch and Kyabram, Australia. Over a three-year period, the investment in these facilities, along with a $13 million state-of-the-art KBA Metal Star printing press in Milperra, NSW, was in the region of $52 million.
The upward trajectory of the infant formula market in Australia and New Zealand and the increased demand from international markets, especially 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 problems 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 enormous 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.
For consumers already facing shortages, empty shelves, higher prices, and purchase limits set by retailers, the closure 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 publicised that Bubs Australia recognised this unique opportunity and was the first to submit an application to the FDA. Due to a strong control of supply 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 immediately. 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 pandemic; 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 economy worldwide. While many industries suffered, the metal-packaging industry experienced extraordinary global growth, and the subsequent rise in demand for raw materials created a global challenge for the metal packaging industry.
The Challenge Facing Jamestrong Packaging
For Jamestrong Packaging Australia, the challenge was real. According to Michael McAuliffe, key account manager at the company, they were initially unsure that they would be able to meet the targets. He told PKN, “Initially they wanted everything within one to two months, with lead time on raw materials we usually need to know months in advance.” After the initial concern of meeting deadlines, forecasts were prepared, and the manufacturing could be spread over several months. McAuliffe says, “There were set dates for flights, and the initial panic was that all of those flights were leaving straight away, but as it turns out they were spread out over several months, so we have been able to manufacture and meet that demand.”
Andrew Buchan, GM Technical and R&D at Jamestrong, commented, “With less than four weeks’ notice for the initial extra orders, our printing and canmaking teams had to move fast to ensure that we met this deadline. Fortunately, due to us putting in contingency stocks due to the global supply chain crisis, we had sufficient extra materials to respond to the need immediately.”
There is more to “responding to the need” than simply meeting supply. When it comes to the production of baby food, only the highest standards will do, hygiene and safety are non-negotiable. Jamestrong’s specialist infant formula can plant in Kyabram, Victoria, Australia, where the cans are made, has a specialist high hygiene clean room with state-of-the-art, high care facilities ensuring the highest levels of precision and protection. While all the cans have been supplied from the Kyabram plant, other Jamestrong facilities involved are the end-making plant in New Zealand and the material preparation (coating and printing) plant in Sydney.
In 2014, Jamestrong developed a strategy around infant formula food safety that encompassed food safety systems and physical plant for printing, end-making and canmaking, ensuring consistency of quality standards across all parts of the process. In addition, Jamestrong Packaging has achieved accreditation to the globally recognised FSSC22000 Food Safety System and ensured compliance with specific compliance requirements and standards, including USFDA Regulations, European Food Safety Regulations and Chinese GB (Guo Bio) Standards.
In July this year, the Australian formula manufacturer received formal confirmation from the Biden administration to position itself for a more permanent presence in the US market; this is good news for Jamestrong.
Buchan says, “The important thing is that we reacted quickly to produce the cans and thank goodness we were able to do that from our stocks of materials. Now that it is a steadier state, we can build that into our plans to meet future deadlines.”
While a $52 million investment that began in 2014 may have just been aimed at the Asia Pacific market, it was a strong foundation upon which Jamestrong Packaging Australia was able to support a major customer.
The confirmation of ongoing orders from the US for Australian-made and packaged infant formula demonstrates that, in this instance, baby steps into a new market should pay dividends for years to come.
This article was first published in the November-December 2022 print issue of PKN Packaging News, p36.
