Bringing It On-Shore

Late last year, Apple’s CEO Tim Cook announced that the Cupertino, CA-based company would manufacture more Mac computers in the U.S., investing $100 million in the project. In January, Bill Simon, president and chief executive officer of Wal-Mart U.S., revealed a plan in which the world’s largest retailer would source $50 billion worth of additional products in the States by 2020. Around the same time, Ford committed to bringing back thousands of jobs to U.S. factories by 2015, saying it would shift some of its production from Japan, Mexico and China to Michigan, Ohio and Missouri.

The reasons for producing goods in the U.S. vary. In the beauty industry, brand manufacturers have found that in many cases, choosing an easily accessible packaging supplier can result in advantages including decreased time to market, competitive pricing, a more efficient supply chain and overseeing a product closer to its distribution point.

Increased Business

Suppliers we spoke to for this article range from companies that are U.S.-based and adhere to a strict domestic-only manufacturing policy to those who run facilities around the world, but see a strong demand from U.S. clients for regional production and so, have established stateside plants.

Jack Albanese, sales engineer/new business development, at Lombardi Design & Manufacturing (with headquarters in Freeport, NY), tells Beauty Packaging, demand is up for U.S.-made products for a variety of reasons. “As costs have risen in China, so has the cost for trans-ocean shipments. Combined, they help to make our domestic pricing that much more competitive. When taken into consideration, all of the logistical headaches, different time zones, extended lead-times and currency fluctuations, Lombardi’s U.S. manufacturing offers something foreign suppliers can’t match: local control, confidence and stability.”

A selection of mascara packages manufactured at HCP’s facilities in New Hampshire

HCP Packaging USA, runs manufacturing facilities in Hinsdale, NH. Damien Dossin, president, reports they have seen an uptick in demand for Made in the USA products and services over the past year or so.

Dossin says, “As the launch cycle for cosmetics is shortened and the rate of refresh for brands is much quicker, we have experienced a significant increase in the demand for manufacturing in the U.S. Domestic development, engineering and manufacturing help our customers cut down on lead times and speed to market.” Looking to the future, he adds: “Some customers have a corporate objective to source all cosmetic packaging in the USA moving forward to aid with flexibility.”

Ahava choose CTL Packaging’s transparent easysupplytube to display the quality of their product through the tube.

A short radius to clients is icing on the cake at CTL Packaging, where Anna Soden, director of sales and marketing, says the company has experienced increased demand, as “customers see the value in Made in the USA products.” The plastic tubes manufacturer is located in Dallas, NC, about 25 minutes from downtown Charlotte. The headquarters is ideal according to Soden, who says 70% of the U.S. plastic tube market is within 1,000 miles of Charlotte.

Brand Perspective

Bob Bastedo, executive director of purchasing at Shiseido America Inc.

On the brand side, Bob Bastedo, executive director of purchasing at Shiseido America Inc., tells Beauty Packaging, “I don’t know if there is a trend per se, but I think there has definitely been a leveling of the playing field occurring over the last two years or so where costs and lead times out of China and elsewhere have increased to the point that near-shoring or on-shoring back to the U.S. is at least worth a serious look now.”

And, in fact, some of Shiseido’s packaging has been produced in the U.S. for years. Bastedo says, “There is a segment of our packaging purchases that really never left or was ever largely sourced outside the U.S. and that is secondary packaging and printed materials such as folding cartons, where we always had and still maintain high-quality and cost-competitive suppliers.”

Outside of Japan, where most Shiseido products are produced, Bastedo says, “There really hasn’t been a push to source locally on our luxury brands as the quality of components (and/or the competitiveness of overseas pricing) has driven the decision-making more and, to be frank, U.S. sources were not considered much in that regard. Of course, if it makes sense from a quality/service/cost standpoint, and you can find the right vendor partner, purchasing regionally is almost always preferred.”

Founding Principle

For some packaging suppliers interviewed for this article, a Made in the USA label is nothing new. It’s a corporate ethic that stems from strong beliefs wrapped up in the legacy of the company’s founding.

