Arkansas Inc. Podcast: Elopak Executives Thomas Körmendi and Lionel Ettedgui

In this episode of the Arkansas Inc. Podcast, AEDC Executive Director Clint O'Neal speaks with Elopak CEO Thomas Körmendi and Elopak Americas President Lionel Ettedgui, as well as Little Rock Regional Chamber VP of Economic Development Jack Thomas, about Elopak, the decision to move its newest facility to Little Rock, and why they chose to do business in Arkansas.

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TRANSCRIPT

I'm Jack Thomas with the Little Rock Regional Chamber.

I'm Lionel Ettedgui, Executive Vice President of Elopak America.

And this is Thomas Körmendi. I'm the Group CEO of Elopak.

And you're listening to the Arkansas Inc. Podcast.

Welcome to the Arkansas Inc. Podcast. My name is Clint O'Neill. I serve as Executive Director of the Arkansas Economic Development Commission. Today, I'm very excited to highlight a company that has invested in Arkansas and recently hosted a grand opening for its new facility in Little Rock.

We'll be speaking with two executives from the Norwegian company Elopak. Thomas Körmendi is the Chief Executive Officer and President of Elopak Group. He joined Elopak in 2018 and has over 30 years of management and business development experience. Lionel Ettedgui serves as President of Americas for Elopak. He joined Elopak in 2019 and has more than 20 years experience in the operations of international large-scale corporations.

Thomas and Lionel, welcome to the podcast.

Thank you, Clint.

Thank you, Clint.

I'm also joined today by my friend and colleague Jack Thomas, who serves as Vice President of Economic Development for the Little Rock Regional Chamber. Jack has been instrumental in the Elopak project, helping to recruit the company to the Little Rock region.

Jack, welcome back to the podcast.

Thanks, Clint. Great to be here at Lucky Dog Studio.

All right. Shout out to Lucky Dog.

Well, let's get started. For us, this started as Project Darius.

Well, like a lot of companies doing a multi-state location search, you had to start with some sort of region or some number of states. Can you help us to understand what drove you to drawing a circle in the Midwest that included Arkansas in your search?

Right. I can start, and Lionel, maybe you can add on. You know, when we looked at it, you're right. We did look at a number of states, and clearly, number one criteria is it has to complement the footprint we already have in Americas, which is partly Canada, Montreal, which is a large-scale plant. We have a plant in Mexico and also one in the Caribbean.

So what we clearly needed was something in between. And we have a number of customers. We have a supplier located in Pine Bluff. So we looked at it from a map point of view. Where do we have the empty spot, and how can we optimize logistics, et cetera?

But adding to that, and this is the other side of the equation, is, of course, when we talked to the good people of Arkansas and Jack and I know from the governor's office, the Port of Arkansas, and everyone else we were in contact with, and we're very helpful, very welcoming, we sensed that there was a strong desire and real enthusiasm around us building a plant here. So that eventually convinced us that it would be the right place.

Yeah, well, that's very encouraging. We know everything has to work out. The numbers on the spreadsheet have to be right. But for you to feel welcome and to know that at the state, local, regional level, everybody wants you to be successful, that's really encouraging to hear.

Jack, do you recall your first engagement with Project Darius and how this all came about?

Yeah, so I was actually looking at some things before we recorded this. On November 10th of 2022, I get an email, another shout out here, to Jack Pillow, former ADC project manager. I get an email from Jack Pillow with the subject line, Project Darius.

And it was a 10-page Microsoft Excel file with all these tabs of real estate and workforce and transportation and business costs and incentives.

And we had six days to fill that out. So we submitted that back November 16th or whenever it was. And then we didn't hear for a long time. So not uncommon in our position to be able to submit these requests for information and then not hear back.

But we can get further into the story. But the first time that we had the chance to host Reinard in Little Rock was May 16th of the following year. So six months after we submitted the initial information request was the first time we had the chance to host him in the community. I can give you details. You know, the reason behind that I was still working Thomas to get the CAPEX to be able to make investments.

