A Compelling Case for Automation

11.22.19 // Heritage Paper


Packaging Automation is increasingly the go to solution to generate increased productivity and reduced costs.

One of the major concerns shared by many of our customers today, is the difficulty in finding good quality labor.              With unemployment rates at near records -as low as 2.4% in Orange County or 3.3% in San Bernardino County – competition is very tight for an experienced labor force.

And, labor costs continue to increase as another $1.00/hour increase in the minimum wage takes effect in January 1, 2020.    In this competitive market, many employers are paying far above the minimum wage.

At the same time, many of these companies are also experiencing growth in their business, particularly from an increase in e-commerce sales.

According to the US Department of Commerce, e-commerce sales increased 13.3% 3rd quarter 2019 over same period 2018 . Retail sales increased 5% during this same period.  And all projections are that this trend will continue.

The Facts

Capacity constraints, difficulty in obtaining skilled personnel and increasing labor costs are all factors driving the need to seek automation of the packaging and shipping operations.

There is some level of automation available to improve almost every aspect of your packaging operations.

The options available today range from

  • Simple low- cost solutions like workstations to improve productivity, and conveyors and tapers to improve process flow
  • Sophisticated customized robotic systems to pick and place product onto packaging lines, and again to automatically case erect, pack and tape at the end of the line
  • Denesters and streamfeeders at the front end or fully automatic palletizing and wrapping at the back end of packaging lines

Automation can deliver real cost savings through reduced labor, improved efficiencies and increased throughput and, help you meet the demands of your business.

The Numbers

With labor costs approaching a minimum of $30,000 per year, automating your packaging lines will deliver a quick return on your investment too. Consider that a fully automatic conveyorized stretch wrapper at a cost of $45,000 could return the investment in 18 months!

There are also significant tax breaks as a result of Section 179 of the Tax Cuts and Jobs Act of 2017.  Under this rule, you can take 100% depreciation in the first year as well as a bonus depreciation to significantly reduce your taxes and thereby, effectively reducing the cost of your equipment.

Optionally, leasing allows you to conserve your capital dollars and to improve your cash flow from the day you install the equipment. Chances are your monthly lease cost would be far less than your current labor costs. Your monthly lease cost on the above mentioned stretch wrapper would be under $1400 / month (36mos. $1.00 buyout) .  And with a capital lease,  you can still take advantage of the Section 179 tax benefits.

The Solution

Heritage Paper is supported by industry leading manufacturers of the full range of packaging equipment systems. Our knowledgeable and experienced team at Heritage Paper can walk with you through your operations. We can identify the opportunities where process flow improvements  and automation could deliver the capacity and cost reductions you need to meet your growing demands.

Whether you want to develop a plan for incremental improvements or complete a front to back of line automation of your packaging process, we will develop the turnkey solution that is right for your business.  Contact us today.


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