CINCINNATI - Procter & Gamble Co. is expecting to save $200 million a year with a new packaging subsidiary that holds several patents for an injection molding process that saves time and reduces material costs.
“When rolled out across our businesses (it) should deliver about $150 million in cost savings per year and allow us to avoid about $50 million in capital expenditures annually,” said Jon Moeller, P&G’s chief financial officer, told analysts Friday.
“It will also bring significant sustainability benefits. It could reduce resin usage by over 100 million pounds per year and eliminate energy usage by over 250 million kilowatt hours. Finally, we’re hopeful this break through will reduce our time to market for package development by up to 50 pecent.”
As WCPO reported on Oct. 1, iMFLUX Inc was incorporated in August after three years of internal development in P&G's New Business Creation unit.
The company’s vice president of research and development, Gene Altonen, has more than 40 granted patents and at least 25 pending patents, according to his bio. His most recent patent applications involve a “high productivity injection molding method” that produces “a mold formed of easily machinable material that is less costly and faster to manufacture than typical injection molds,” according to the web site, www.patentbuddy.com .
The company was awarded a 60 percent Job Creation Tax Credit for eight years by the state of Ohio in September to encourage the development of a new iMFLUX facility in West Chester Township. The facility is expected to employ 221 people with an average salary of $79,000.
P&G has been trying to save $10 billion in a productivity program that eliminated more than 7,000 jobs. In an earnings call with analysts Friday, Moeller said P&G is ahead of its job-cutting targets for 2014. The company may take some cuts planned for 2015 and move them into the current fiscal year. At the same time, it's working on a supply chain redesign in the U.S. and Western Europe.
"That is a significant opportunity to both reduce cost and improve cash through reduced inventory and, importantly, improve customer service," Moeller said. "Basically, our supply chains have come about over years and through a number of acquisitions. This is an opportunity to step back and say, 'If we were doing this over, how would we do this?'"
While iMFLUX represents a big cost-saving opportunity, it could also become a product line that P&G can sell to other companies, said Stuart Schaefer, a former global head of external business development for P&G Chemicals.
"If P&G can produce plastic bottles significantly cheaper than anybody else, that could be a major profit center for them," said Schaefer, who left P&G in 2008 and now owns his own packaging company, Green Up Street LLC.
Ceresana Research estimated in March that the global market for high density polyethylene, the type of plastic commonly used in U.S. consumer packaging, will reach $70 billion by 2019. Bottles account for about 28 percent of that global volume. So, P&G has a ready market of potential customers already spending billions.
Schaefer said iMFLUX will find customers if its bottle-making technology doesn't require a huge upfront investment or ongoing use of proprietary resins. But he suspects P&G is planning to market iMFLUX technology outside the company because of the executive they put in charge of the new venture.
Nathan Estruth is a 22-year P&G veteran who previously led the P&G’s franchise companies, Mr. Clean Car Wash and Tide Dry Cleaning.
"He's the kind of guy you'd put in charge if you wanted to make it an outside business," Schaefer said.