Soden says, “CTL Packaging has without a doubt been a significant motivator in the ‘Made in the USA’ movement. For the past few decades, overseas organizations have dominated the manufacturing industry.” She says with “a rebounding economy,” CEO Manuel Diez finds bringing manufacturing back to the United States is not only a trend, but it offers a glimpse into the future of U.S. commercial longevity. “CTL’s dedication to reestablishing the United States as a strong member of the manufacturing community is reflected both in our location choice and in the way CTL has shaped its culture.”

A large part of Lombardi’s U.S. manufacturing centers on custom caps and spray-through closures for fragrance and skin care. The supplier’s engineering expertise coupled with its knowledge of innovative resins such as Surlyn, have resulted in launches such as Bath & Body Works’ Sweet Pea.

Lombardi Design & Manufacturing, with headquarters in Freeport, NY, has been on board with domestic manufacturing since the company’s founding 24 years ago—at a time when domestic cosmetic packaging was thriving—according to Albanese. He says the ensuing decades saw the rise and fall of a cosmetic manufacturing presence in the U.S. European suppliers in particular invested in the U.S. with new factories alongside an established domestic supplier base. Then, China opened its doors to foreign investment, which paved the way for a mass migration of U.S. manufacturing. “In spite of this,” says Albanese, “Lombardi remained committed to our domestic customers, our experienced employees, and to our vision of being the local source for injection-molded development and components.”

Albanese adds, “Today is a witness to the revitalization of U.S. manufacturing.” We strive to serve our customer base with personal contact, local development, and logistics that make sense. Our largest customer base is established in the New York metropolitan area.And, that’s where the majority of our manufacturing is based.”

All aspects of Lombardi’s business are done domestically including design, engineering, and production.

U.S. roots also run deep at New York-based premier folding carton company Arkay Packaging, where the company’s history is deeply entwined in a love of this country, says Mitchell Kaneff, third-generation chairman/CEO. “Our first-generation founder—and my grandfather—Max Kaneff viewed his coming to America from Ukraine as a great victory. He was so proud of his American company, which he began 91 years ago in New York City. This has not altered over time—Arkay affirms and endorses a Made in the USA culture to this day.”

Arkay produced the Fade to Black cartons for Smashbox. Gregg Goldman, director of sales at Arkay, says the coolest thing about it is the blind embossed logo and weight claim. “There was risk of the logo becoming invisible, instead of subtle, so our customer was on press while we printed and embossed simultaneously to make sure that the gradation of the vignette and the depth of the embossing lived together.” Goldman says that while “some small portions of the raw materials may come from outside the U.S., in North America, all of the carton manufacturing was done right here in the USA—in our factory in Roanoke, Virginia.”

Today, Arkay’s U.S. manufacturing facilities are located in Roanoke, VA. Like others interviewed for this article, Kaneff says that Arkay has experienced increased demand for Made in the U.S. products and services over the past year or so.

The same holds true at The Penthouse Group, which Steven Ostrower, president, says is the last remaining manufacturer of cosmetic puffs in the USA from a base line of over 70. He tells Beauty Packaging, “Yes, we have experienced increased demand for Made in the USA products over the past year or so,” and says they attribute this to their ability to reduce both costs and lead-time.In addition, “We’ve found that by exceeding customer expectations, [clients] are very happy to keep their business in the USA.”

Located in Freeport, New York, 30 miles from Manhattan, The Penthouse Group is also a third-generation, family-owned company. It was founded in 1952 in New York.

The North American Tube Council awarded JSN the Tube of the Year Award in the category of Best Personal Care 2011, for a tube they manufactured domestically for Philip B Russian Amber Imperial Conditioning Creme.

JSN Cosmetic Packaging, which specializes in manufacturing plastic squeeze tube packaging and injection molded caps—including product design and mold maintenance—has called Irvine, CA home for the past 30 years.

Owners Jim and Sandy Nagel say they want to keep all of their manufacturing and packaging support for customers in-house. “This allows us to directly monitor production quality at every step, and helps us deal with all stages of our customers’ packaging requirements firsthand,” says Jim Nagel.

