Steven J Shifman: “Opportunity lies in running as fast as the marketplace”

It’s been seven months since the launch of Michelman Innovation Centre for Coating (MICC). How has the industry responded?
The amount of interest in the Indian market with regards to finding sustainable solutions is awe-inspiring. Since the opening of MICC in January 2018, we have had an overwhelming response from the brand owners as well as the converters and the film-makers showing up at our facility. Not only the flexible packaging space but also the paper coatings space is exciting. India is contributing significantly to our growth. There is an enthusiastic and rapid growth taking place in India.

Two debates in India: one about the plastic ban and the second about food safety. So, how can Michelman help?
First of all food safety is something that we have been working on for decades at Michelman. A few decades ago we started with paper packaging in the United States and it has been expanding over the years also into flexible packaging. We do a lot of work in food safety in the form of various types of barrier coatings and coatings to enhance the sealing properties of a pack. On the plastic waste front, I think if there’s anything that is causing our phones to ring every day is the plastic waste directive.  I think the packaging and the brand owners are incredibly interested. For decades, Michelman has been developing coatings that can help to downgauge and help to eliminate plastic waste.

Historically, the challenge has been economic feasibility. Today, according to our findings, two things have happened. First, in some cases, the customers don’t care about economics because they need to find a way to solve the problem. This is good news. Secondly, thanks to technological advancements, we have been able to develop solutions that are economically feasible. So, we are finding a lot of opportunities to be competitive with price and at the same time solve the plastic problems.

In the Indian flexible packaging space, there are around 1,000 odd converters of which top of the pyramid are the ones who control 30% of the market and are aware of the security and the other things but there are a lot of companies that are at the bottom of the pyramid, one, they don’t have the knowledge and second they may not be keen to implement these things. So, how do you look at these companies and what should they be doing, ideally?
Our investment in the innovation centre is more beneficial and useful for the small converters. The big converters have in-house facilities for testing and prototyping and hence can innovate. However, smaller converters, which are typically family-owned businesses, are not in a position to invest in these kinds of equipment and laboratories. This is the gap which MICC fills in perfectly because that is the infrastructure which we have, which these converters can use to design and prototype new packaging structures which are in compliance with the plastic waste management regulations. This coupled with Michelman’s expert team aims to enable these small and medium-sized converters.

For an Indian converter, what is the biggest risk today?
There is so much challenge in the marketplace now with finding ways to eliminate the plastic waste. I’m sure all the converters are keenly aware of this and working aggressively to help their brand-owner customers, so, the biggest risk is not to be able to meet with the demands of the marketplace and to not be able to adhere to the strict norms that the government has enforced. Also, things are changing very fast. If a converter is not able to adapt and match his speed to the market then he will also have the risk of losing the market share.

When we say adapt, what does the converter has to change today?
I think it is the mindset that needs to change. The converters have been solving brand owner’s problems for many years successfully, but these solutions have been primarily related to downgauging, print quality, and physical properties of the packaging. The customers are asking for something different now, so the converters have to deal with the change like anybody else in the business, and get rid of some of the embedded assumptions, and that’s is one of things that we like about the Indian market that unlike the other parts of the world, the customers in India are rapid, eager to try new things, they are enthusiastic about dealing with the changing marketplace. For Michelman, that’s one of the reasons that it is so exciting to be here because of the pace of the change and the enthusiasm in the marketplace.

Is this a challenge for Michelman?
The biggest strength for us is that we can move very fast to keep up with the fast moving market. Our Indian customers are enthusiastic about trialling new things, about finding new solutions and it’s important for us to keep up with them. The plastic waste management directive is an opportunity in this market. There are many interesting challenges in the market and many opportunities for us. 

