09.04.12
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Accommodating brand manufacturers looking to centralize their supply base in the local market tops the list of reasons why many beauty industry suppliers choose to run operations in the U.S.
Over the past few years, Beauty Packaging has noticed a growing trend: A number of beauty industry suppliers are touting their Made in the USA status. Looking into this further, we talked to a sampling of packaging manufacturers with facilities in the U.S., to learn more about the rationale behind their domestic activity, how it supports global operations they may have, and what the advantages are for the brands they serve.
We found a range of reasons why suppliers serving the cosmetics, personal care and fragrance industry choose the U.S. as a base—from offering clients easy access and local customer service, to supporting American made goods and manufacturing. But there are also a number of other beneficial factors, including speed to market, process and materials control and reduced transportation costs.
With both large and small beauty brands targeting global markets, and increased interest in sustainability and supply chains, there’s been a shift toward producing goods in close proximity to key distribution points—wherever that may be in the world. With many of the largest beauty brand manufacturers maintaining offices in the United States—and specifically on the East Coast—a number of packaging suppliers, many with global capabilities as well, operate design and manufacturing facilities to serve the needs of beauty manufacturers active in the domestic market.
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The bottle for Taylor Swift’s Wonderstruck was designed by the Elizabeth Arden design team and developed and manufactured in SGD North America’s facility in Georgia. |
Such is the case with premium glass manufacturer, SGD North America. With headquarters in Paris, and multiple manufacturing facilities throughout the world, including in France, Germany, Spain, Brazil, the U.S., and China, SGD offers high-quality fragrance glass manufacturing and decorating on the East Coast of the U.S. The company’s manufacturing plant in Covington, GA, produces in excess of 100 million fragrance bottles per year, according to Peter Acerra, president and chief executive officer of SGD North America. With a decorating facility just 70 miles away from Covington, Acerra says, “SGD is pretty unique in the U.S. as a high-quality fragrance glass manufacturer and decorator.”
Acerra cites a long list of advantages for U.S. customers utilizing its U.S. facilities, including: better lead times than overseas; proximity to market, which makes it better for forecasting (if they pop the forecast, for instance); a quick response time for moving inventory; great sales service; making goods in the U.S. close to their fill site; and perhaps most important, flexibility.
Acerra explains: “The timeframe for fragrance launches has shortened greatly—and with just in time inventories, local manufacturing makes it advantageous as far as supply chains. Companies can also buy and sell in U.S. dollars, which has been positive in terms of exchange rates over the past few years.”
However, as a global manufacturer, Acerra notes the trend to produce packaging locally throughout the world: “The real strategy is to produce the product in the market you want to serve—in order to meet the demands of customers in that market.”
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Decoration for Bath & Body Works’ Be Enchanted was carried out at Decotech’s facility in Englewood, NJ. |
Richard Engel, executive vice president, Decotech, Inc.—which offers design, manufacturing, laboratory and procurement—also talks about the advantages of a local supply base, tailored to specific regions.
Decotech’s headquarters and all of its operations are in Englewood, NJ, where the company does 100% of its manufacturing. While the company follows a “domestic-only” credo “out of principle,” Richard Engel, executive vice president, comments, “Demand in our industry is less about ‘Made in the USA’ and more about finding a local supply base in whatever region they are in.All our clients are global players and the strategy we are seeing more of is to locate as much of the supply base in the local market as possible.This is primarily driven by improved lead times and reduced transportation costs.”
Engel recounts the additional benefits of a U.S. base for both his company and for their clients. He says, “The greatest benefit is obviously being able to run a well-managed and profitable company inside the USA.The advantages for our clients are numerous.The ability to drive less than half an hour and be at our facility is a great luxury both for us and for our clients.For production line trials and approvals, our clients love that they can come in the morning, work, have a nice lunch and be back at the office for the afternoon.It’s also great that they can call us for an unscheduled meeting and we can be at their offices in under an hour.During the development process, being in the USA saves a lot of precious time.”
Lombardi Design & Manufacturing, an American company, which started in the U.S. and which does the majority of its manufacturing on Long Island, NY, also manufactures outside of the U.S. to support customer requirements. Carl Lombardi, president, explains, “Our thinking is we need to make the best package wherever our customer requires. Though we are local, and decisions, design and development are happening in New York, with the advent of technology, we can easily get the info out and communicate with other locations.”
He says, “We think it’s imperative to support customers in the U.S. with U.S. manufacturing.” A 25-mile trip from Manhattan to Long Island proves to be a benefit to customers. “Accessibility is important for brands during package development,” says Lombardi. “Everyone wants to be quicker to market—that leads us all to regionalization.” And, he adds, “The closer to home, the more control our customer has.”
