Meeting Global Demand

Three years ago during a visit to Malaysia, Sidel president and chief executive officer Gérard Stricher believed that the company should build a new blow-molding machine manufacturing plant. Beginning on June 2006, that yearlong dream took root in Shah Alam, some 40 kilometers from Kuala Lumpur. Twelve months later, in June 2007,

Sidel opened the doors to its new world-class production plant—the largest outside of the company’s European operations. Built to manufacture low- and medium-speed, two-step PET bottle blow-molding machines, the 11,000 square-meter facility will ramp-up production capacity from 70 to 120 machines per year—with the potential to double it.

The facility will work closely with the Group’s main manufacturing plant in Le Havre, France. Sidel says the subsidiary is expanding its equipment range to include containers that are both large or have complex shapes.

This $13.5 million investment comes amidst a series of global product launches, as Sidel makes a charge to reach its goal “to become, by 2010, the undisputed world leader in packaging equipment and lines for liquid foods packaged in glass, plastic and cans”. It is in fact, part of an overall strategy to satisfy customers’ needs for quantity, quality and short lead-times.

So what’s next? At the Sidel Malaysia’s new plant opening, Stricher and Marc Ville, managing director of Malaysia Sidel, sat down with Asia Food Journal’s Eliza Leung to talk about the facility that they and others envisioned, and its year in the making; Sidel’s 11 years in the country and the transformation of a workforce; PET bottles and beer in China; and the evolution of lifecycle management. The discussion took place in Shah Alam.

AFJ: How confident are you of reaching Sidel’s 2010 goal?

Stricher: I’m very confident. I’m convinced that the key factor is to be as close as possible to the customer. Understand his needs; help him to achieve the best possible efficiency, at the lowest cost. We have a factory in Pune, India; one unit in Muntinlupa City, in the Philippines; one unit in Beijing, China; and an important technical center in Shanghai, China. At Sidel, daily operations are completely delegated to clusters and zones inside the cluster. We’re very international. We are pushing our operations as close as we can to the customer, and Sidel Malaysia’s factory is part of that strategy to be competitive. We have a strong industrial plan that we are implementing worldwide.

We also believe in innovation. At Sidel, we demonstrated in blowing that through increasing speed and lightweighting, we have helped customers cut costs. Now our scope is larger than the blower—it’s the complete line. Last year, more than 50 percent of our sales were complete lines. We are selling less and less standalone machines because our customers have decided that they want to have a supplier who is responsible and who will deliver a complete solution.

AFJ: Tell us about Sidel Malaysia and the new plant.

Ville: We started with a small manufacturing center, and now we are a global center of excellence. We are a design center; and we are very proud of this, because we are the only factory in all of Sidel that is able to produce the SBO Compact. The government has given us the status of “regional distribution center”, which means that we export at least 80 percent of our production. In fact, we sell about 95 to 99 percent of our machines to 82 countries. Since we started, we have made more than 500 blowmolders. In those ten years, we only sold 10 machines in Malaysia. With this machine, we can reduce blowing costs by 20 percent. And here’s a scoop: today at Sidel Malaysia, we made our first 10-liter bottle, used for the oil and water markets.

AFJ: Why Malaysia?

Ville: Malaysia has a young and skilled workforce. When I came for the first time to Sidel Malaysia, I was pleasantly surprised that people are hungry; they want to learn. It’s a good advantage. When we started ten years ago, you could not find graduates who could assemble machines. So we invested in a lot of training. A decade later, those people are still in the company today. Another asset is that everybody is able to speak and understand English. This is very important because we have a lot of drawings and a lot of specifications that can now be understood without additional translation. People seem to be very pragmatic. Within a year, we managed to build this 11,000 square-meter factory. I would say that the relationship with Malaysians is very simple, very easy. It is a pleasure to work with them.

AFJ: China is an important market for you.

Stricher: Five years from now, China is going to be our biggest market. Currently, we are managing giant orders in this country for complete bottling lines, especially in the water business. This is why we are strengthening our industrial capabilities in China. Again, this is part of our strategy to be localized, to be near our Chinese customers.

We are selling the same machines, the same level of performance and technology that we use in Europe, the US or South America to our customers in China. We never believed in downgrading equipment to Asia. Very quickly, outside of the manufacturers like Coke and Pepsi, the big Chinese players have shown us that they want the European standard. Our first line of growth is innovation; and we make sure that we keep our intellectual property.

Beer in PET bottles is going to grow very rapidly. Sidel’s Actis 48 barrier system makes PET competitive with glass, and even cans. This has been demonstrated by our customers, a large German and a Belgian brewer, who’ve been producing beer for the hard German discounters Aldi and Lidl, for two years. These companies are making money in a very tough market, where prices are very low. We can do more in China.

AFJ: Anything else to add?

Stricher: I believe that worldwide the beverage industry is currently running at 50-percent efficiency. We are developing more and more lifecycle management. So if an investment is made for 15 or even 20 years, we will follow that line and help the manufacturer to upgrade or improve this piece of equipment. When you move efficiency from 50 percent to 75 percent, you are improving output by half, saving money, and creating capacity. You could argue we are shooting ourselves in the foot, by helping the customer to avoid investing in new machines. But at the end of the day, I’m absolutely convinced that this is the strategy that will drive growth. We want to give our customers a good night’s sleep. By doing so, he will want to come back to us.