Out-of-the-box thinking takes Goodpack places; “Once, I visited a rubber factory when a lorry hit something… The splinters were stuck to the rubber… It took an enormous amount of time to remove the splinters and the contamination to the rubber. “So I thought we should look at something that is easy to pack, environmentally friendly, easy to stack and cheaper than the wood we were buying.”

Out-of-the-box thinking takes Goodpack places

Wednesday, Jul 03, 2013

Rachael Boon, The Straits Times

SINGAPORE – Unlike most other Singapore companies, it all started for Goodpack founder and chairman David Lam with the need to solve a packaging problem which had been plaguing buyers of natural rubber. For years, they had bemoaned the damage caused to raw rubber during the shipping process in one of Singapore’s oldest industries. Wooden crates used to package natural rubber bales would be tossed around in ships, causing wooden splinters, sawdust and other debris to contaminate the raw material. This foreign matter then clogged up machines used to process the rubber. After latex is tapped from trees, it is coagulated and refined as rubber for use in tyres and other rubber products. Mr Lam, now 60, became aware of the packaging problem in the late-1980s when he was involved in trading natural rubber. Spotting a potentially vast market opening, he turned his mind to how best to replace the wooden crates with better packaging.“Since I was already in the rubber trade, I looked at the packaging of rubber and the disposal problem in the US, (to create) something that could be cheaper than the existing packaging,” he said.

“Once, I visited a rubber factory when a lorry hit something and everything dropped on the floor. The splinters were stuck to the rubber, which is already very hard to cut. It took an enormous amount of time to remove the splinters and the contamination to the rubber,” he recalled.

“So I thought we should look at something that is easy to pack, environmentally friendly, easy to stack and cheaper than the wood we were buying.”

He identified this gap in the market for sustainable packaging that would make transporting the rubber fuss-free and cut costs.

Mr Lam, who is married with three sons, said: “I always tell my children: ‘Look at something that not many people are doing – that’s novel, that’s something different.'”

Two years of designing and $2 million later, Mr Lam came up with the intermediate bulk container (IBC) that Goodpack now produces for bulk cargo. The IBC is a reusable, stackable steel container that can be collapsed when not in use to save storage space.

“It took me two years to design it, and another two years to get people to accept it. I got my first contract in 1992,” Mr Lam said.

Supportive, loyal customers also offered to bear the cost of producing boxes in the early stages.

Mr Lam said: “They’d ask me to build 1,000 boxes, and would pay for the cost of production, even though they weren’t sure if they were going to use them.”

He also had to tweak his design after his products were thrown around and damaged on a train in the US, revealing damaged goods.

That experience forced him to design boxes that could better withstand such impact.

He recalled: “When I went to Texas to check the boxes, goods were smashed… It was back to the drawing board.”

Today, the mainboard-listed company spends US$120 million (S$152 million) a year on building new containers, and has made more than three million of the one-sized IBCs.

Even though Mr Lam was familiar with the natural rubber industry, it was tough convincing the big players to adopt his containers. But deals were struck with major tyre companies like Goodyear, Bridgestone, Continental and Yokohama, giving Goodpack major industry endorsement.

Mr Lam later moved into providing IBCs for the synthetic rubber industry.

Goodpack enjoyed the firstmover advantage, allowing it to develop an extensive global network of 5,600 sites in more than 68 countries.

Mr Lam said the company now packs 35 per cent of the world’s synthetic rubber and 40 per cent of the world’s natural rubber, both of which add up to about 20 million tonnes.

In 1996, Goodpack diversified into packaging liquids like tomato paste and apple juice into IBCs.

Mr Lam also developed a global system to track the containers.

“It’s not feasible to pack the box in Singapore, send it to New York and bring it back to Singapore, because it’s very expensive,” he said. “So if I’ve a customer in New Jersey who needs it, our computerised system will tell us who needs it nearby.”

Mr Lam is looking to license the business to other products to speed up the process of growing the company. “It’s not easy to replicate this business. I’m still very excited about it after so many years. There’s a lot of growth; you can pack anything with the box. With licensing, companies simply use our IT system when they need our packaging. But they cannot touch packaging for our main industries such as synthetic and natural rubber.”

He is also in the midst of expanding into the area of packing automotive parts, which are still generally packaged using corrugated paper and pellets.

“We’re keeping our fingers crossed because this is the biggest thing that will happen to us, as it is five to 10 times the volume of synthetic and natural rubber,” he said.

Goodpack hires more than 500 people and has a presence in 18 offices on all major continents. It makes the IBCs in China.

Mr Lam is keeping up his expansion drive, with a Moscow office opening in January this year. The businessman calls himself “a practical and optimistic person”.

He said: “You don’t invent or design something where there is no market or a very small market. You need to design for a huge market like cars.”

“For example, many go into the furniture business, so it’s very hard to compete. I always believe in finding a business that you can develop a niche in, where not many people are doing the same thing as you,” he added.

“This business is a sunrise business. Things will only get more expensive. The steel box can last us more than 35 years, with maintenance, but can you imagine what wood will cost in 20 years’ time? It’s a good business, people will need to change to environmentally friendly packaging, and it will continue to grow and expand.”

Mr Lam said his dream is that “when anyone thinks of bulk packaging, they’ll think of Goodpack”.

rachaelb@sph.com.sg