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Meeting Great Expectations
By Eliza Leung and John Kalkowski
Direct from Tetra Pak’s facility in Lund, Sweden,
1 October 2007
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Step into the quiet offices of Tetra Pak in Malmo, Sweden and there’s the sense that much is percolating behind the lightly colored, wooden panels of this well-established organization. From the research and packaging labs to the printing warehouse, the company’s employees are wielding innovation as a tool to remain globally competitive.
+++++++++++++++++++++++++++++++++
Innovating For Change
In the quest for differentiation, Michael Grosse, executive vice president, Development & Engineering, Tetra Pak Group, discusses the importance of the truly novel.
The aseptic processing and packaging of raw milk is no easy task. Four thousand parameters, that have the potential to interact together, need to be controlled and accounted for. Add to that the need to create convenient, high-quality products at an affordable price, and you have one demanding recipe for growth.
But Michael Grosse, executive vice president, Development & Engineering, Tetra Pak Group, seems to thrive on this kind of challenge. The former BMW executive cites the “things are possible” spirit of Tetra Pak founder Dr Ruben Rausing, explaining that the challenges can be met by harnessing technology, market conditions and need. He says, “It’s not just what you deliver, but how you deliver it.”
Case in point. Grosse says Tetra Pak has been able shrink the energy requirements of its machines by 80 percent in just one generation.
Several interesting projects in the company revolve around packaging user-friendliness. Researchers are assessing whether or not the company’s carton packaging is robust enough to be distributed via vending machines. Studies are also being conducted to assess the tastes and textures that are most pleasing to the lip, by placing a camera inside a bottle to photograph how people sip. This is to better understand what the best diameter is for the best flow.
+++++++++++++++++++++++++++++++++
Serving Up Sustainability
With parallel schemes in fiber traceability, carton-package recycling and carbon-emission reduction, Tetra Pak is pushing hard to combat global warming.
If a tree falls in the forest, Tetra Pak wants to know—when and where. Earlier this year, the company pledged that all of the wood fibers used in its beverage cartons would be traceable to legal and acceptable sources by 2015. In addition to its forest-of-origin activities, the company also committed to reducing its CO2 emissions by 10 percent in absolute terms by 2010.
To date, Tetra Pak has cut CO2 emissions by four percent–from 390,000 tons of CO2 equivalents in 2005 to 373,000 tons of CO2 equivalents in 2006. And it says it has further work to do. (In the EU 27, about 30 percent of beverage cartons have been recycled, a savings of 280,000 tons of CO2 emissions.) Part of the company's strategy is to create sustainable commercial recycling ventures in countries where they do not yet exist, creating market infranstructure and improving the social standards of the communities.
AFJ: Tell us about recycling in Brazil.
Mink: This is a country with no legislation in place, and packaging was contributing to littering. Industry and stakeholders came together and said something must be done. So Tetra Pak began working with street collectors to organize other street collectors into cooperatives—which is one way to get them out of the informal sector. This was done with the help of municipalities, the Church, and NGOs. The government also agreed not to charge those cooperatives taxes. By operating tax-free, the gains made by selling materials to recyclers stay within the community. By doing that, we’re helping to increase social and hygiene standards. It is the women with young children who do the sorting. Often cooperatives have childcare facilities to allow the women to work. The men go out on the street and carry the heavy material. Some municipalities contribute trucks and facilitate. This approach has been extremely successful. So we have done a lot of knowledge sharing about the Brazil model with other developing countries.
In Turkey, packaging-waste collection still depends very much on the informal sector. So what we do is to make sure that there is recycling capacity in these countries. In countries where we have factories, we give part of our factory waste to recyclers. If our customers also have waste, we give that away too, in order to keep the operations of the recyclers going.
We also make it known that there is revenue for people who collect beverage cartons and get them to a recycler. This information economy works quite well; but we cannot work with the informal sector directly. So we cooperate with local authorities and NGOs.
AFJ: Is it easier to recycle in a less-developed country?
Mink: Not really. In Europe, the legislator is driving recycling. We see most of the growth in Western Europe, whereas there has been less in Asia. However, the booming market is China. We have a recycler there. This year, we recycled about 5000 tons of material. So it is a start. But it took more time than we anticipated. In order to meet our target, we will have to focus our activities, in terms of volume, on our top markets. Nevertheless we will combine whatever we can, including recycling education with the school feeding programs in order to complete the whole cycle.