“Because we are a family owned business, we feel that being in one domestic location has been a positive factor both in terms of our stability and focus,” says Sandy Nagel.“It helps us maintain a unified vision in all decision-making processes.This keeps us in control of production flow, quality and service at every level of manufacturing.”

In 2013, CSI launched a new line of single wall PP jars called Fiore. Alexi A. Smith director of sales and marketing, says, “U.S.-based customers have chosen this jar for their product lines as part of their Made in the USA initiatives.”

Alexi A. Smith, director of sales and marketing at Cosmetic Specialties International, LLC (CSI) explains that the company’s remaining a U.S.-based manufacturer over time has served them well. “There was a period of time in the industry where a majority of manufacturers was considering the outsourcing of their products to China and other Asian countries,” says Smith.“Many did move forward with that option, but saw complications such as increased lead times and transportation costs as well as an overall decline in quality of the product. We recognized the issues other manufacturers were having, and received feedback from our customer base about their negative experiences with foreign sourced goods—this reinforced the initiative to remain a U.S.-based manufacturer. We have now seen customers seeking us out solely based on that fact.”

Verla International has also held true to domestic production. The private label contract packaging and filling company, located in New Windsor, NY, about an hour north of New York City, owns 50 acres, with five buildings (290,000 sq. ft.), and has room to expand.

April Vignone, president-Trendsetters International, consultant for Verla International, tells Beauty Packaging: “We believe in supporting our local economy, and manufacturing in the U.S. allows us to have tighter control on raw materials.” In addition, she says, “Most of our customers would rather say that their products are made in the U.S.”Vignone says Verla is one of the only domestic manufacturing facilities with an in-house machine shop.

“Our team of mechanical engineers designs and builds all our manufacturing and filling equipment, which allows us to provide innovative filling concepts for color cosmetics, nail polish, specialty skin care, lotions/scrubs, and fragrances with the utmost efficiency at very competitive pricing. Our R&D team consists of chemical engineers, chemists, and lab technicians who are consistently researching new raw materials to create the most innovative formulations,” says Vignone.

Juan E. Bruna, president of Miami-based Bruna Seals, says that local manufacturing and conversion enables the company to incorporate a service model that “really allows our customers to create an efficient supply chain.”

“Choosing a business location is perhaps the most important decision a business owner will make,” says Juan E. Bruna, president of Bruna Seals, who selected Miami for his corporate headquarters and production facility. He says building a manufacturing enterprise in the U.S. has its challenges but it also allows Bruna Seals to tap into a skilled multilingual, multicultural workforce drawn from more than 100 nations. In addition, its central location in the Western Hemisphere “facilitates communications with our European, South American and Asian clients.”

Bruna says, “In the past year, we have seen many of our customers return to the U.S. market to address their package related needs and begin to consider the level of service and product innovation that Bruna Seals offers as a competitive advantage over what they have experienced outside the U.S.”

From Decotech’s headquarters in Englewood, NJ, just 20 minutes from Manhattan, Richard Engel, executive vice president, tells Beauty Packaging, they have seen a regional strategy develop over the past few years in which clients try to source as much as possible locally. He explains, “The USA is the largest market in the world for perfumery and

Decotech used a gold glitter spray coating with texture on the sophisticated bottle for Michael Kors Gold for Aramis Designer Fragrances (The Estée Lauder Companies).

cosmetics so, one way or another, Made in the USA has become increasingly important for items sold into this market.”

Ethics play a strong role in Decotech’s conviction to U.S. manufacturing. “As a matter of principle,” says Engel, “we strive to source as many of our materials domestically as possible. And we actively avoid sourcing from regions that do not play by the rules of ethics and appropriate business behavior that we hold ourselves to in the USA.”

Engel adds, “We believe that if everyone around the world had to follow the same rules and regulations as we do here in the USA, it would be very hard to compete with American productivity and quality. We are proud of the fact that we produce 100% of everything we sell right here in New Jersey and we also have a 100% full-time workforce; no temps.”