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This powder puff for CoverGirl & Olay was made in the USA by The Penthouse Group. |
“We found that having this control on the ground in New York serves ourselves and our customers in extraordinary ways,” explains Ostrower. “We are able to ensure on-time delivery of cosmetic puffs that meet the highest quality standards.Also, since most of our global customers have their headquarters within a short drive of our New York location, we are able to quickly deliver new concepts within a very short turnaround window.”
Like many of the companies surveyed in this article, The Penthouse Group has satellite operations as well—in this case, part ownership of factories in Japan, China and Thailand. About 45% of company business is manufactured in the NY facility, down from 100% when it was established in 1952.
Go Global, Think Local
Approximately 60% ofWayne, NJ-based Topline’s business is currently done in the U.S., a percentage that has declined in recent years, as other regions strengthened.Damien Dossin, vice president of sales & marketing, says, “The percentage was higher in previous years, but as overseas business has become a key growth strategy, more business is coming from Europe, Latin America and Asia.”
Thus, regionalized manufacturing and production come into play. Dossin explains that the company sees the value in manufacturing in various regions of the world depending on the product. They maintain manufacturing and filling operations in the U.S., China and Mexico and sales offices in Sao Paolo and Paris.
Optimum efficiency comes from knowing which facility best suits the specific packaging requirements.
Dossin says Topline recognizes that products can be split into two categories. He describes Group 1 as including products with volatile market demand requirements; products requiring close proximity so that they can be carefully monitored; products that can be automated; and items requiring reduced lead times and high flexibility due to unpredictable forecasting.
Group 2 products are suitable to be made in a low-cost country; these have high value added, complex assembly and decoration requirements.
“We are very good at serving the products that fall into Group 2,” explains Dossin, “and decided to start a manufacturing plant in the USA so that we can be more competitive with products that fall within Group 1.”
Dossin says the benefits of manufacturing in the USA are many, including: close proximity to supply chain; increased speed to market; no exchange rate fluctuations as business is conducted in U.S. dollars; low inflation and cost of labor increases (compared with China where inflation and salary increases are higher); Made in USA is preferred versus made in China; and air freight is not a consideration when needing to expedite.
However, the challenges, he says, are complex: Finding cost-effective services and the right level of automation to balance the investment and labor costs versus non-USA manufacturing.
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MWV’s HVD airless dispenser, used in products including Redken’s Rough Paste, is 100% American-made. |
“Domestically, the demand, if all other things are equal, is nearly 100%... every marketer in the U.S. would prefer Made in the USA, when possible. A balance of supply chain, brand fit, consumer need, and value ultimately drive their decision,” says Trout.
About half of MWV’s revenue is generated in the U.S. and the other half in 100 countries around the world. Trout says the portion of revenue coming from outside the U.S. has grown steadily in the past several years, but “our manufacturing facilities in the U.S. have always been and will always be an important factor in our success.”
Headquartered in Norcross, GA, RockTenn is a leading North American manufacturer of corrugated packaging, consumer packaging, and recycling and waste solutions, with sales of $10 billion a year. The company employs approximately 26,000 employees in over 240 facilities in the U.S., Canada, Mexico, Chile, Argentina and China. According to Jessica Kimbrough, VP, marketing, consumer packaging, the majority of RockTenn’s manufacturing of packaging products takes place in the U.S., close to where the company’s global and regional customers/brand owners manufacture their products.
In the U.S., RockTenn produces recycled and SBS paperboard, containerboard, corrugated packaging, merchandising displays, and offers recycling and waste solutions to its customers. The company serves a broad range of end use markets, including cosmetics, personal care and other health and beauty segments, and Kimbrough says, “Our key advantage is that we are in close proximity to our customers/brand owners who also choose to manufacture domestically, and who require value-added products and services delivered cost effectively.”
Home Advantage
Cosmetic Specialties International (CSI), headquartered in Oxnard, CA, chooses to do 100% of its business in the U.S. Michael J. Musso, president and CEO of the turnkey supplier of cosmetic and personal care packaging, explains why they have never waivered from this tack. “We believe that the quality of our products far exceeds that of overseas production.” He says that CSI can deliver products to its customers in six weeks, providing them with just in time delivery. “This is half of the time of an overseas supply chain, says Musso. “We believe there is significant value in U.S.-based manufacturing and intend on growing our operation here in the U.S.” CSI offers package and tool design, manufacturing and decoration of customer molded packages and jars and closures. As with many U.S. suppliers, flexibility is of utmost concern in serving brands’ needs. Thus CSI also has consultants in Asia “that assist us in sourcing specialty products that our customers may require, but are not feasible for us to produce in the U.S.,” adds Musso.
