As an industry pioneer and leader, we remain dedicated to investing in innovation to push the boundaries of our industry. We have been around long enough to know that you can’t rest on your laurels, you must drive yourself faster and in a more focused manner than your competition. We have a duty to our customers to continually find new ways to remove waste and variability to improve production efficiencies. We also see our role as a leader to expand industry boundaries and a prime example would be our new multi-layer technology solution. Leadership implies a duty to take the industry to new levels, to expand our addressable markets and generate new opportunity for our customers. Internally, we apply the same relentless focus to improve efficiencies, speed and consistency. Global markets are here to stay and to compete today you must have a better team, move faster and be relentless. After all we have a duty to perform.
The core markets we serve with our systems and moulds are beverage and food packaging, personal care, home care, closures and medical. In our Hot Runner business we extend our reach into automotive, personal electronics, and other select technical applications. Not every business segment generated the same level of growth in 2016, but we were pleased with our overall organic growth.
Globally we expect further growth over 2016. There will be regional differences as some economies are struggling more than others. At the same time in a few key markets confidence in the overall economy is growing and investment levels are increasing. As we have moved into 2017, we are optimistic about continued growth in packaging with the introduction of our Multi-Layer Technology. We feel this is a revolutionary development that will provide improvements in package performance and economics – extending the addressable market for PET by driving conversion from other packaging materials.
We also have a growing number of applications beyond PET for Multi-Layer Technology and see opportunities to expand the market for injection moulded plastics. We believe we can take back some of the space lost to thermoforming and displace other materials. I’ve been around long enough to remember the days when plastics were displacing other materials at a much higher rate than they are today. I believe that in 2017 we will start to see conversion rates growing again.
We are also encouraged by the launch of our next generation HyCAP4 system for beverage closure moulding, as well as the more recently introduced HyperSync integrated system for moulding specialty packaging applications. The integrated systems approach is working as customers recognize that this delivers better productivity and part quality at a lower total cost of ownership. We have also recently created a dedicated customer success management organization, which is committed to proactively supporting customers, building stronger partnerships and ensuring customer investments in Husky equipment are optimised. Bottom line is we expect to have a good 2017.
K Show 2016 was extremely successful for us, apparent from how busy our booth was throughout the entire duration of the show. The platform allowed us to really showcase the diversity of the markets we serve, and demonstrate our latest solutions to serve each of these markets. Our technology was very well received and we had great meetings, including some that resulted in sales.
Industry tradeshows have long played an important role in helping us launch our biggest products, showcase our existing solutions and connect directly with existing and prospective customers – and they will continue to play a vital role for us. We experimented for a few years by passing on a few tradeshows. Our other initiatives generated some success and served specific purposes, but didn’t replace the benefits of participating in a world class tradeshow. There’s no question the number of connections that can be made at tradeshows is very attractive, and we will continue to look at tradeshow opportunities as an integral part of our overall communication strategy.
Achieving the highest levels of engineering have and will certainly continue to be critical when developing industry-leading technology solutions. We have always strived to offer our customers state-of-the-art engineering, which has proven to be one of our main differentiators. The nature of engineering and what it means is changing however. The next generation of great products with rely not only on traditional core engineering capabilities in mechanical, controls and process. An entirely new field of opportunity will be generated by integrating much more intelligence into our products. That intelligence will extend beyond the production equipment to create one seamless and integrated end-to-end system. We are just now at the base of a new mountain of opportunity.
Consumers are changing. They are changing their buying habits. They demand more variety. They are quick to respond to trends. They are more health conscious. They expect increasingly higher quality. We are evolving the way we do business to get ahead of those trends.
You can expect smarter products, enhanced flexibility to support multiple SKUs, new technologies that further expand the addressable markets, and more focused customer support. You will see more products like Multi-Layer Technology that have unlocked packaging opportunities that were once limited.
Production technologies will enable new innovative package designs to be produced more cost effectively. This is leading to the development of packages with added functionality that deliver consumer convenience and brand recognition, smaller sizes and more single serve portion controlled packages, as well as increased levels of package customization. The plastic package can be cost effectively made more attractive and functional.
Husky is well-known throughout the industry for our complete system solutions for PET preform injection molding. We have taken our years of experience in developing an optimal integrated solution for the beverage packaging market and have applied these learnings to our adjacent core markets.
An example of a technology we see expanding is our revolutionary Self-cleaning Technology that significantly reduces downtime by eliminating hundreds of hours of mold maintenance a year. This development requires the integration of technologies within the mold, hot runner and machine process controls and only through this integrated system approach could this breakthrough be achieved. We see opportunities to expand the application of this technology.
In 2016, we launched our next generation HyCAP4 system for beverage closure moulding. New enhancements allow HyCAP4 to deliver industry-leading performance and productivity, significantly greater energy savings, and is equipped with intelligent features that make it easier to use.