Shivie Dhillon, president of Bottle Coatings—which provides an entire range of services, including general powder coating services, bottle coatings, bottle sourcing, color matching, silk screening and pad printing—says they have “absolutely experienced increased demand for Made in the USA products and services over the past year or so.” He says the demand continues to accelerate, “as customers appreciate American quality, as well as the convenience of working within a very

Los Angeles-based Bottle Coatings provided powder coating on nail polish gel bottles for L’Oréal’s Essie brand. The bottles were complicated and customized, with detailed embossing. Of particular note, says Shivie Dhillon, president, is Bottle Coatings’ ability to powder coat the raised embossed Essie labeling, which is a very difficult procedure to get right.

positive business climate, which also includes speedy service and good communication.”

Dhillon started the company in the Los Angeles area a number of years ago, and says they have established many great U.S. supply and vendor contacts during this time. “We find that the general atmosphere for conducting business in the United States is strong and supportive.”

Paris Art Label supplies brands including Revlon with labels. Jonathan Tarantino, senior vice president, says, “If you look at any Revlon project line that has label, it was done in the U.S. start to finish for the label itself.”

U.S.-based label manufacturer Paris Art Label, operates three facilities in the U.S., and Jonathan Tarantino, senior vice president, says this gives customers a number of advantages. “The lead time is the major factor, the cost is second and the quality is much better,” says Tarantino. “Our commodity requires a very short lead time,” he adds. “Usually the label is ordered last. Manufacturing a label in China would not only take way too long with the shipping lead time, it would also be more expensive when you add freight costs in.” On the other hand, Paris Art manufactures and ships labels to clients in China.

Opening a U.S. Plant

The popularity of domestic suppliers has been strong enough to prompt suppliers based in other regions of the world to open U.S. plants.

Padtech used its pad technology to produce a package for Kate Somerville, called Clinic-to-Go, which is a glycolic facial peel.

Take Padtech for instance, which maintains U.S. manufacturing facilities in Flemington NJ, but is headquartered in Norway. Padtech is a contract manufacturer with its own protected technology. They fill, decorate, and do complete secondary packaging for their customers using their pad technology. Matthew S. Grimaldi, executive vice president of sales and marketing, tells Beauty Packaging, “Being Norway-based, we still felt the best opportunity to achieve business was in the U.S. market.”

Grimaldi says, “Across the industries that we are involved in, which are the HBA, OTC and pharmaceutical industries, having products made in the USA is of utmost importance based upon what we have seen.”

R.A. Jones, a company of Coesia Group, which manufactures packaging machinery, produced the scalloped top carton for Clairol Hair Color in its U.S. facilities.

R.A. Jones, a company of Coesia Group, which manufactures packaging machinery, owns facilities in Iowa, Kentucky and Virginia. Rusty Sparling, sales director, tells Beauty Packaging, “There has been a trend back toward ‘buy American.’ ” He says they expect this to continue as the middle class and wages grow in low-cost manufacturing countries such as China and India. “The U.S. can be quite competitive,” he says.

Sparling says R.A. Jones manufactures in the U.S. because it’s the bulk of their customer base, and where many were founded. “Strategically,” he says, “manufacturing in the U.S. has been very important to maintain a very strong after- sales service, spare parts and support organization. We have found that many of our large, global customers also feel that manufacturing here is a strategic advantage for them.”

Anomatic’s global operations continue to grow. The anodized aluminum packaging supplier runs a manufacturing plant in Asia as well as operations throughout the U.S. In New Albany OH, Anomatic is part of a packaging office park that Steve Rusch, director of marketing and business development, says has been dubbed the “Beauty Campus,” featuring a vertically integrated supply chain capable of producing an entire beauty product including the components to the bottles to the formulation and filling. Anomatic was founded in the U.S. in 1967. Rusch says demand for Made in the U.S. products and services is on the rise.