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The rolled edge overcap paper compact produced by Chicago Paper Tube for Jing Ai cosmetics is 100% Made in the USA. |
Dudlak explains why: “For the past one hundred plus years, quality craftsmanship and responsiveness have been the cornerstones of our operation, and we just don’t feel that we can count on either one from an overseas supplier. It wasn’t until relatively recently—maybe the past ten years—that overseas competition in round paperboard packaging has had a significant presence in the marketplace. And we’ve already heard enough horror stories from folks who received sub-standard product well beyond a due date from an overseas source to know that there will always be a place for a reliable domestic manufacturer. Some clients have already come back to us… you miss one holiday selling season and you’re not too keen on rolling the dice again the following year.”
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Diamond Wipes’ package for Pretty Touch Makeup Remover Wipes includes a Made in USA logo. |
More than 95% of Diamond Wipes’ business centers on its clean solar energy-operated manufacturing facility in Chino, CA. The company also runs a manufacturing plant in Bucyrus, OH.
Tom Hill, SVP general sales manager, Diamond Wipes, says they’re intent on domestic investment, and have expanded their facilities in the last decade. “Because we believe in the value and quality of products that are made in the USA, we continue to invest domestically to grow our business.”
JSN Cosmetic Packaging, is based in Orange County, CA. Jim Nagel, president, says the family-owned company has been doing business there for over 30 years, almost exclusively serving the USA. He says, “Over these years we’ve gained expertise in manufacturing a number of packaging components and continue to utilize that experience, though in response to the off-shore competition, we decided to focus on those products which allow us the greatest degree of competitiveness. All of our manufacturing is done right here in house, currently including plastic tube and closure production.” This includes all package offset printing, labeling, hot stamping, and the predominant percentage of silk screening.
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JSN Cosmetic Packaging does all of its manufacturing—including plastic tube and closure production, such as this for Philip B.—in Orange County, CA. |
By staying in Irvine, Nagel says, “We can oversee the manufacturing process from beginning to end, hence quality control is maintained at each phase. We also maintain control of shipping and delivery, which allows us to offer an advantage that offshore companies really don’t have, because transport from overseas can face unforeseen delays and complications. This leads to difficulty in dealing with quality issues such as consistent color matching—which is a big deal. Essentially devoting ourselves to our domestic customers has helped build a reputation for high-quality manufacture, personal customer support and delivery date awareness.”
Brooklyn and Queens, New York, are home to Ares Printing & Packaging, manufacturers and designers of e-flute folding cartons and point of purchase displays, and paperboard folding cartons and displays. George
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Ares Packaging’s new 100,000 square foot facility in the Whitestone-College Point area in Queens, NY. |
Smaller suppliers also benefit from close access to major cosmetics firms located in Manhattan. From KTT Enterprises’ facility in CT, the family-owned manufacturer and supplier of SK, SBR, NBR sponges and cosmetic puffs, has the capability to be in their customers’ offices within hours to work closely on projects, says Nancy Coffey, CEO
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Back in the USA
Some of the suppliers we interviewed for this story noted a trend toward a return to customers choosing to manufacture in the U.S. rather than elsewhere in the world.
At St. Charles, IL-based Olcott Plastics, company president Joseph Brodner, says their customers used to compare the cost of its plastic jars and closures manufactured in the U.S. to those of suppliers halfway around the world.
“However,” he says, “travel and transportation costs, differences in standard quality levels, communication barriers, ability to address rush requirements, amount of safety stock necessary to account for transit times and other issues and costs were not taken into account when comparing proposals.” He says customers weren’t getting the full picture. “Now,” he says, “having had experiences with sourcing from non-domestic suppliers, Olcott’s customers became educated about the associated time-consuming and financial challenges, and as a result, our business has grown.”
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The packages for Maybelline’s Fit Me Bronzer and Blush were produced at Topline’s Michigan plant |
For instance, the company’s Michigan facility has been molding domestically for years, and Dossin says they have several new opportunities under development as well. Topline is filling fragrance and nail items in its Mexico facility, which Dossin says would have been filling in China previously. “This has kept jobs in the USA, reduced lead times, improved/simplified the supply chain and reduced overall cost by avoiding costly freight, duty and handling fees.”
JSN’s Nagel, notes: “We are in process on numerous new product projects, most of which are confidential until product launch. However we can certainly share that we observe a trend in which companies are returning to the USA.Those confiding in us are returning after experiencing unsatisfactory performance as well as rising costs from off-shore vendors.”
