Today our countdown moves to the Number 1 Need of Glass Suppliers and indeed Packaging makers in general. We started with Innovation, moved to Exclusivity, then down to Moulds and, from there, Forecast Accuracy. Payments terms followed, then Contract Length and, finally, we landed here with our number one need of … Volume!

Beyond any shadow of a doubt, Volume (or quantity) is the primary need of packaging manufacturers the world over because, in order to cover their very high fixed costs and generate a margin, they must utilise their production capacity to as close to 100% as is possible

“’Fill the Machines!” is a war cry heard routinely within manufacturing environments and never more so that right now with so much underutilised capacity due to COVID-19 and other hostile trading conditions.

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Today our countdown moves to Need Number 2 – “Customer Tenure or more specifically Contract length”

I rank this item as the second most important Supplier need a packaging customer should be aware of, because size matters enormously to manufacturers, especially when it comes to investment payback.

To explain why, consider this case study:

Recently OI sold 5 glass plant facilities to Visy for $733m. Annuals revenues for this business are circa $750m with an EBITDA of 16% and profit of $30m or just 4%. This means Visy are looking at a 24 year wait to recover their purchase investment.

The guarantee of long-term demand through lengthy supply agreements provides a vital assurance that the initial and future investment in the acquisition will not be in vain.

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They say "Cash is always King" and never more so than for those publicly owned businesses who are bound to produce and publish annual reports. Share prices, dividends, and staff bonuses often swing on just how much cash is on hand at the close of each financial quarter and year. Most glass suppliers are publicly listed, although in Australia things have recently changed.

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