Behind the Headlines
What happens when a new law bans your product
Week of January 1, 2019
Along with the ball dropping in Times Square, the New Year brought a new law to New York City — a ban on coffee cups, food packaging and foam packing “peanuts” made from the expanded polystyrene plastic commonly known as Styrofoam.
A similar ban is in place in San Francisco, and manufacturers of the products were not surprised by the new law in New York since it had been in the works since early in 2018. But the new law and those like it that focus on one particular product can have devastating effects on small and medium-sized industrial companies whose entire business and manufacturing processes are focused in that one area.
“Some companies will be caught in the wrong space,” said Ron Leach, Chairman of Novipax, a PE-owned maker of polystyrene trays and absorbent pads used in supermarket packaging of meat. “Fortunately, the New York law exempted the use of the product for meat packaging as well as for things like the shipping blocks used in packing TVs and computers.”
Leach said that most small manufacturers simply cannot afford the investment necessary for a retooling to make an entirely new product if a law or regulation bans their current offering.
“In the packaging business now, for example, there is a lot of pressure to do away with plastic straws due to environmental concerns,” he said. “Big, multi-product companies can shift to other products. But if you’re a small specialty player, you’re probably in serious jeopardy.”
Environmental impact will weigh increasingly on business, Leach believes, since younger consumers consider it so important.
“But in packaging, at least, where I’ve spent my entire career, there are no easy answers and no clear-cut rights or wrongs,” Leach said. “For example, is a can of tuna fish better than a one-portion plastic pouch? Metal cans and paper can be recycled, for example, but they take a lot of water and energy to manufacture and ship. Consumers and manufacturers like pouches because they are convenient and lighter. But they’re made from complex layers of plastic that don’t decompose. Which is better?”