OnDemand WTP Pricing Research

Are trade tariffs a major risk to packaging materials pricing? | Packaging Digest

How much do you know about factors that affect packaging prices? Gary Kestenbaum gives a perspective from the customer’s view, in light of recent government tariffs.

The current trade atmosphere is leaving suppliers and customers uneasy as to where prices of goods are heading. In the world of packaging, we are obviously concerned about tariffs on metals because they are obvious components of packaging and packaging machinery. One has to wonder, though, what the next raw material is that will be added to the list of incoming or outgoing tariffs in this global game of “trade chicken.”

The subject brings to mind some meaningful experiences I’ve had that changes my understanding of pricing.

As a member of product research and development (R&D) at a “Mega Food Conglomerate” (MFC), it was not the cost of business goods and services that kept me up at night—trials, experiments, logistics, commercialization and vendor support were the object of my focus.

It got worse when I moved into packaging. I needed CAD [computer-aided design] samples, dielines, pre-production samples, trial support and, oh, I needed them instantly. After all, I was the client, working for a customer that purchased many millions of dollars’ worth of packaging. The factors that went into pricing for goods and support were invisible to me. I just needed “the Cadillac” of support to make my customers, the internal marketing and business managers, happy!

My mentors in packaging R&D just gave me contact information for the vendor tech support reps and told me to call if I needed anything. Simple enough process, unless you are the vendor tech support reps.

My first packaging introduction to the “$100,000 Pyramid” category “Things That Affect Costs” occurred after an explosion at the Phillips petroleum plant significantly affected sourcing of high-impact polystyrene (HIPS) K-resin. Users scrambled to replace this high-quality resin and were forced to pay more for lesser alternatives, if they were even available. I quickly learned how the costs of polymer resins were linked to the price of oil, which obviously varied year to year, and how bauxite mining and supply issues affected aluminum packaging. Offshore steel pricing could fluctuate with volatility of the Dollar and Euro. Mergers and acquisitions played a role as well, which segues to one of my favorite anecdotes on packaging raw material costs.

Read complete article here:

Are trade tariffs a major risk to packaging materials pricing? | Packaging Digest.