Also in 2016, we launched HyperSync, which is our all-new, high-performance, fully integrated system for specialty package moulding. HyperSync is a synchronized system, with mould, machine, hot runner and auxiliaries designed to work together. Combined with intelligent features and networking capabilities, the increased synchronization of machine and mould processes deliver faster cycle times at a lower total part cost, with no impact to product quality.
With regards to medical, the acquisition of Schöttli in 2013 has allowed us to learn and grow our medical business by focusing on specific applications and developing mould technology that enable customers to bring the highest quality medical products to market. Medical is also a market that is highly focused on risk management. We are taking a deliberate, long-term approach to medical. We won’t take risks that put our customers in a position to experience greater risk. We will deliberately focus on finding sources of variability and bring new products to market that help mitigate and control risk.
Multi-layer technologies have been tried before but they‘ve never realised their full potential. They‘ve either been handicapped by issues with material degradation, by lower overall output in efficiency, or by significant compromises in cycle time. These factors have made it challenging to achieve a balance between enhancing package performance, while maintaining a lower part cost.
To overcome these issues we built Husky’s Multi-Layer Technology on our proven HyPET HPP5 platform for PET and our new HyperSync platform for specialty packaging applications. Both products share Husky’s core system technologies. There‘s nothing in the market today that offers a faster cycle, a higher part-to-part capability, or more efficiency. What we combine on top of that is a revolutionary melt delivery system and an extremely sophisticated control system that allows dosing of any one of a wide number of barrier materials with greater precision and speed, with no impact on cycle time. Those components are fully integrated at a system level.
We believe that our Multi-Layer Technology can revolutionise the PET and Packaging industries because of the potential it offers to unlock real growth. We see opportunities in small format carbonates, sensitive beverages including juice and dairy, food, personal care and home care. This is possible because of our ability to cost effectively enhance the performance of the package to give it more decorative and barrier capability, all while providing a safe and secure product, a better looking package, and at a very competitive part price.
Husky’s Multi-Layer Technology has the capability to accurately and consistently deliver only the required amount of barrier material to meet an application need. This enables the amount of barrier that is in each bottle to be reduced, which means less barrier material is entering the recycling stream for a given number of packages with a specific shelf life requirement.
Barrier additives are used extensively in plastic packages today, typically blended with PET. Husky has proven that a multi-layer structure is much more effective than a blend, and our customers have been able to reduce the amount of barrier additives used. Furthermore, some barrier material may be able to be separated by elutriation, which reduces the amount of remaining barrier content in recycled PET.
We are working closely with brand owners, converters, recycling associations, other OEMs and NGOs to understand the new challenges and ambitions for recycling, and to find solutions to reduce the impact of packaging from a sustainability perspective. That includes developing designs that support a circular economy, finding new outlets for all packages and materials processed in recycling plants, or exploring ways to integrate new recyclable barrier materials into PET packaging.
Finally, we are working on technologies with barrier resin suppliers and others to introduce new materials that offer both superior recycling capability and better performance.
We are committed to developing a solution to solve the end-to-end challenge. As with many challenges a system level solution is required and Husky has the presence, resources and motivation to move the challenge of recyclability forward.
The plastics industry can do more to address the challenges of recycling and sustainability. The misperception that plastics are harmful to the environment, that they are a less sustainable solution to other materials persists today. That’s a shame as in many cases a plastic package has a lower carbon footprint and is potentially much more sustainable than many popular alternatives.
The move towards more efficient processing equipment has been a good step. The industry must be more creative from the perspective of the total end-to-end lifecycle of the product. New packaging and processing applications must consider the total lifecycle of the product and we have to work much more constructively with recyclers.
Husky’s goal is to offer customers solutions that will help them to achieve both business success and environmental responsibility by lowering part costs, reducing resin consumption, maximizing operational efficiency and minimizing energy use. This is beneficial both from a business and sustainability perspective as these efforts both reduce manufacturing costs and minimize environmental footprint.
Finally, we take our own global carbon footprint seriously. Husky’s 2016 waste diversion rate, which we calculate annually, is approximately 96 percent. In 2009, Husky announced our goal to become carbon neutral by 2025 and incorporated this mandate into a programme called TargetZERO. Each year since then we have calculated the emissions from our manufacturing campuses globally and have achieved consistent progress towards our goal of carbon neutrality. Additionally, every year since 2013 we have reported our emissions through the Carbon Disclosure Project (CDP), which is the largest international not-for-profit organization providing the only global environmental disclosure system for sustainable resource use data. In addition to these initiatives, Husky supports facility infrastructure investments that improve our overall energy efficiency, such as equipment upgrade and end-of-life equipment replacements and we leverage new technologies that contribute to reduced electrical consumption.
We find that both fillers and converters are united in their desire to achieve the highest output at the lowest cost. Both groups have similar primary equipment demands, but how those systems are integrated into their production environment can differ.
