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Dow’s New Approach To Packaging Innovation

Firm spends heavily to become go-to polyethylene packaging partner

by Alex Scott
April 27, 2015 | A version of this story appeared in Volume 93, Issue 17

Photograph of plastic packaging machinery.
Credit: Dow
Dow’s application lab in Horgen is full of packaging machines, including one that can create a film with up to seven layers.

The popping, thumping, and whooshing in Dow Chemical’s 22,000-sq-ft polyethylene application testing lab in Horgen, Switzerland, has become a little louder in recent weeks. It is there, by the shore of Lake Zurich, that Dow has been assembling a fleet of the latest extrusion, sealing, pouch-making, and film-laminating machines for polyethylene packaging.

The machinery in Horgen cost Dow more than $20 million. Renovating one of four floors of the Horgen lab cost a further $10 million. The firm is developing three other major application testing labs in São Paulo, Brazil; Shanghai; and Freeport, Texas, and additional specialist testing labs in locations that include Tarragona, Spain, and Cannes, France.

And yet Dow doesn’t want to use the labs much. Rather, the company is offering them to customers to play in at no cost. This “free candy” strategy is designed to attract prospective customers—the plastics converters that turn polyethylene into packaging—as well as the firms that make branded consumer goods.

To make its offer even sweeter, Dow is also providing customers access to analytical and physical chemistry labs and the use of novel packaging technologies that might unlock new markets or reduce packaging costs. In this way, Dow hopes to position itself not just as a supplier of polyethylene but as an essential provider of packaging technology. Dow has named its technology-rich offering Pack Studios.

“This is for the whole of the industry that wants to collaborate with us,” says Marco Amici, European marketing manager for Dow Packaging, pointing to a machine in the Horgen application lab that can extrude seven layers of film at a time.

Polyethylene is a huge business for Dow. The firm’s performance plastics division, which includes polyethylene, generated close to 40% of its $58.2 billion in 2014 sales. Moreover, a major hike in polyethylene sales is in the cards: The firm plans to add more than 2 billion lb per year of polyethylene and specialty plastics capacity across the globe by 2017.

The pressure is already on to ensure that Pack Studios pays off. Some 20% of profit for Dow’s polyethylene packaging business needs to come from the Pack Studios technology suite within 10 years, according to Martin Pavlik, group leader for Dow’s plastics development service in Horgen. “It’s not a cheap thing,” Pavlik says. “But we believe it will put us in pole position for the future.”

Credit: Dow
Dow has an exclusive license for PacXpert soft-bottle systems.
A soft bottle.
Credit: Dow
Dow has an exclusive license for PacXpert soft-bottle systems.

A key advantage of Pack Studios is that it will help Dow get a clearer view of what customers need, whatever the market conditions, Pavlik says. Dow used to rely heavily on lab data to determine the best packaging solutions, but industrial-scale testing in the new application labs is providing a better understanding of customers’ technology needs, he says.

Dow is confident that the intellectual property (IP)-protected packaging technologies it can offer will be a cornerstone of Pack Studios. An example is a glue-free sealing system for complex packaging seams that works by heating polyethylene molecules with ultrasonic vibration. The ultrasonic sealing system can accelerate packaging production, reduce energy use, and work with thinner polyethylene film. “It will change part of the industry,” Pavlik contends.

Dow codeveloped the sealing system with Fraunhofer IVV, a German process technology firm. Dow is hoping that consumer product giants such as Nestlé, located nearby in the Swiss town of Vevey, will be tempted to test such technologies.

The technology offering that Dow’s executives in Horgen seem most excited about is PacXpert, a collapsible “soft” bottle made from polyethylene. Benefits of PacXpert are that it can be squeezed to release viscous mixtures such as pig feed and that its neck can be easily bent to avoid spillage, such as when pouring windshield wiper fluid.

Dow hopes PacXpert will also be used by the paint industry. Air could be squeezed out of the soft container to prevent skin formation on the paint surface. Dow has secured an exclusive license for the technology from Asheville, N.C.-based Smart Bottle.

“The key is to allow the customer to have a specific technology that is ‘IP-proofed’ so that no one can copy it,” says Fabrice Digonnet, European head of new business development for Dow Packaging.

Although it is not unheard of for major packaging companies to offer their customers some R&D resources, Dow appears to have “taken this to a new level with Pack Studios,” says Gil Yannuzzi, a packaging industry consultant based in Ankeny, Iowa. Still, it’s not yet clear if the investment will pay off.

Pack Studios undoubtedly represents a financial risk for Dow, but less than two years after the firm began rolling out the initiative, it has started to deliver good results, company executives say. With more than 2 billion lb of extra polyethylene to sell by 2017, Digonnet and his colleagues are counting on Pack Studios to generate those good results for a long time.



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