What is the significance of a packaging converter in the value chain? Do you believe converters need to move up the value chain?
It is a very competitive market out there, and as I said, it is also adaptive, enthusiastic and energetic. The converters are going through a lot of change right now because they are meeting the needs of the demanding and fast moving consumer goods markets and other packaged goods markets. What we are also finding which is exciting is the solutions that our team in India are creating. These solutions are finding homes outside of India as well. 

What are the unique applications that you see in India?
We are innovating a lot in edible oil and paper cups industry. What is unique in India, at least in comparison to the western world, is the sachet packs. The small size sachet is unique to this part of the world; we don’t see that product in the Western world.

Michelman has been making a significant investment in India, what is your vision for the Indian business in the next five years?
Rapid growth, our growth in this marketplace is very significant and Michelman is a very purpose-driven business. Our business is all about innovating a sustainable future and that’s the purpose of our company and sustainability is incredibly important to us. Wherever we are working we work on finding interesting sustainable solutions and we believe in acting consciously and practising conscious capitalism. For us it is very important that we serve our people, we serve our planet and if we do that we will make plenty of profit. Michelman’s vision is to work with our Indian customers to help with this rapid change and develop more and more sustainable packaging, we believe that we made the investment in India at the right time and we have been overwhelmed by the response to our investment. So for the next few years, we intend to plan on significant new investments in the market, we are hiring a lot of people, we are working quickly to deal with the change in the market. 

You spoke about conscious capitalism. Please elaborate.
It is something that Michelman has been practising since a long time and we practised it before we started calling it conscious capitalism. If you look at classic conscious capitalism, there are really four underlying tenets. The first is that the business is purpose driven, it has to have a strong purpose and as I said earlier, Michelman has an incredibly strong purpose of innovation and sustainability. And unlike many western businesses we are really about the future, and we are building for generations to come. 

So, conscious capitalism begins with a strong purpose. Secondly, we are very focused on all the stakeholders and not just shareholders. Our shareholders are very important to us like in any business, we have to get the returns to our shareholders but we also have many other stakeholders, our associates, our employees are stakeholders, our customers are clearly stakeholders, and our suppliers are stakeholders. Michelman is very involved in the communities where we work, we do a lot of charitable work and a lot of giving. We have conscious leadership and we work very hard to have leaders in our organisation that are more than about just making a profit, our leaders understand all of our stakeholders.

Our leaders are about helping all of the associates to have fulfilment in their job and find a career, build capabilities skills and finally, there needs to be a conscious culture, we work very hard on having the right culture, it’s a culture where I think people enjoy themselves, look its work, everybody works hard, but I want our people to smile, I find as what we say sometimes in American business sometimes about the smell of the place, that you walk-in and you can smell that the people are happy. So, again with conscious capitalism, it is a purpose, its multiple stakeholders, leadership and it's having the right conscious culture and that’s what is really important to us at Michelman, whether it is our team in China, Europe, USA or here in India. That is how we like to operate our business.

We have heard that you regularly write letters to your employees and to their families, so what is that about and how important is the communication part of the leadership?
I really want all our associates around the world to understand what our strategy is, what is important to me and what we are thinking about and some of the lessons, and understand how the business is doing. So, the monthly letters are all about that. 

These days, I am writing a lot on conscious capitalism, things that I am thinking that are on my mind, things that impact our business. So, it is really a way to make sure, our associates around the world feel connected to the company and what’s important to us and that they feel a part of the Michelman Company. I started this back in 2008, during the financial crisis, because I wanted our associates to know that we were doing okay and we are going to be fine. Because, everybody felt impacted by the financial crisis and I started writing newsletters monthly and once I started writing I couldn’t stop, I think people began to accept that.

Growth plans for India?
Well, right now it’s moving so quickly, as I said earlier, our opportunity is to run as fast as the marketplace. We invested heavily in the Michelman innovation centre for coatings, we are making more investments in that facility because we are finding that there are more tools that the marketplace is looking for. 
We continue to put in capital investments, more tools, and more capabilities and hiring more people so, yes, we are planning on continuing to invest in India.