AFJ: Have you had problems de-inking using flexo inks?
Mink: No. Often the paper mills that produce tissue paper have special processes to make product based on recycled paper, because they use a lot of newsprint or printed maters. In many countries, the recycled product is used as an inner layer for corrugated boxes, so it really isn’t an issue.
+++++++++++++++++++++++++++++++++
Looking Into The Near Future
Get expert insights from Michael Zacka, vice president, Marketing and Products Management, Tetra Pak, on what consumer trends are catching on, and what changes manufacturers can continue expect in the next few years.
Health is the number two value globally that consumers rate most high, behind protecting the family. Coupled with their number two fear—recession and employment—this creates the challenge of meeting the worldwide demand for added value at a low cost. The race is on to figure out just how to combining health with the convenience and fun that consumers are craving.
AFJ: How can processors standout in the health platform?
Zacka: There are two aspects that are critical for differentiation. The brands themselves need to have credible claims. This is a must. Second, these claims need to be communicated in a way that is not confusing. Often we see that if claims are not managed correctly, they are not understood by consumers. Look for simplicity.
+++++++++++++++++++++++++++++++++
Leading for Change
Dennis Jönsson, Tetra Pak CEO and president talks about his own stance for managing growth, and reactions to industry developments.
AFJ: What part of leadership is most important?
Jönsson: In my case, personal involvement is the easiest way to lead. Because I’ve been with the company for twenty-five years and seen success, I think it’s easy to feel what we need to do to secure growth. It wasn’t necessarily something that I planned for, but I’ve had a lot of fun. I’ve had great development because I’ve worked in different market stages and different parts of the world—to Panama, Mexico, the US and then back to Europe again. And that has provided a lot of diversity. It has felt like being in many companies.
There are several places that I loved because they provided me with a lot of joy, a lot of challenge. Mexico was a fantastic place. Here, we developed a very sound position in the market, with a strongly-recognized brand identity and strong product recognition. So it was a challenge to go to the US and say “I’m Dennis Jönsson from Tetra Pak”, and people saying “Tetra-who?” It was a completely different challenge.
AFJ: What is your reaction to Alternapak?
Jönsson: We know as much as you know. We’ve seen them in Anuga. What they are trying to do is to basically adjust some of the equipment that we have. [Alternapak is using an old Tetra Pak filling machine (TBA/8) and modifying the switch in order to run its own packaging material through it.] But at this stage, we are seeing limited interest. Customers that deal with perishable and sensitive products are looking to save just more than a few bucks. They want safety from a company that can actually secure the quality of the products that are linked with their brands. I think that’s what we’re trying to offer: total solutions, total service, total safety. Cost is important. But don’t look at it in terms of what you can save here. Think about what you can save in the total operation.
AFJ: What is the impact of the SIG Combibloc takeover?
Jönsson: It doesn’t affect us immediately. It certainly provides an interesting challenging competitor. We’ve been impressed by the speed and the way that they’ve done this. You know we have a lot of respect for the company on its own. Now that it’s an even bigger group, we will have to watch it carefully.
+++++++++++++++++++++++++++++++++
Bridging The Nutrition Gap
Ulla Holm, Global Director, Tetra Pak Food for
Development Office explains the role of milk and
the company’s contribution to fighting malnutrition and poverty.
Seven years ago, Tetra Pak started its Food for Development (FfDO) program, using dairy as a means to alleviate malnutrition and poverty.
By training dairy farmers, financing processing plants, developing markets, and running school-feeding programs, the company has been able to carry out its principle of “safe food for everyone”. More than 43 million children in 17 countries have drunk more than 1 billion liters of milk annually.
In Thailand alone, 6.2 million children have benefited from school-feeding programs. The impact has been great, with milk consumption jumping from two to 23 liters/capita between 1988 and 2003. In addition, 250,000 jobs have been created. And that’s just the beginning says Ulla Holm, global director, Tetra Pak Food for Development Office. Negotiations are ongoing in Aceh with NGOs and private companies, in the hopes of setting up permanent milk production. “If successful, Indonesia would import 10,000 cows to the region,” explains Holm.
