"Our journey began in 1984 when the company first started manufacturing high-impact polystyrene (HIPS) trays used in greenhouse irrigation systems," Flemming Jørgensen, Sales Manager at Staal Plast, shares. "We soon expanded with our extrusion line in 1996 which produces raw sheets used to create highly durable and efficient bench trays. Extruding our raw sheets gave us the possibility to increase our quality without increasing our prices, as we don't have to buy standard extruded sheets from the general market, but developed a specific horticultural tray optimized for use in growing environments."
In 2018, Staal Plast opened a production facility in Sycamore, Illinois. "We saw the growing cannabis industry in the United States, which had created a significant demand for efficient and reliable growing solutions," Flemming says. "The cannabis market in the US was exploding at the time, and we saw that to be a part of that growth, we needed to establish ourselves locally."
"We were facing long shipping times from Denmark to the US, and with the market growing so rapidly, it was essential to set up production closer to our customers," Jacob Sørensen, the company's owner and R&D Manager, explains. This meant a way more sufficient supply chain.
Keeping the focus on automation
The US production facility is a carbon copy of its Denmark counterpart but with continuous improvements. "Every time we install a new production line, we try to make it more efficient and more automated," Jacob notes. This enabled Staal Plast to maintain a high production standard while minimizing labour needs. "In the US, we have a fully automated facility with robotics, which gives us a smooth and highly effective production line," Flemming adds.
"Our Danish production facility operates in two segments: the extrusion of plastic sheets and vacuum forming, the latter of which is particularly important for creating the trays used in cannabis cultivation," Flemming explains. Their US facility focuses on vacuum forming, with raw sheets shipped from Denmark, allowing for optimized shipping and maintaining material quality. "By shipping the raw sheets and only forming them in the US, we're able to reduce shipping costs and still ensure that our customers receive the same high-quality products they've come to expect," Flemming says.
Adapting to changing market demands
"A few years ago, when the cannabis industry was booming, costs didn't matter as much, and everyone was willing to invest in high-end, custom solutions.
But as the market has matured, they are now looking for cost-effective, standardized solutions that still provide the necessary quality," Jacob says.
He highlights the role of investors, noting that "Five years ago, everyone was flush with investor money, but now, the focus is on efficiency and reducing costs. All markets mature at some point and this one is no exception, and only the fittest will survive."
"We developed a narrow tray that allows growers to fit multiple trays on a single bench, ensuring the necessary airflow around the plants for optimal growth. This product has been particularly well-received by the industry," Flemming says. "The narrow tray design is for efficient airflow without sacrificing quality."
Flemming also notes, "This tray is not developed for the Cannabis industry only, but suits this business well due to the set-up option for increased airflow." Jacob adds, "There are several ways of designing ventilation, and by using our narrow trays, we open up new possibilities for ventilation, allowing for vertical airflow and resulting in increased airflow around the plants for optimal growth."
Market shifts and regulations
Flemming and Jacob share that the US cannabis market, although initially fuelled by rapid expansion, has faced challenges with oversupply, price drops, and increasing competition. The market dynamics in Europe however are different. Regulations are much stricter, and the process of legalizing cannabis cultivation has been slow.
"In Europe, the cannabis market is heavily regulated, and the legal framework has made it more difficult for large-scale operations to take off. It's a more complicated landscape for growers here compared to the US," Flemming points out.
One of the challenges they face in Europe is adapting to small-scale production setups, especially after recent cannabis legalization in countries like Germany. As Jacob explained, "The regulations in Germany, for example, limit large-scale operations, which makes it more challenging for growers to maintain cost-efficient production methods."
Remaining optimistic
Despite the challenges, both Flemming and Jacob are optimistic about the future of the cannabis industry. Jacob shares his observations from the recent MJBizCon, where he notes that while many companies had smaller booths and more modest setups, there was still a sense of optimism in the air. "After a tough couple of years, everyone is adjusting to the new market realities. There's a feeling that the worst is over, and the market will continue to grow in the long term," he says, referring to how all markets should mature to be successful long-term.
Flemming notes that many of Staal Plast's US partners have expanded into other sectors, such as traditional greenhouse farming, to diversify their business. "Some of them are realizing that cannabis alone won't sustain their business in the long run, so they're applying the knowledge they gained in the cannabis market to other areas, like indoor farming."
For more information:
Staal Plast
Jacob Braa Sørensen, Co-owner
[email protected]
Flemming Jørgensen, Sales Manager
[email protected]
https://staal-plast.dk