PAX - the Packaging Council of Australia

Who is Pax Cont.• Started in Botany, it now has a modern facility inIngleburn on 6.5 hectares.• Pax manufactures some 85 million units of aerosols &liquids of which 40% is exported throughout the AsianRegion.• Approximates $600 million in retail sales.• Employs 380 people.• Produces 700 different products:- using 5000 different materials,- for 30 different clients,- across 20 different countries.28/02/07 Version 01Shaping Australia’s Future

Pax Customers!• PROCTER & GAMBLE ASIA• COLGATE PALMOLIVE• LEVER REXONA• BRISTOL MYERS (NOW P&G)• GILLETTE AUSTRALIA AND ASIA• SCHWARZKOPF HENKEL• SHISEIDO• AVON28/02/07 Version 01Shaping Australia’s Future

Pax Customers!• JOHNSON & JOHNSON• WD-40• PHARMACARE• GOLDWELL KAO• REVLON• ALBERTO CULVER• WELLA• SABRE28/02/07 Version 01Shaping Australia’s Future

Botany!28/02/07 Version 01Shaping Australia’s Future

PerceptionPopular Opinion!Manufacturing in Australia:• Is not competitive.• Is regarded as an “Old World” Industry.• Has no part to play in an advancedeconomy.• “Clever Country”28/02/07 Version 01Shaping Australia’s Future

Circle of ChangeLOCALISATIONREGIONALISATIONLOCAL INNOVATIONDIVERSIFICATIONREGIONALISATIONRATIONALISATIONGLOBALISATION28/02/07 Version 01Shaping Australia’s Future

Move to Ingleburn.• 1985 – Appointment of a Microbiologist• 1990 - Relocated from Botany.• Change of company name• Upgraded facilities to meet the increasingGovernment legislative requirements & qualitystandards.• Recession.• Looked at Asia for growth opportunities.• Procter & Gamble.28/02/07 Version 01Shaping Australia’s Future

Ingleburn28/02/07 Version 01Shaping Australia’s Future

World Manufacturing Influences.• America – The Americas• Europe – The Russias• Japan – Asia– Recognition of Japan’s desire & influence in Asia.– Sought an association with a Japanese company todevelop Regional supply.– Opportunity of producing a replica of P&G WorldStandard Styling Aids Plant in Shanghai for the DaizoCorporation.– Development of the relationship with the DaizoCorporation over the last decade.28/02/07 Version 01Shaping Australia’s Future

Alliance formed with Daizo!28/02/07 Version 01Shaping Australia’s Future

Birth of One Asia!• Pax Australia and the Daizo Company of Japan havejoined forces to create One Asia.• One Asia is a manufacturing strategy that simplifiesmanufacturing of aerosols and liquids in the Asia PacificRegion.• One Asia facilities currently cover:– Tokyo Japan– Kyoto Japan– Sydney Australia– Bangkok Thailand– Shanghai China28/02/07 Version 01Shaping Australia’s Future

One Asia Strategy• One Asia provides Pax Australia and its suppliersthe opportunity CHINA to grow through: Kyoto Tokyo– Direct Exports from Pax.THAILANDShanghaiJAPAN– Supply Bangkok to other One Asia facilities.AUSTRALIASydney28/02/07 Version 01Shaping Australia’s Future

Formation of One Asia!Con RyanPAX ChairmanShigeoki TogoDAIZO President28/02/07 Version 01Shaping Australia’s Future

What is One Asia?• Partnership of two very successful manufacturers(DAIZO & PAX) who understand the different needs ofthe Asian Region.– Merging of Asian & Western cultures.– Able to manufacture aerosol and liquid productsthroughout Asia.– Are Internationally Competitive in Quality, Serviceand Price.– “One stop shop for production in Asia”28/02/07 Version 01Shaping Australia’s Future

Partnership StrengthsDAIZO• Superior Quality• Company Size• Experience• Asian Culture• Multiple Facilities• Creativity & InnovationPAX• Commercial Skill• Batch Making Expertise• Experience• Western Culture• Large Modern Facility• International PriceBenchmarking.28/02/07 Version 01Shaping Australia’s Future