Inspired by Thailand, in 2000 China's Ministry of Agriculture also launched a school-feeding program" to Inspired by Thailand, China's Ministry of Agriculture in 2000 also launched a school-feeding program. Just six years later, the country more than doubled its cow population to 9.9 million; milk consumption also increased to 18.8 kilograms/person from 7.6 kilograms/person in 2000. To compound this success, Tetra Pak China has committed $13.3 million over the next five years to the school milk programs.
In 2006, Tetra Pak received the World Business Award for supporting UN Millennium Development Goals.
+++++++++++++++++++++++++++++++++
Committing To Safety
Sam Strömerstén executive vice president, Tetra Pak Processing Systems discusses the strengths of integration, traceability and automation.
Globalization and consolidation have put pressure on food safety. And sustainability is also increasingly important. Luckily this goes hand in hand with cost efficiency remarks Sam Strömerstén executive vice president, Tetra Pak Processing Systems.
AFJ: How important is integration?
Strömerstén: The integration between processing and packaging is very important. If I can comment from the processing perspective, there are some big advantages—one being instant credibility. We have increased context surface that we can talk with our customers. We know more about their issues. And if we go into developing areas, such as China, Brazil and India, we can service our customers with a combination of aseptic processing and aseptic packaging; this reduces the complexity for them, allowing them to get their businesses going and cutting risk. They have one partner that is knowledgeable, that controls that chain all the way through.
Having said that, it took some learning for the company to manage one business that is 10 percent and one business that is 90 percent. However, we learned at Tetra Pak that we have a large common customer base. That’s the value of having the two businesses together. Then you can say we have a choice now. We can only work with a common customer base or we can work a little wider as we do now. The reason why we work wider is that it makes us a stronger processor.
Being stronger means that we can compete, and also add more value to the packaging side.
AFJ: Is the processing side growing?
Strömerstén: I’m actually very happy to say that we are. We have been growing a percentage of sales. And I’m very pleased with the acquisition of Carlisle Process Systems (CPS) in the US. Carlisle Companies had the leading position in cheese in the US. We had the rest of the world; but they were definitely the leaders in that country. And they had powder technology. This is not something that will relate directly to packaging; but our owners at Tetra Pak think it makes sense to have, to better service our customers.
Actually, the proportion of dairy in our total sales have been reduced. Part of that milk has gone into cheese, which happens.
AFJ: What areas need development?
Strömerstén: I’d like to see us get further in filtration. It is slowly and inevitably becoming a more and more important. This could reduce some heat treatment and take away some of its impact.
AFJ: Tell us about traceability.
Strömerstén: Traceability is very important for rules and regulations for our customers. Then you can have traceability through different means. It is feasible, theoretically, to have traceability with pen and paper. You make records of everything you do. It’s not the most efficient way of doing it, and not the fastest way. So traceability goes into automation, and it goes there because legislation says so, and because the customers like to be in control. But the big difference is resolution. Here’s an example of what I mean. If I take a package of milk, what is it that consumers want to know? There are so many possibilities. How was this milk produced? On what day? Which tanker delivered the product to which silo tank? From which farm? Or which cow? That’s resolution. So the industry is developing an interpretation or an industrial practice of what it means to have traceability. I believe that we had a fairly early head start with our automation system Tetra Pak PlantMaster.
What the end-result will be and the level of resolution that’s necessary we don’t fully know yet, but it’s being developed as we speak.
AFJ: Tell us about PlantMaster.
Strömerstén: This is a software functionality that we created based on Siemens, Rockwell and Mitsubishi technology. We could never compete with the billions that Siemens put into their solutions. What we can do is add functionalities including reports for our customers. With PlantMaster it is possible to maintain and troubleshoot at a distance, by connecting through the internet.
People tend to have little maintenance. They have their breakdowns, they have long stops, and so it costs a lot of money. With PlantMaster, you can monitor how much maintenance you actually need. Your CIP needs may be very different depending on the product or recipe that you run. Perhaps you have less contamination because the raw milk was a bit better. There can be many reasons why the need of CIP would be different. We have managed to optimize CIP, to cut one to three percent of operating costs. And that’s good since every percentage point counts.
AFJ: Are your international customers standardizing their lines?
