The takeover of the independents one year on

John Weedon, Managing Director of the Weedon Group, considers the effect of the recent take-over of TRM Packaging on buyers of corrugated packaging.

In the 12 months since I last wrote about the multi-national paper-making groups buying up a growing number of independent corrugated manufacturers, the trend has increased. TRM, until recently the largest independent corrugated packaging company in the country, became the latest to go when it was sold to DS Smith in March.

Today the UK corrugated market is dominated by five giants of the industry – DS Smith, Rigid VPK, Cepac, Saica and Smurfit Kappa. Together they supply about 75% of the corrugated market. Sales by the independent sector – those companies that are not part of the ‘big five’ – are now thought to amount to only about £350 million a year. That figure has decreased by some £150 million over the last two years alone.

As the big five swallow up the independents, buyers’ options are being eroded. True, the bigger the corporation, the greater the potential for economies of scale, and multi-national paper-making groups may be able to provide more economical services to their customers – assuming they pass on their cost savings, of course!

But what is widely known is that monopolies have a tendency to create complacency – and then service can easily become a casualty. This may be a key consideration, in particular, for small and medium-sized businesses, if the big corporations don’t take the trouble to deal with individual needs. At the same time, many of these companies are being pressured by retailers to lower their costs, so they are being squeezed from both sides.

With the loss of TRM, there are now only five significant independent corrugated manufacturers left in the UK equipped with their own corrugator and the ability to both manufacture their own corrugated board and convert it into packaging.

For example, the Weedon Group is a family-run operation. We have been trading since 1987 and have developed into a business in three locations nationally, with a combined turnover of over £22 million. We offer our customers a total solution for their packaging and display requirements.

While you don’t have to be a giant multi-national to provide a complete packaging solution, we and the other independent corrugated manufacturers also offer something that the big five cannot – a different sort of approach.

Because every customer matters to us, we put a great deal of effort into cultivating – and maintaining – relationships. For example, we take the time to understand our customers’ concerns and the pressures under which they operate. Our independence also makes us more flexible. So, if a customer has an emergency, we can adjust our procedures to meet a tight deadline, or change a design at short notice.

Many buyers appreciate this individual level of service, and some of TRM’s customers may well find their way to the remaining independents rather than becoming just small fish in a multi-national pond.

But there is no denying that size does bring economic advantages and security – and the remaining independent corrugated manufacturers will have to try that much harder and offer even better service to withstand the inexorable march of the titans.

And that is very good news for buyers!