Plastic packaging expands deep into SADC ... but cautions against environmental taxes

By Sibangani Dube
August 2012
Prime Business
Plastic Packaging has risen to the challenge of being a multimillion-dollar 100% Namibian company manufacturing and satisfactorily supplying both local and regional packaging materials.

Over the years, plastic packaging has grown into five groups of companies; Plastic Packaging (PP) Ltd being the holding company, while Plastic Packaging Cape, Ango Plasticos, Namibia Polymer Cyclers and Polyoak Packaging have each been strategically positioned to add value and profit to the company and it is them that hit the right numbers.

The buy-in by Stimulus Holding; a BEE outfit, has added to the mix, the inclusion of the previously disadvantaged into the main stream economy.

“We feel privileged to be associated with an investment company such as Stimulus,” says public relations officer, Plastic Packaging, Schalk Burger.

The company is associated with other highly successful companies and “that excites us to have them in our camp. Being involved in many other industries, we make our input about general trade, trends and critical decisions, priceless!”

“We have grown from strength to strength and we are very proud of that,” says Burger PP is firmly rooted into the Namibian market, supplying all the retail packing material in leading supermarkets such as Shoprite, Pick n’ Pay, OK and Spar supermarkets, to name but a few. Such is a bold statement that PP uses to undertake serious business as they are ISO certified. The certification is externally conducted twice a year by SABS and for the past 10 years, they have received a clean bill of health.

The rich fishing industry has spurred the growth of the PP as they are a key supplier of vital sheeting products for export-bound fish and fish products. Examples of companies they deal with in fishing include Hangana, Tunacor and Novanam. In addition, they are one of the major suppliers of wheelie bins to municipalities.

It is interesting to learn that only 30% of PP’s products is imported, out of the manufactured 70%. The reason for imports is a result of the expensive machinery needed, which in most cases, is not justified by volumes thus turning to imports as a cheaper option.

The Namibian market is very small but this has not limited PP. The company has spread into vibrant niche markets such as the northern Cape and they are not looking back.

Plastic has gained a significant stranglehold in the northern Cape, supplying a greater part of the region including towns like Upington, Springbok, Pofadder, Keimoes, Kakamas (and surroundings), Groblershoop, Olifantshoek, Kathu, Kuruman, Danielskuil and Postmasburg.

Plastic Packaging Cape runs a fully functional branch in Upington with its own management while reporting to the mother office in Windhoek.

One of the reasons for the Upington route is the ease in the delivery of fairly cheap products to the northern Cape at the same price or even cheaper than those from the South African companies.

This is due to the fact about 98% of trucks coming into Namibia return to South Africa empty, thus transport is fairly cheap on the back route. Hence, the route is the gateway to the area. However, Burger says, “Soon, we realised that our ‘style’ was very similar to this area’s and both the customers and us were comfortable with each other, which resulted to our success.

Angola is PP’s huge and potential market. “We haven’t scratched the Angolan market yet,” says Schalk.

Ango Plasticos was created to supply this virgin market; such is the dominance that the company currently supplies markets in Lubango, Benguela, Huambo and Luanda. To cut the costs, plans are afoot to establish a manufacturing factory in Lubango to fully supply that market. The Zambian market is beckoning too while the Botswana market has a limitation of its closeness to Gauteng, making it hard to beat that competition.

PP Namibia recently went into a 50/50 joint venture with a South African company (located in Windhoek, Prosperita Industrial Site) that exclusively specialises in liquid packaging. This has enabled the local industries to have this product at affordable rates.

PP Namibia scored another first in Namibia by establishing Polymers Recyclers in Okahandja. This entity is geared towards recycling material, which is sold locally and regionally (mainly so, South Africa).

“We have nothing to waste and we are excited about our greening process,” emphasises Burger.

He, however, feels that they are often labelled as the ‘bad guys’ by environmentalists. And according to him, the blame game absolves other pollutants such as glass manufacturers when their only ‘sin’ is that plastic is visibly everywhere.

Burger raises concern that environmental taxes that the Government plans to moot would hurt the manufacturing industry and consequently the economy, leading to job loses - something South Africa has experienced in the past.

Companies like Namibia Dairies and Plastic Packaging are in talks with the Government regarding its idea to raise the levy on some packaging materials and containers. Burger says that at the moment, it is still very difficult to predict what the outcome may be, but should it (Government) follow through with the idea, the packaging industry as well as the consumer is going to bleed from this.

In South Africa, customers stopped buying plastic bags and the impact was so big that 500 jobs were lost in SA and Namibia may go the same route; thus adding to the already high unemployment.

Initially, as a Namibian manufacturing company, Burger says they have always enjoyed considerable Government support. But lately, the tender issue has become what he describes as ‘dodgy’, “We are competing with people who charge 30-40% more than us and most of them buy products from us.”

On protection of local products, Burger feels the Government should consider extending the infant protection policy to every manufacturer; the same way it has done for Namibia Poultry Industry (NPI). It is through these policies that the local products would gain a market foothold thereby tilting the scales in the local products.

“For every N$40 000 spent on Namibian products, one job is created,” states Burger.

The company also bemoans the lack of skills, especially those of printers, “Every time we lose an employee through whatever means, it takes close to six months to get a replacement.”

PP Namibia is not done with the expansion; this time, there are serious considerations to invest in a N$6m-N$8m flexi printer through a joint venture with a South African company, which has been in the business for 20 years; it would lay to rest Namibia’s need for high quality labels.

The company is also working towards investing in a co-extruder which will create the ability to manufacture multi-layered bags and sheeting. The Plastic Packaging Group employs 515 people in and outside Namibia.

Burger believes that even if Namibia is a small country, it throws telling blows with unique products. NBL’s Windhoek Larger and many others are some of the good examples, “The message is therefore very loud and clear; ‘we are here, give us a chance’.” PF