From a technology standpoint, for several physical reasons the quality standards that have been achieved with compression moulded HDPE closures are difficult to replicate with compression moulded PET preforms. We continue to maintain an open mind to all approaches to PET preform manufacturing, but at this point our experience leads us to the conclusion that injection moulding remains a superior process in the manufacture of PET preforms.
Husky builds more than just machines, we engineer complete integrated system solutions, including moulds, machines, hot runners and auxiliaries. All of these components are designed to work together in harmony so that our customers are able to achieve the highest levels of productivity, part quality and repeatability at a lower total cost of ownership. The best system is the one that produces the best part at the lowest total cost, reliably, whenever needed. The company supplying that equipment also needs to operate at a speed that doesn’t slow customers’ time to market. Our relationship only begins with the sale of the system. Our job extends over the useful life of that system to ensure our customers get a lifetime of value out of their investment. Those are the requests our customers have made to me over the 32 years I have been working for this company. It’s those needs that we focus on serving.
Today, relative to any other time in our history, we have an unprecedented level of innovation effectiveness through our investments in research and development. Over the last several years we have invested a significant amount to advance the state-of-the-art in preform production and other equipment. These investments have led to exciting advancements in our Multi-Layer Technology. Additionally, investments in our melt delivery technology have led to improved quality, productivity and design freedom in a range of applications that had previously been unavailable to existing technologies. We will always invest in research and development to be the innovation leader. It’s simply how we define ourselves. Nothing less is acceptable.
Future products will be smarter, intuitive and self-correcting. They will allow parts to be moulded that were previously unmouldable. They will be more productive. They will be delivered faster. They will combine the ability to deliver the lowest total cost of production with greater flexibility.
We want to establish ourselves as the leading industrial technology supplier to the plastics processing industry. We focus on a culture of innovation to ensure we are continually delivering state-of-the-art solutions to customers, with the goal of reducing their total cost to produce and helping them grow their businesses.
At Husky we maintain a regular cadence of renewal in our products and services, where we find opportunities to further eliminate waste and variability from the injection moulding process. Our product roadmap extends well into the future to ensure that we continue to address the specific needs of the various markets we serve and have the ability to release new technology at will. We are also examining critically the way we do business. An increasing investment in Lean Culture and a breakthrough level of information and material workflow automation are top priorities of the company. Finally, we are investing to improve our sales and service effectiveness and reach.
While company ownership may have changed, the fundamental aspects of life here at Husky remain the same. We still strive to find the best solutions for our customers in everything that we do, and above all else, we are driven by our culture of innovation. With some of the brightest minds in the industry here, we are confident that the life and soul of Husky is still alive and well. That doesn’t mean that what appealed to everyone 20 years ago remains a part of the company today. To work here you need a passion to be the best, to fully realise your potential, to be relentless in your pursuit of a better solution to everything we do. The DNA of Husky remains the same, regardless of our ownership structure. What differs today is that we apply that DNA not only to our products, but how we operate our business. After 32 years I can say the core of what drew me to Husky remains, only more focused, more intense.
Husky is a very global organisation, perhaps more so than any of our competitors. We have more than 40 sales and service offices worldwide supporting customers in over 100 countries. We serve a wide range of market segments, including food and beverage packaging, medical, automotive, consumer goods and electronics. We have great people, they make all the difference. To be more successful I have to constantly strive to do my job better. I have to ensure that every Husky person on our global team is pulling in the same direction and working across boundaries to serve our customers. We have a huge bench of talent and capabilities, but sometimes those resources aren’t focused as quickly and effectively on a customer opportunity or challenge as they need to be. Every single customer of Husky should feel that every part of this company is pulling for them. This I can improve.
We have increased our focus and discipline on new product launch effectiveness to make sure everyone from manufacturing to customer support is familiar with new products. To launch effectively every part of the organization must be an integral part of the innovation cycle. We are also learning to apply the same end-to-end system level innovation we apply to product development, to internal manufacturing processes. We can and must do this better.
If new trade rules come into effect with the current U.S. administration, we will deal with them as required. As a Canadian company, we respect our trading partners immensely and will adjust our logistics as required to continue that relationship, but it will not affect our overall global strategy.
Since Berkshire Partners and Omers Private Equity acquired Husky in 2011 they have demonstrated confidence in our business, management team, strategic plan and potential for future growth. We will continue to focus on meeting our commitments, building our business and exceeding our customers’ expectations in order to ensure our future success.
Faster and revolutionising the way we operate to serve emerging trends better; a more efficient producer; an expanded addressable market; an even better, more focused and more capable team; humble enough to know how to listen and learn; gaining traction with a few of our new and truly disruptive products.
We have always had great competitors and we always will. A few of today’s new competitors will get stronger, more capable, more challenging. Some of the existing competitors will struggle to survive. It’s always been that way and I hope it always will. Difficult is a frame a mind. As long as we never become complacent, we never underestimate a competitor, we never stop innovating, we refine the discipline of execution, we will be okay. We are in this for the long haul and I have never been more excited by our opportunities than I am today.