“Location can play a very important role to some domestic customers,” says Rusch. As a result and as an example, Anomatic has opened a new Product Design and Innovation Center in New Albany. Rusch says this new facility features the latest in manufacturing capabilities including custom color matching, laser engraving, a miniature CNC-machining center, and 3D printing capabilities—integrating the entire design process into one facility, helping to shorten customer needs significantly. “As a result,” he says, “customers now have the ability to see new product innovations come to life—from concept to production at a much quicker pace through a process now known as ‘rapid prototyping.’ This production innovation allows brands to bring the very latest in packaging design to their customers sooner—and add a competitive edge to the marketing process.”

Automation Is Key

One key to The Penthouse Group’s success, says Ostrower, is automation. It’s what enables many U.S. suppliers to offer a competitive advantage.

For the launch of Queen Latifah Pressed Powder, The Penthouse Group worked with P&G on a very tight schedule to provide custom concept Flocked Foam Powder Puff samples for experimental orders prior to launch. Steven Ostrower, president, says this required expedited manufacture of production quality puffs so P&G could evaluate and distribute large quantities to their test markets. “Our East Coast manufacturing facility is conveniently situated to support P&G’s global powder manufacturing facilities located in Hunt Valley, Maryland. Through partnership we have reduced lead-times to less than one week,” says Ostrower.

“Our manufacturing expertise is automation,” says Ostrower, “and it has enabled us to grow our business by staying competitive with low-cost regions of the world.”He says their customers are demanding reduced lead-time in both development and production and they measure supplier performance through regular reviews.”

Automation expertise also contributes to Topline Products’ competitiveness. Topline offers fully automated in-line decoration including hot stamping, silk screening, pad printing, in-mold labeling and in-mold decoration, in addition to fragrance filling and nail filling, plus pick and pack, blistering, and assembly. The company, which operates manufacturing facilities around the world, opened a 50,000-sq. ft. manufacturing facility in Dundee, MI. A 79,000-sq. ft. manufacturing facility in Reynosa, Mexico, on the Texas border, was opened primarily to support U.S. and North American customers.

Sandra Hutson, sales and marketing director, says Topline has experienced increased demand for Made in the U.S. products and services over the past year or so—“especially as the need for shorter lead-times has increased.” She says Topline chose to manufacture in the U.S. because “We wanted to improve our service for our North America based clients launching products which are impacted by volatile market demand requirements.”

L’Oréal Color Riche Eyeshadow Quad compact, produced in Topline’s Michigan plant, features the challenging technique of hot foil stamping on a contoured surface.

She says that a USA-based factory gives Topline the ability to offer shorter lead-times and greater flexibility for products, which are difficult to forecast and require close proximity to the production process so they can be carefully monitored.

Time Is Money

As we’ve seen, many of the advantages of manufacturing in the U.S.—for both brands and suppliers—come down to savings in time and costs.

On the brand side, this holds true at Shiseido America, where Bastedo tells Beauty Packaging there are other benefits as well. He says, “Well, lead time and speed to market are big factors. Time is money, so when you can order on quicker replenishment cycles, you don’t have to hold as much inventory, and being able to shorten the concept-to-counter timeline in any way is a huge competitive plus. Further, the development process for the project should conceivably be easier and less prone to misinterpretations dealing with a domestic supplier. You also take the risk of any negative currency fluctuation out of the equation by dealing dollars to dollars as well as mitigate other issues endemic with overseas supply

The bottles for NARS’ 200ml Multi-Action Toner were sourced with and made by Inoac Plastics in Bardstown, KY. The cap was also made in the U.S., by Carolina Precision Plastics.

such as labor or political problems, port issues, customs delays, etc. Finally, it is always nice to be able to place and keep business here and support the American economy while reinforcing the idea that our domestic manufacturing is making a comeback.”

From the supplier side, Verla’s Vignone says domestic manufacturing offers brands a variety of benefits that may not even be apparent at first. “While the initial cost for domestically supplied products may appear to be higher, the final cost is often equal to or lower than a product brought in from overseas. The shipping costs are of course much higher, and if there is a tight deadline, the cost for air shipping can be prohibitive. There may also be a quality control issue with foreign suppliers and, in those cases, having to replace inferior products adds another level to the cost factor.”

