By A. G. Gonskiy
From August 5 to September 1, 1998 a group of Ukrainian entrepreneurs and managers were on a study tour in the USA. This study tour was the first within the framework of technical assistance to Ukraine, based on the Marshall Plan ideas. This specific project "Productivity Program - Studying US Businesses" was worked out by the Center for Economic Initiatives (CEI), Cincinnati, Ohio with the support and participation by James M. Silberman. In the 50's Mr. Silberman headed the Productivity and Technology Department in charge of the "Productivity Program" of the Marshall Plan for Western Europe. At present he is one of the authors of the concept of aiding the post-Soviet economy. The concept is based on the Marshall Plan principles - assistance to rapid productivity growth, as the key economic factor.
Certainly, the project was carried out thanks to personal initiative and organizational efforts of the CEI President Leland M. Cole.
The first group of tours was made up of the representatives of the Kharkov region food processing industry. During that month the group visited 20 companies in four states of the United States Mid-West, attended seminars and lectures at Ohio State University in Columbus (Department of Agriculture), Ohio Department of Agriculture and Institute of Food Technologies, Chicago.
The basic difference between American Ukrainian businesses is very high productivity and the speed of turn over of consumer goods. It is achieved by a wonderful organization of the work of managers, worker and the whole business infrastructure.
The productivity is achieved not so much by technological superiority of the equipment, but by highly effective work of marketing managers, sales managers and promotion managers.
It was the striving for the effectiveness of production, storing and selling processes of the food produce that lead to the comprehensive use of packaging technologies.
Studying the work of profitable companies under free market conditions one can see the effectiveness of the great principle: "Packaging should save more than it costs". That is why the diligent American economy, oriented at loss minimization, uses packaging at all technological stages. One can say that packaging is an economic instrument of organization and increasing productivity of the business. There is a clear connection between the use of packaging technologies and the level of economic development in different parts of the world.
According to the CS First Boston data, in 1996 consumer packaging took up 75%, industrial packaging - 25%. In developed countries packaging makes up from 1.5% to 2.5% of the gross national product.
North America - 95, Western Europe - 90, Japan - 70, South America - 15, Asia (except Japan) - 40, Australia, New Zealand - 6, Africa - 5, others - 39.
Packaging plays a special role in the food processing industry, which is the basis of the consumer market. With the leading transnational corporations, packaging takes up to 30% of the total sales of food products in the USA (see the table).
According to the CS First Boston data, in 1996 the production of the so-called hard packaging amounted to $43 billion. Here belongs the corrugated cardboard packaging, glass and tin-plate and plastic cans and bottles, closing means for these containers. Flexible packaging (paper, plastic and composite foils, labels etc) comes to $28 billion. The production of other types of packaging amounted to $14 billion.
When in the United States, one keeps comparing the state of production and the use of packaging to those in Ukraine and sees that the progress in our country to a great extent depends on the development of the packaging sector. The way of economic development for Ukraine lies through productivity improvement in market economy conditions.
Businesses will be competitive if they provide not only high productivity but also for its rapid growth. To do this, it is necessary that the way of thinking of Ukrainian managers changes. That is, setting objectives and choosing methods to achieve these should be based on the market economy development dynamics factors. And its smooth functioning is only possible when the understanding of the universality of self-organized market processes is set in the national conscience of the society. This can be achieved by broad educational projects, based on study tours - one of the most effective ways of experience transmission.
This American experience showed that many Ukrainian products have wonderful export prospects. But they are brought about because of a lack of knowledge of the accepted selling practices in the West as well as the absence of packaging containers and standards for the present day Western markets. These are also the reasons for losing to competition in the home market.
Finally one must say that Ukrainian businessmen have a vast and abundant field for their activities. The recent study tour helped to see it clearly and concretely. The continuation of such study tour projects will lead to the animation of business activities in Ukraine, speeding up the development of packaging technologies, marketing and design.
Information supplied by the author January 1999. Page last updated: January 19, 2004