THE ONE ASIA MISSIONTo develop a manufacturing network thatprovides the finest products and services forregional and local customers28/02/07 Version 01Shaping Australia’s Future

Encourage Complexity.• Recognition that Asia has different product requirementto America & Europe.• Pack sizes are usually smaller.• Formulations are sometimes different.• Differing Government regulations for labelling.• Language specific to country.28/02/07 Version 01Shaping Australia’s Future

Quality is the Driver!• Recognition that quality is the driver of the Pax strategy.• Service• Price28/02/07 Version 01Shaping Australia’s Future

Quality Standards!• Recognition that Japan has the highest qualitystandards world wide.• Hair Care AQL’s are:Region: CRITICAL MAJOR MINORUSA 0.15 1.50 4.00EUROPE 0.40 1.50 6.50ASIA 0.04 1.50 4.00JAPAN 0.04 0.65 2.5028/02/07 Version 01Shaping Australia’s Future

Quality Standards!• Formation of Quality Assurance Department.• Introduction of Procter & Gamble QA system.• Government sponsorship of Japanese QA officerfor a 2 year period at Pax.• Staff Exchange Program between Daizo & Pax.• P&G Pinnacle Award.• ISO 9000:1994 certified.• TGA Licensed.• Regular International Customer quality audits.28/02/07 Version 01Shaping Australia’s Future

Pax & P&G• Pax is designated a P&G Strategic Site.• Current QA Rating 100• Achieved in October 2006.• Pax is now rated the highest quality producer ofpersonal care products for a contractor in the P&Gworld28/02/07 Version 01Shaping Australia’s Future

Pricing Strategy:Elements for Regional Success.• Internationally competitive TDC.– OpenLocalCosting.– International Pricing Strategy.$ExportTime28/02/07 Version 01Shaping Australia’s Future36

USA & Europe:•4 month delivery forstandard product.DeliveryPAX:• 8 week delivery for standardproduct.• Long lead times for nonstandardproducts.•High costing for pack orformulation variations.• High shipping costs intoAsia.• 8 week delivery for nonstandardproduct.• No costing penalty for packor formulation variations.• World competitive shippingcosts into Asia.28/02/07 Version 01Shaping Australia’s Future

DeliveryUSA & Europe:• Minimum order quantities6-12 month’s stock.• Weekly delivery notavailable.PAX:• 1 pallet minimum orderquantity.• Weekly delivery available.28/02/07 Version 01Shaping Australia’s Future

Shipping Costs.FREIGHT TO: FROM USA FROM AUSTRALIAKOREA $2336 $720SINGAPORE $2064 $680MALAYSIA $2304 $660JAPAN $2618 $900HONG KONG $2336 $700TAIWAN $2347 $78028/02/07 Version 01Shaping Australia’s Future

Australasian Aerosol IndustryDevelopment• Asian Focus.• Promotion of Regional Supply ex Australia.• Inclusion of Government Agencies.– Austrade– Department of Foreign Affairs & Trade– Invest Australia• Australian Aerosol Industry Awards.– Inclusion of company Regional decision makers.– Inclusion of Asian Aerosol Industries.– Development of an Asian Aerosol Association.28/02/07 Version 01Shaping Australia’s Future

Strengthening of the Alliance• Paul Curryer has been appointed to the Daizoboard• Nobuyuki Minami has been appointed to the Paxboard• Management succession plan implemented28/02/07 Version 01Shaping Australia’s Future

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Where To From Here?• Focus on the Elements for Regional Success.• Continue to promote One Asia with Daizo toInternational Companies.• Build closer relationships with aerosol associations inAsia.• Support Japanese government initiative of forming anAsian trading market.• Pax $20 million expansion.28/02/07 Version 01Shaping Australia’s Future

!Stage 1Stage 2, 3 & 428/02/07 Version 01Shaping Australia’s Future

Pax stands as a tribute:• To the efforts of our suppliers, employees,customers & Government, who have shownwhat can be achieved when people worktogether for a common goal.28/02/07 Version 01Shaping Australia’s Future

Reality28/02/07 Version 01Shaping Australia’s Future