In The News

P&G reveals dollar details about 'breakthrough in packaging'


Cincinnati Business Courier

Details emerged Friday about cost savings that Cincinnati-based Procter & Gamble Co. expects as a result of launching its iMFLUX Inc. subsidiary, which plans to build a plant in West Chester.

The plastics technology that iMFLUX is developing could save P&G $150 million annually in packaging costs as well as reduce capital expenditures by $50 million a year, chief financial officer Jon Moeller said during a conference call with market analysts.

The call was scheduled to talk about P&G’s earnings for the first quarter of the fiscal year, which ended Sept. 30. Moeller mentioned that Procter & Gamble (NYSE: PG) has “a strong innovation program coming in the back half of the year.”

The first analyst to question Moeller, Bill Schmitz of Deutsche Bank, asked whether plastics packaging technology being developed by iMFLUX could be “a game changer going forward in terms of how you make and buy bottles and give you a pretty neat competitive cost structure advantage.”

A news report last week in Advertising Agehad quoted an anonymous source as saying P&G could save up to $1 billion a year as a result of iMFLUX. I reported on that claim in the Cincinnati Business Courierbut in a follow-up story this week I reported that an informed source had told me the savings were expected to be significantly less.

“I do stand by the numbers reported,” Jack Neff of Advertising Age told me later this week. “Whether the system can actually produce savings of up to $1 billion annually for P&G or reduce thickness of plastic by as much as 75 percent, I don’t know. However, the former is what the source reported hearing” from former P&G CEO Bob McDonald.

With regard to the 75 percent figure, a patent application in which iMFLUX’s vice president for research and development, Gene Altonen, is named as the primary inventor “walks through how the high-velocity injection molding system described can reduce wall thicknesses from a millimeter to as little as 0.25 mm,” Neff said. “If this is an exaggeration, it would be an exaggeration on the part of the patent application.”

P&G and iMFLUX had been mum on the matter until Friday.

“Due to the competitive nature of the business, and the fact that our technology and processes are currently undergoing the patent application process, we cannot share extensive details,” iMFLUX spokeswoman Anna Hogan had told me.

Moeller called the iMFLUX technology a “proprietary breakthrough in the packaging area.”

When rolled out across P&G’s businesses, the iMFLUX technology “should deliver about $150 million in cost savings per year and will allow us to avoid about $50 million in capital expenditures annually,” Moeller said.

In addition, “it could reduce resin usage by over 100 million pounds per year and eliminate energy usage by over 250 million kilowatt hours,” Moeller said. “Finally, we’re hopeful that this breakthrough will allow us to reduce our time to market for package development by up to 50 percent. So it is something we’re excited about and should benefit from.”

As I reported earlier this month, iMFLUX plans to create the equivalent of 221 full-time jobs within three years at the plant in Butler County with an annual payroll of $17.5 million.

iMFLUX Inc. was created to develop new plastics processing technology for injection molding. Founded this year, the company is headquartered at 8611 Beckett Road, P&G’s Beckett Ridge Technical Center.