Strömerstén: It’s a lot of customization. However, I can say that some of the big beverage companies are being more standardized today. Even in large MNCs, you always have the different balances between the center and the front. So how big is the influence of the center and how big is the influence of the front? Some of our customers have a very strong central drive. Those companies standardize much harder. It’s not always natural for an engineer to standardize because they can always do it a bit better than what anybody else can do.
+++++++++++++++++++++++++++++++++
Innovating For Change
In the quest for differentiation, Michael Grosse, executive vice president, Development & Engineering, Tetra Pak Group, discusses the importance of the truly novel.
The aseptic processing and packaging of raw milk is no easy task. Four thousand parameters, that have the potential to interact together, need to be controlled and accounted for. Add to that the need to create convenient, high-quality products at an affordable price, and you have one demanding recipe for growth.
But Michael Grosse, executive vice president, Development & Engineering, Tetra Pak Group, seems to thrive on this kind of challenge. The former BMW executive cites the “things are possible” spirit of Tetra Pak founder Dr Ruben Rausing, explaining that the challenges can be met by harnessing technology, market conditions and need. He says, “It’s not just what you deliver, but how you deliver it.”
Case in point. Grosse says Tetra Pak has been able shrink the energy requirements of its machines by 80 percent in just one generation.
Several interesting projects in the company revolve around packaging user-friendliness. Researchers are assessing whether or not the company’s carton packaging is robust enough to be distributed via vending machines. Studies are also being conducted to assess the tastes and textures that are most pleasing to the lip, by placing a camera inside a bottle to photograph how people sip. This is to better understand what the best diameter is for the best flow.
+++++++++++++++++++++++++++++++++
Serving Up Sustainability
With parallel schemes in fiber traceability, carton-package recycling and carbon-emission reduction, Tetra Pak is pushing hard to combat global warming.
If a tree falls in the forest, Tetra Pak wants to know—when and where. Earlier this year, the company pledged that all of the wood fibers used in its beverage cartons would be traceable to legal and acceptable sources by 2015. In addition to its forest-of-origin activities, the company also committed to reducing its CO2 emissions by 10 percent in absolute terms by 2010.
To date, Tetra Pak has cut CO2 emissions by four percent–from 390,000 tons of CO2 equivalents in 2005 to 373,000 tons of CO2 equivalents in 2006. And it says it has further work to do. (In the EU 27, about 30 percent of beverage cartons have been recycled, a savings of 280,000 tons of CO2 emissions.) Part of the company's strategy is to create sustainable commercial recycling ventures in countries where they do not yet exist, creating market infranstructure and improving the social standards of the communities.
AFJ: Tell us about recycling in Brazil.
Mink: This is a country with no legislation in place, and packaging was contributing to littering. Industry and stakeholders came together and said something must be done. So Tetra Pak began working with street collectors to organize other street collectors into cooperatives—which is one way to get them out of the informal sector. This was done with the help of municipalities, the Church, and NGOs. The government also agreed not to charge those cooperatives taxes. By operating tax-free, the gains made by selling materials to recyclers stay within the community. By doing that, we’re helping to increase social and hygiene standards. It is the women with young children who do the sorting. Often cooperatives have childcare facilities to allow the women to work. The men go out on the street and carry the heavy material. Some municipalities contribute trucks and facilitate. This approach has been extremely successful. So we have done a lot of knowledge sharing about the Brazil model with other developing countries.
In Turkey, packaging-waste collection still depends very much on the informal sector. So what we do is to make sure that there is recycling capacity in these countries. In countries where we have factories, we give part of our factory waste to recyclers. If our customers also have waste, we give that away too, in order to keep the operations of the recyclers going.
We also make it known that there is revenue for people who collect beverage cartons and get them to a recycler. This information economy works quite well; but we cannot work with the informal sector directly. So we cooperate with local authorities and NGOs.
AFJ: Is it easier to recycle in a less-developed country?
Mink: Not really. In Europe, the legislator is driving recycling. We see most of the growth in Western Europe, whereas there has been less in Asia. However, the booming market is China. We have a recycler there. This year, we recycled about 5000 tons of material. So it is a start. But it took more time than we anticipated. In order to meet our target, we will have to focus our activities, in terms of volume, on our top markets. Nevertheless we will combine whatever we can, including recycling education with the school feeding programs in order to complete the whole cycle.
AFJ: Have you had problems de-inking using flexo inks?
