Packaging supplier calls foul on ‘golden handcuff’ deals

By Simon Pitman

- Last updated on GMT

Related tags Personal care packaging Adhesive

Packaging supplier calls foul on ‘golden handcuff’ deals
Packaging professionals should be aware of too-good-to be-true incentives that combine ‘free’ machinery as part of contracts with adhesives suppliers.

Adhesives are an integral part of almost any type of cosmetic and personal care packaging, providing a seamless structure to both primary and secondary packaging for everything from lipsticks, fragrances and soaps, including almost every type of hair care and skin care product.

When it comes to ensuring that this crucial element of the packaging process is integrated smoothly into the overall manufacturing process, it seems that contractors will go to great lengths to ensure new business.

Stop and think about why the incentive would be offered

Pierce Covert, president of Glue Machinery Corporation, says that at this point, those involved in the decision making process should stop and think about what is being offered to them.

“If you manufacture any sort of packaging product, you’ll probably need to invest in adhesive machinery at some point,”​ Covert told Cosmetics Design.

“And if you’re like most people, you probably haven’t ever really shopped for adhesive machines and equipment in the past, so you might not know exactly what to look for.”

'Cheap' can be more expensive in the long run

Price is usually the driving force behind business transactions of this kind, but although an offer from an adhesives contract manufacturer may seem competitive or attractive, Covert warns that contracts with adhesives suppliers that include free machinery are not quite as sweet as they may first seem.

“While these offers might seem like great deals on the surface, the fact is that there are some serious drawbacks which should give you pause,”​ he said.

“There’s a reason these types of deals are known as ‘golden handcuff’ deals, because once you’re locked in, it’s hard to get out. Getting locked into a costly contract could cut into your bottom line.”

Dig a little deeper into the terms of the contract

Although a free piece of hot melt machinery to apply adhesives seems like a good deal, Covert points out that the likelihood is that this machinery will be amortized into a contract that lasts several years.

“In many cases, this makes it far more expensive than if you simply purchased the adhesive machinery separately,”​ Covert said.

Ultimately such machinery actually has a low cost of ownership and typically requires little maintenance, so expenditures on them should be low and infrequent – something that may not be the case if it is incorporated into a contract.

Related topics Packaging & Design Packaging

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