Waning Overseas Advantage
Until recently, it was challenging to compete with overseas labor costs, but many suppliers are now witnessing a change.
Musso, of CSI, comments,“We fully believe that any cost variances between the U.S. and imports are getting narrower as the cost of quality and time are being analyzed as well as a real increase of overseas labor.We believe that we have sustained and grown for over 30 years due to our great U.S.-based workforce and our loyal customer base.
“We are seeing a resurgence in manufacturing moving back to the U.S. The cost differential that was very evident in the early part of this decade is now shrinking,” he says.Additionally, Musso believes it is becoming increasingly important that they provide their customers with great flexibility in terms of delivery times and package changes on the fly. “We are nimble,” he says, “and can work quickly to respond to our customers’ needs without months of delays.”
The biggest challenge of a U.S. operation, of course, says Chicago Paper Tube’s Dudlak, is competing with Asian manufacturers’ labor costs. But, he says, “As these continue to rise, as does the cost of fuel, we’re seeing less and less overseas advantage here as time goes by. Our advantage is in being able to produce a high-quality, completely custom product for our clients in a matter of days or weeks rather than several months.” He says having regular, direct contact with the client on the phone or in person fosters a more intimate relationship and gives them greater control over the process. “Our Midwestern location makes it convenient and cost-effective for clients to press check a job or receive proofs and samples within a day.”
Diamond Wipes’ Hill says, “While the company has been successful in providing full service, turnkey wet wipe contract packaging and contract filling—from consultation to R&D to packaging design to production—the challenges abound, especially from overseas operators in China whose imported goods are transacted at extremely low prices.” However, he notes, “As the standard of living slowly improves in these countries, their cost of doing business is on the rise as well. The playing field is becoming leveled.”
Ostrower of The Penthouse Group shares the sentiment, saying, that the advantages of having their capabilities in one facility in NY versus an overseas facility in another time and/or date zone are numerous.
Access to Growing Markets
Manufacturing in the U.S. can also create advantages for brands looking to export to other markets.
While 95% of Olcott Plastics’ business is fulfilled domestically and 5% of its business consists of international clients, Brodner says demand is picking up for exports. “International shipments from our warehouse in the U.S. have doubled over the last five years, mainly to Mexico and Canada,” he says.
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The same holds true for MWV.Trout says, “A great deal of the products and materials we manufacture in the U.S. are exported to global markets, including emerging markets such as China, India and Brazil.” In addition to local manufacturing in other countries, Trout says MWV capitalizes on manufacturing advantages in the U.S.—especially paperboard manufacturing, and some of its primary plastics plants that manufacture dispensing solutions—to sell products within the U.S. and overseas.
The door is also opening for RockTenn. Kimbrough says, “As our customers/brand owners choose to begin manufacturing in other countries, such as South America and Brazil, we believe there is some opportunity to manufacture packaging products in the U.S. and export to those regions.”
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Oxygen Development’s 220,000-sq.-ft facility in Palm Springs, FL. |
Oxygen Development specializes in the development and production of high-quality color cosmetics, skin care, hair care and bath & body care. Headquartered in a 220,000-sq.-ft facility in Palm Springs, FL, with an additional plant in the Dominican Republic, it is an FDA/OTC approved production and warehousing facility, offering services ranging from bulk manufacturing to full turnkey solutions.
Musa Pharand Dias, global vice president sales & marketing, Oxygen Development, says, “Ninety percent of our business is done in the USA; and the international market is a great potential for growth. She comments on the company’s growth in the turnkey area, and explains why more brands are taking this route: “The success factor of the outsourcing activity in the U.S. is a combination of internal and external pressures that companies are facing along with highly professional and value added services provided by outsourcing manufacturers.”
Supporting American Manufacturing & Jobs
As noted previously, Decotech manufactures in the U.S. for a number of reasons, “not the least of which is the principle of it all,” says Engel.Additionally, he says, “A majority of our workforce has immigrated to the U.S. to work. This is the land of opportunity. For three generations we have been proud to offer that opportunity to our employees without fear of losing jobs to offshoring. In addition, the work we do here is extremely technical and is a large part of the value chain in our industry.Why would we want to send this high value-added work overseas?We don’t feel the marginal improvement to the bottom line would justify sacrificing our employees’ livelihoods.”
As a 60-year old company, Ostrower of The Penthouse Group, says, “We have many long-time employees in our New York location who are able to add their many years of experience to creating new items and problem solving whenever a challenge arises.” By keeping the operation in one facility, he says they been able to retain jobs in the U.S., and have experienced a moderate job growth rate in the past two years.