Mink: No. Often the paper mills that produce tissue paper have special processes to make product based on recycled paper, because they use a lot of newsprint or printed maters. In many countries, the recycled product is used as an inner layer for corrugated boxes, so it really isn’t an issue.
+++++++++++++++++++++++++++++++++
Looking Into The Near Future
Get expert insights from Michael Zacka, vice president, Marketing and Products Management, Tetra Pak, on what consumer trends are catching on, and what changes manufacturers can continue expect in the next few years.
Health is the number two value globally that consumers rate most high, behind protecting the family. Coupled with their number two fear—recession and employment—this creates the challenge of meeting the worldwide demand for added value at a low cost. The race is on to figure out just how to combining health with the convenience and fun that consumers are craving.
AFJ: How can processors standout in the health platform?
Zacka: There are two aspects that are critical for differentiation. The brands themselves need to have credible claims. This is a must. Second, these claims need to be communicated in a way that is not confusing. Often we see that if claims are not managed correctly, they are not understood by consumers. Look for simplicity.
+++++++++++++++++++++++++++++++++
Leading for Change
Dennis Jönsson, Tetra Pak CEO and president talks about his own stance for managing growth, and reactions to industry developments.
AFJ: What part of leadership is most important?
Jönsson: In my case, personal involvement is the easiest way to lead. Because I’ve been with the company for twenty-five years and seen success, I think it’s easy to feel what we need to do to secure growth. It wasn’t necessarily something that I planned for, but I’ve had a lot of fun. I’ve had great development because I’ve worked in different market stages and different parts of the world—to Panama, Mexico, the US and then back to Europe again. And that has provided a lot of diversity. It has felt like being in many companies.
There are several places that I loved because they provided me with a lot of joy, a lot of challenge. Mexico was a fantastic place. Here, we developed a very sound position in the market, with a strongly-recognized brand identity and strong product recognition. So it was a challenge to go to the US and say “I’m Dennis Jönsson from Tetra Pak”, and people saying “Tetra-who?” It was a completely different challenge.
AFJ: What is your reaction to Alternapak?
Jönsson: We know as much as you know. We’ve seen them in Anuga. What they are trying to do is to basically adjust some of the equipment that we have. [Alternapak is using an old Tetra Pak filling machine (TBA/8) and modifying the switch in order to run its own packaging material through it.] But at this stage, we are seeing limited interest. Customers that deal with perishable and sensitive products are looking to save just more than a few bucks. They want safety from a company that can actually secure the quality of the products that are linked with their brands. I think that’s what we’re trying to offer: total solutions, total service, total safety. Cost is important. But don’t look at it in terms of what you can save here. Think about what you can save in the total operation.
AFJ: What is the impact of the SIG Combibloc takeover?
Jönsson: It doesn’t affect us immediately. It certainly provides an interesting challenging competitor. We’ve been impressed by the speed and the way that they’ve done this. You know we have a lot of respect for the company on its own. Now that it’s an even bigger group, we will have to watch it carefully.
+++++++++++++++++++++++++++++++++
Bridging The Nutrition Gap
Ulla Holm, Global Director, Tetra Pak Food for
Development Office explains the role of milk and
the company’s contribution to fighting malnutrition and poverty.
Seven years ago, Tetra Pak started its Food for Development (FfDO) program, using dairy as a means to alleviate malnutrition and poverty.
By training dairy farmers, financing processing plants, developing markets, and running school-feeding programs, the company has been able to carry out its principle of “safe food for everyone”. More than 43 million children in 17 countries have drunk more than 1 billion liters of milk annually.
In Thailand alone, 6.2 million children have benefited from school-feeding programs. The impact has been great, with milk consumption jumping from two to 23 liters/capita between 1988 and 2003. In addition, 250,000 jobs have been created. And that’s just the beginning says Ulla Holm, global director, Tetra Pak Food for Development Office. Negotiations are ongoing in Aceh with NGOs and private companies, in the hopes of setting up permanent milk production. “If successful, Indonesia would import 10,000 cows to the region,” explains Holm.
Inspired by Thailand, in 2000 China's Ministry of Agriculture also launched a school-feeding program" to Inspired by Thailand, China's Ministry of Agriculture in 2000 also launched a school-feeding program. Just six years later, the country more than doubled its cow population to 9.9 million; milk consumption also increased to 18.8 kilograms/person from 7.6 kilograms/person in 2000. To compound this success, Tetra Pak China has committed $13.3 million over the next five years to the school milk programs.
