James Lim, director of SKP, says that in addition to sustainability, it is important to consider the customers needs, as the company explores plastic alternatives. PHOTO: YEN MENG JIIN, BT

THE name “Seow Khim Polythelene Co” might not ring a bell, but the SKP acronym might be more familiar. Its 46 retail outlets across Singapore are known for offering disposable cutlery, partyware and stationery – though the company’s roots lie in plastic food-packaging.

“The retail business serves as a showcase for our product range,” said director James Lim. But business-to-business sales of plastic packaging still comprise the bulk of the company’s revenue.

SKP is Singapore’s largest supplier of disposable food-packaging, with two factories in Singapore and Malaysia.

The business was founded by Lim’s elder brother, Lim Seow Khim, in 1979. Takeaway food was rising in popularity then, and the older Lim saw an opportunity to supply plastic bags – the main form of takeaway packaging – to the food and beverage industry.

SKP began as an importer and wholesaler of plastic bags. It expanded into retail in 1991 to improve cash flow, “prompted by bad credit and demand from customers, often hawkers and small businesses, for more flexible, on-the-spot purchases”, said James Lim.

As the business grew, it set up its own factory in Singapore in 1995.

Today, the company is evolving in response to another trend: sustainability, which threatens the attractiveness of plastic as a material.

Exploring plastic alternatives

With the Singapore government putting a greater emphasis on sustainability and greener products gaining popularity worldwide, SKP was prompted to go green too, said the director.

In 2019, SKP launched its in-house biodegradable food-packaging line, EcoVue.

EcoVue products blend the usual polypropylene material with a biodegradable additive. This means they can be broken down by microbes faster than traditional plastics.

They also break down completely into organic components – natural gases, biomass and water – and leave no plastic waste behind, unlike so-called “oxo-degradable” plastics which break down into microplastics.

However, this biodegradable advantage is relevant only if waste is buried in landfills. The benefits of EcoVue products are limited in Singapore, where incineration is the main method of waste treatment, acknowledged Lim.

That is why the EcoVue line is meant mainly for export, as the bulk of waste worldwide ends up in landfills, he added.

EcoVue is currently exported to Brunei, Australia and Europe. But as it has high production costs, SKP continues to look for other sustainable packaging approaches.

In 2023, SKP began collaborating with higher education institutions and the Agency for Science, Technology and Research to explore alternative raw materials, such as seashells.

However, some of these alternatives sacrifice the functionalities of the packaging materials, noted Lim. “For example, some customers may need the food containers to be microwaveable, which is difficult to achieve with biodegradable alternatives like seashells or bamboo.”

Materials such as bamboo would be more practical for cutlery in a party setting, for example, when food is consumed on the spot.

“While keeping sustainability in mind, it is also important to think from the customers’ perspective, to understand their true needs,” he stressed.

Greener and more productive

Given Singapore’s lack of landfills and composting facilities, sustainability might be better pursued not by focusing on biodegradable plastics, but by making plastic products in a greener way, he said.

In 2020, SKP switched to solar energy after Enterprise Singapore (EnterpriseSG) introduced it to Total Solar Distributed Generation, an affiliate of French energy giant TotalEnergies.

SKP leases solar panels, installed at its Singapore factory, which generate about 1,000 megawatt-hours of electricity per year. This has reduced SKP’s energy costs by more than 10 per cent, and cut carbon dioxide emissions by more than 380 tonnes per year.

Improving productivity is another important way for SKP to achieve sustainable growth, he said.

In 2023, SKP switched from traditional injection moulding machines to the thermoforming process, with financial support from EnterpriseSG.

Thermoforming allows for the manufacture of products that are more intricate, more durable and lighter than those made by the traditional method. It also substantially reduces plastic waste – which is good for both the environment and the bottom line.

The thermoforming machines also have sensors that capture real-time output and robotic arms that automatically stack the products, reducing reliance on manual labour.

With the new machines, SKP’s output capacity rose by more than 200 per cent.

Its latest major productivity move is to move its production data to the cloud, to tackle cybersecurity concerns and prepare for a greater degree of automation.

Lim estimated that the move will cost S$200,000 to S$300,000, saying: “It is a significant investment for us in today’s uncertain business environment, but the process cannot wait.”

Cross-border challenges

These investments are being made even as SKP recovers from the blow of the pandemic years, while facing new challenges.

Since its founding, the company’s toughest time was during Covid-19, as demand for its products is closely tied to the performance of the food and beverage industry, said the director.

Its Malaysia factory began operations in 2019 just before the pandemic hit, which meant that the increase in capacity came at a time when demand fell. Today, overall revenue has improved but still remains below pre-Covid levels.

“Now that domestic demand has stabilised, we are waiting for opportunities in export recovery,” he said.

Before the pandemic, exports made up 30 per cent of SKP’s total sales, with customers in more than 20 countries across four continents. Now, the figure stands at around 7 per cent.

One reason for the fall in exports, he said, is that it has become more convenient for businesses to get bulk supplies from e-commerce platforms.

There is also increasing competition from overseas suppliers, he added. For instance, Taiwan banned single-use plastic cups across beverage shops last year. This means that domestic producers of such plastic cups need to find customers in other markets instead.

Apart from greater competition, he sees other challenges such as elevated borrowing costs, high labour costs and the difficulty in attracting young talent to the manufacturing industry.

“Our focus in the next few years is to stand our ground, instead of venturing big into new fields.”

Source: The Business Times © Singapore Press Holdings Limited. Reproduced with permission.