SGD employs about 500 employees in the U.S. The majority of employees are based operationally in GA, with the marketing and sales staff based in New York City.
Local employees make up the work force at Lombardi Design & Manufacturing, where Carl Lombardi notes: “All live in and most grew up in New York and Long Island. We’re committed to making the business competitive and successful in the region where we live.”
CSI’s Musso says they have been employing local residents for more than 20 years. “We have long been a provider of packaging for one of the largest consumer products companies in the world and we make the packaging for their largest beauty care item. The production of this product and its growth have been responsible for maintaining dozens of jobs in the California market for over two decades.”
The benefits of domestic operations can be passed forward, working for all parties involved.
Olcott’s Brodner says not only does U.S. manufacturing support his workers, but also those of his customers. For example, he says, “A project for one of our major personal care companies we serve on the West Cost means our staff of American workers keeps working, which means the quality remains high and that results in efficiencies across the board, including lower costs and timely production and distribution.This approach has garnered us a positive reputation, and our clients remain as loyal to us as we are to them.By maintaining our U.S.-based operations, we continually grow our business and, in turn, help our clients do the same.”
Filippidis of Ares, notes: “As a company, we feel that creating jobs here, not only in the United States, but in New York City, is key to improving our economy.”
Hill of Diamond Wipes, adds, “Increasing numbers of our accounts are developing or have already instituted a supply chain program—encouraging and often requiring their suppliers to work with domestic partners and small businesses.”
Made in USA Label
A Made in the USA label can carry a positive message, both domestically and abroad.
Dias of Oxygen, says companies are looking for products with high quality and innovation, and a Made in the USA mark is “for sure a point of difference.”
Olcott’s Brodner agrees. “Globally and domestically a Made in the USA product is in high demand because it instantly signifies quality. We even mark every box we ship ‘Made in the USA’ which is important to both our U.S. and international customers.There is a much more positive impression of an item that is manufactured in the U.S. than anywhere else in the world.”
While Diamond Wipes sources both domestically and globally, Hill says a Made in the USA label holds allure. “For many of our customers in the cosmetic and personal care industries, the promise of superior product quality and integrity is critical to their brand positioning. Choosing to have their products manufactured in the USA is one way to deliver that promise to their consumers. It is more than just a statement of fact.”
RockTenn’s Kimbrough says, “We are beginning to see traction around the Made in the USA label, and expect to see some of our customers choosing to incorporate the message on their primary packaging.”
Labels get even more regionalized at Ares. Filippidis says, “We find that clients are interested and seek us out because of our ‘Made in NYC’ label as well as our FSC certification and Rainforest Alliance certification. Not only as companies, but as individuals, they understand the need for us as a country to continue to manufacture domestically.”
Consumer Appeal
Consumers have also been paying more attention to a Made in the USA label.
Dudlak of Chicago Paper Tube & Can Company, observes: “Consumers, too, are more and more selecting American-made products in order to support U.S.-based manufacturing. Our clients can build and boost their brand as they tell their ‘Made in the USA’ story, grow their consumer base and distinguish themselves from competitors.”
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The Export Advantage As a growing number of entrepreneurial beauty brands seek to enter overseas markets, a Made in the USA label can help them succeed. Sheila Sebor, vice president, operations, ICMAD, says manufacturing is coming back to the U.S. due to factors including quality (safety and functionality); cost (savings are not what they once were); and time to market (shipping componentry). She says consumers overseas see the quality of a Made in the USA label. “It has a certain appeal to overseas consumers—quality, safety, level of confidence, sustainability. Countries still look for and want to emulate the U.S.” ICMAD provides export certificates for members who want to sell their products abroad. The organization has seen an upward trend. Last year 1,300 certificates for overseas sales were processed for confirmed orders. Sebor says that number will likely grow to 1,500 or 1,600 this year. Even if some componentry such as brushes comes from overseas, notes Sebor, the trend is for contract manufacturers in the U.S. to provide assembly. For more on ICMAD and its views on Made in the USA products, please go to www.beautypackaging.com |
Gabor says that more than 900 brands now carry the mark, including several from the beauty industry. Michael Todd True Organics is one of the recent companies that has signed on to use the mark. Lewis Hendler, chairman, Michael Todd Cosmetics, says he believes that a Made in USA label appeals to consumers in the U.S. as well as globally. “U.S. manufacturing represents a positive feature or benefit in our estimation,” says Hendler. He says that 100% of the manufacturing is performed in the U.S. The packaging is sourced overseas. Other beauty brands carrying the Made in USA brand certification mark logo include Dolphin Organics and Sensible Organics. More info: www.madeintheusabrand.com |