At R.A. Jones, Sparling cites a number of advantages for a domestic operation, including quicker shipping; easy access to spare parts and service; no language issues in documentation of communication or project management; high quality materials, replacement parts and components that are more easily sourced. He says there’s better “real time” accessibility to all parties for meetings, general discussions etc., because the time zone differences are pretty minimal. Finally, he says, “Given the weak dollar, U.S.-based machines tend to compete quite favorably from a price perspective.”

Future Opportunities

Time will tell how domestic manufacturing continues to serve the beauty marketplace. Clearly there are advantages to regional manufacturing in various areas of the world—as well as suppliers with specific expertise. But increased interest in domestic manufacturing—whether a trend or, as Shiseido’s Bastedo calls it “a leveling of the playing field,” a renewed interest can’t be denied.

As far as Shiseido, Bastedo says, “We are still in the nascent stages of identifying/analyzing what parts of our packaging portfolio as well as what domestic suppliers are compelling candidates/good fits to try to on-shore business back to the U.S. or undertake new projects with. We have seen some very promising potential domestic partners lately in the areas of injection molding, blow molding and tube manufacturing.”

He adds: “We have been very pleasantly surprised, when taking a fresh look recently, at some U.S. component manufacturers’ capabilities and competitiveness. It seems those who have survived the economic ‘carnage’ have emerged leaner and more technically advanced and are better equipped to compete in a global arena. We look forward to one day soon being able to logically award and develop more and more of our packaging business closer to home.”

Why We Are Trending to Buy American Written by Chris James A few short years ago, cheap labor was a big enough factor to encourage a surge in global outsourcing of personal care packaging mainly to Asia. As more time has gone by and more research has been done, the many benefits of buying packaging in the U.S. has really started to change the way supply chain managers look at their global packaging options.With continued increase in demand for American made packaging by both large and small brands, we have gone from the idea of simply just paying more for U.S. made containers to a better understanding of the real benefits of buying at home. Three of the main drivers of this change in demand seem to be lead-time and freight costs, quality controls and accountability, and packaging sustainability. The primary benefit for using U.S. manufacturers is reduced production lead-time and freight costs.With average lead-times in the U.S. about half of what most Asian factory lead-times are when including ocean freight, customers no longer have to place larger orders. That quickly translates into smaller inventories on hand and more flexibility in regard to changes in forecasts. When considering the recent downturn in the global economy, companies with less inventories on-hand seemed better prepared to face the financial challenges that resulted.When you add in the recent surge in U.S. Custom’s inspection delays, the already long lead-time from Asia continues to increase making the American factories look all the more appealing. Another factor to consider is the high level of quality control and customer service provided by suppliers here at home as compared to some inherent unease customers can feel when dealing with a foreign supplier. For Asia suppliers, it’s difficult to compete with the idea that customers can visit their domestic manufacturers relatively quickly and inexpensively as compared to having to travel halfway around the world to check on a production run. Mix in local customer service and it provides customers with a higher level of confidence in their manufacturing partners here in the U.S. The need for sustainability in packaging is only going to continue to grow larger worldwide. This is becoming more of an expectation in consumers today and brands are picking up on it quickly. While both U.S. made and globally sourced packaging materials can be recyclable, actually using recycled materials to make the packaging is a growing trend here at home. When one considers that the bulk of recycled materials is found here in the U.S. and Europe, the idea of freighting them back to Asia to be used diminishes the green value. Combined with a stronger chain of material controls, U.S. factories have a strong argument to present to their customers. Buying American allows more companies the opportunity that wasn’t available before. As more brands are entering the marketplace today, retail shelf space is becoming more and more difficult to obtain. This is forcing companies to look at every option to set them apart. Packaging is a great way to accomplish this and a Made in the USA label is continuing to be a major factor in the final decision. About the Author Chris James is co-founder and VP of sales & marketing at East Hill Industries, Inc. www.packagingcosmetics.com; www.cosmetictubes.com