In 2006, Tetra Pak received the World Business Award for supporting UN Millennium Development Goals.
+++++++++++++++++++++++++++++++++
Committing To Safety
Sam Strömerstén executive vice president, Tetra Pak Processing Systems discusses the strengths of integration, traceability and automation.
Globalization and consolidation have put pressure on food safety. And sustainability is also increasingly important. Luckily this goes hand in hand with cost efficiency remarks Sam Strömerstén executive vice president, Tetra Pak Processing Systems.
AFJ: How important is integration?
Strömerstén: The integration between processing and packaging is very important. If I can comment from the processing perspective, there are some big advantages—one being instant credibility. We have increased context surface that we can talk with our customers. We know more about their issues. And if we go into developing areas, such as China, Brazil and India, we can service our customers with a combination of aseptic processing and aseptic packaging; this reduces the complexity for them, allowing them to get their businesses going and cutting risk. They have one partner that is knowledgeable, that controls that chain all the way through.
Having said that, it took some learning for the company to manage one business that is 10 percent and one business that is 90 percent. However, we learned at Tetra Pak that we have a large common customer base. That’s the value of having the two businesses together. Then you can say we have a choice now. We can only work with a common customer base or we can work a little wider as we do now. The reason why we work wider is that it makes us a stronger processor.
Being stronger means that we can compete, and also add more value to the packaging side.
AFJ: Is the processing side growing?
Strömerstén: I’m actually very happy to say that we are. We have been growing a percentage of sales. And I’m very pleased with the acquisition of Carlisle Process Systems (CPS) in the US. Carlisle Companies had the leading position in cheese in the US. We had the rest of the world; but they were definitely the leaders in that country. And they had powder technology. This is not something that will relate directly to packaging; but our owners at Tetra Pak think it makes sense to have, to better service our customers.
Actually, the proportion of dairy in our total sales have been reduced. Part of that milk has gone into cheese, which happens.
AFJ: What areas need development?
Strömerstén: I’d like to see us get further in filtration. It is slowly and inevitably becoming a more and more important. This could reduce some heat treatment and take away some of its impact.
AFJ: Tell us about traceability.
Strömerstén: Traceability is very important for rules and regulations for our customers. Then you can have traceability through different means. It is feasible, theoretically, to have traceability with pen and paper. You make records of everything you do. It’s not the most efficient way of doing it, and not the fastest way. So traceability goes into automation, and it goes there because legislation says so, and because the customers like to be in control. But the big difference is resolution. Here’s an example of what I mean. If I take a package of milk, what is it that consumers want to know? There are so many possibilities. How was this milk produced? On what day? Which tanker delivered the product to which silo tank? From which farm? Or which cow? That’s resolution. So the industry is developing an interpretation or an industrial practice of what it means to have traceability. I believe that we had a fairly early head start with our automation system Tetra Pak PlantMaster.
What the end-result will be and the level of resolution that’s necessary we don’t fully know yet, but it’s being developed as we speak.
AFJ: Tell us about PlantMaster.
Strömerstén: This is a software functionality that we created based on Siemens, Rockwell and Mitsubishi technology. We could never compete with the billions that Siemens put into their solutions. What we can do is add functionalities including reports for our customers. With PlantMaster it is possible to maintain and troubleshoot at a distance, by connecting through the internet.
People tend to have little maintenance. They have their breakdowns, they have long stops, and so it costs a lot of money. With PlantMaster, you can monitor how much maintenance you actually need. Your CIP needs may be very different depending on the product or recipe that you run. Perhaps you have less contamination because the raw milk was a bit better. There can be many reasons why the need of CIP would be different. We have managed to optimize CIP, to cut one to three percent of operating costs. And that’s good since every percentage point counts.
AFJ: Are your international customers standardizing their lines?
Strömerstén: It’s a lot of customization. However, I can say that some of the big beverage companies are being more standardized today. Even in large MNCs, you always have the different balances between the center and the front. So how big is the influence of the center and how big is the influence of the front? Some of our customers have a very strong central drive. Those companies standardize much harder. It’s not always natural for an engineer to standardize because they can always do it a bit better than what anybody else can do.
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