TBY talks to Bülent A. Atabay, Vice-President of the Packaging Group at Yıldız Holding, on the plastic packaging sector both at home and in Europe.

Bülent A. Atabay
Bülent A. Atabay started his career in 1977 working as a project engineer at Marshall and Tekfen. From 1980 on, he spent 20 years working in various positions at Yaşar Group, and was later appointed through Yaşar Group to the position of General Manager of Akril. He later became Deputy Group Director for Paints and Chemicals, and as General Manager responsible for East European operations in 2001. Since 2009, he has been acting as Deputy President of Yıldız Holding Packaging.

You recently acquired the Italian flexible packaging company Nuroll. How does this acquisition reflect your growth strategy?

We wanted to become a full-range supplier. Our strategy is to buy the technology, know-how, and market instead of developing them. This allows us to run a smooth business operation without any added obstacles along the way. Italy is one of the centers for innovation in packaging, and the opportunity presented itself in the form of Italian company Nuroll.

Nuroll is very experienced in Biaxially-oriented polyethylene terephthalate (BOPET). The packaging consumption rate per capita in Turkey is only $85 per person, and the world average is $130. In North America and Canada this number is as high as $400, and Japan it is $550. This means we have a long way to go, and that the Turkish market is far from being at saturation point. We are aiming to develop Turkey in this area. We acquired Nuroll to reach these targets, and chose the company as it is one of the only companies in Europe producing BOPET. We will keep Nuroll in Italy producing specialty products, while Polinas will focus on the commodities.

What expansion opportunities came about with the acquisition of Nuroll?

In the planning stages of acquiring Nuroll we knew we would have to make follow up investments, and so now we are investing in Nuroll's technology. We are also investing in a new plant very close to Polinas' facilities in Manisa. This will be a new line producing 30,000 tons of BOPET per year. Nuroll's capacity is only 20,000 tons and contains an extra two lines. We will transfer the technology from Nuroll to this new production facility. Hopefully, this facility will start up in January 2012. With these investments complete, the packaging group will have a yearly BOPET capacity of 50,000 tons, and a biaxially-orientated polypropylene (BOPP) capacity of 100,000 tons. This puts us in a strong position in the European league and the world league—at least in the top 10. The major driving force behind these acquisitions is the fact that Turkey is becoming a production center in Europe. If European clients place an order with us, they will receive it within a week; this is not possible from other countries, including China.

How much of your production is for the export market?

Currently we export 35-40% of our production mainly to European countries. For every 100 units of exports, 80% are sent to Europe.

What sort of a range of products do you offer your clients?

Our biggest volume goes to clients producing chocolates, biscuits, cakes, and beverages. Besides packaging, our products find application in the electronics and photovoltaic (solar) industries—and these are areas we are looking to move further into, and produce mainly in Italy. We will shift volumes for commodities over to Turkey, while the technological films will be made over in Italy.

What steps has Polinas taken to make plastics more environmentally friendly?

What to do with plastics is an environmental question being asked around the world. People carry out a lot of campaigns against plastics, but these protests are unrealistic. Plastic brings comfort to the lives of people. Without plastics life would become very difficult, and it wouldn't be possible to provide the same storage capabilities. Therefore, instead of trying to get rid of plastics from our lives we have to find out how to avoid the negative consequences of their use. In the world, paper is the most recycled material, the second is metal, the third is plastic, and the fourth is glass. Only an insignificant part of packaging material can be recycled. To package 6,000 chocolate bars you need only one kilogram of film. Therefore, it is not possible to go through the recycling process and classify the packaging as garbage. So, we must use biodegradable plastics. But when you use these products there are costs as well.

One biodegradable option is polylactic acid (PLA), which is derived from corn. This is really something difficult to believe in because a lot of people in the world are hungry; they need food, and corn is a food staple. It is ridiculous to use corn for packaging purposes, and it is expensive. Therefore, we have developed a synthetic-based biodegradable material. A petroleum derivative is still used as a raw material, but some extra additives are added to make the films degrade over time. We started rolling out this product in 2007. We have a good product, but unfortunately we cannot sell it as we would like because there is no legislation supporting its use. Even in the most developed countries in the world—in the UK for example—there is no legislation. Without legislation nobody will use these materials because the cost is 20-25% higher. We are disappointed that we have made such an investment, spending a lot of money on R&D and on launching the products, but have gained only a limited amount of sales. We are one of the few companies in the world that can produce such plastics, and we are the only licensed biodegradable film producer in Turkey.

How significant is your R&D expenditure?

Our policy is to spend up to 3% of our net sales on R&D. However, when we say R&D we also include all the expenditures from the purchase of technology and know-how. We do not conduct basic research on our own, as it is expensive and requires a lot of time. We perform this kind of research in cooperation with universities and other institutions.

What competitive advantages does Polinas have being part of a large group of companies?

We are part of Yıldız Holding, which is also the owner of Ülker Group. Ülker Group is the largest food producer in Turkey and it uses 8-9% of our total production, which is a certain advantage for us. Apart from that we can come together in R&D projects, so this facilitates a lot of opportunities for us to see and plan for the future together. We also alert them to any upcoming trends or legislative changes they should be aware of. Having a big name gives us better financial resources and investment opportunities, including HR and IT capabilities.

What is the future for Polinas and the packaging industry?

The future is to create packaging that eliminates the need to add preservatives to food. The future is the health of human beings. To facilitate health you need an absence of chemicals, and if you don't want the chemicals then you need sophisticated packaging, which we have. Being able to supply both BOPP and BOPET together gives us economies of scale to improve our packaging for the future. We are also pioneering new logistic methods—and this is vital to our operations. We will continue to seek new ways of delivering to our customers on time whenever they need something. Having these two product lines together has given us strength to use these new models. All of this will ultimately allow us to develop the capability to design packages so advanced and cost effective that there will be no need for chemicals in foodstuffs.