Very good. Sounds like you were successful because it started as a $70 million project. Now it's a 95. I've seen 100 out there. So it sounds like you were very successful.

So I want to talk about Elopak, what you make, what you do, the impact that you have on the economy. But, you know, when we first hear about projects, Project Darius, we know nothing about the company. Jack, can you talk a little bit more about what were some of the elements in that original RFI that said, even though we don't know everything there is to know about this company, here are some of the things that stands out that makes us excited about the project, helps us to be patient for that six month period and ready to go when they're ready to engage.

Yeah, so I don't remember much. I do remember it said it was an unnamed manufacturer of packaging for the food and beverage industry. So that's all we were operating on. And I think at that point in time, the scope was for a 275,000 square foot existing building. Obviously, speed to market was critical to find that perfect building that was rail served out there across the South and the Midwest. I think I don't want to speak for you guys, but I think you may have experienced that that perfect building did not exactly exist.

That's right. So you decided let's build it ourselves. Right. But you told that something different. You know, you say to us, yes, we will find one for you guys. Come on. And finally, we end on a waterland, you know, a beautiful place. And we built from scratch.

That's right. That's right. So when that May 2023 site visit, we hosted you guys in a 500,000 square foot building that was under construction at that point in time. And I think if I remember correctly from Reinard, he said, we love this building. It's just a little bit too big. You guys ended up building 300,000 square feet. So we were fortunate that we had some additional real estate that we could go around the corner and build exactly what you needed.

But I shared this with some folks and on LinkedIn yesterday. But the first time that Reinard came to Little Rock, obviously it was very confidential. We didn't know who you guys were. And this is not uncommon in our world where he just stuck out his hand and said, hi, I'm Reinard. And no last name, no title, no company. So, you know, we're operating that, you know, this is a legit opportunity, hopefully. You know, you've got some trust built up, but still we're completely in the dark.

Right. So it was really neat to work with Reinard and obviously to see this project come together.

So, Thomas, I want to talk about the company itself. As we learn more and more about the project, obviously we wanted to compete for it. We wanted to show you that we had the real estate eventually. We had the workforce. We had the business costs, the common sense, public policy, the warm welcome. And so the more we learned about your company, the more we really thought that this would be a really good fit. We have a great food and beverage industry in Arkansas, a great environment for manufacturing, welcoming for businesses, welcoming to international companies.

But if you could tell our audience more about Alopex, for those that are not familiar, a brief overview of who the company is, what you manufacture.

Right. What we do is we do sustainable packaging and we are, in fact, the world's largest company who would do fresh liquid carton packaging. And you would call that milk cartons, juice cartons, gabletop cartons is what we primarily do. We've done it for many years. We've done it since 1957. And it has been in private ownership until 2021, was it now? Right when we had an IPO listed on the stock exchange in Oslo. Revenue wise, we are somewhat over a billion euros. So that would be somewhere around 1.4, I think, billion US. We're around 3,000 people located around the world and operating in some 70 markets that we currently serve.

Out of this, we have then worked, what we do is actually we produce the packaging material, which is what we'll do here in Little Rock. And that's what we primarily do in the plants we have. But we also produce machines, filling machines that are used together with the packaging material. And then we supply our customers with services, installation, maintenance, upgrades, improvements of various kinds, etc. We have a setup with a technical center in Europe, both in Norway and also in Germany, in Mönchengladbach. And then we have here in US actually a technical center in Wixom, close to Detroit.

Thanks, Thomas. I know that Elopak has a focus on sustainability and what you call repackaging tomorrow. Can you tell us a little bit more about what that means?

Right. And you're absolutely right, Clint. We focus very much on sustainability. What we sell and offer our customers are sustainable packaging solutions. So repackaging tomorrow is the strategy that we developed and presented during our capital markets day last year. It's a strategy that brings the company into two, which would be around $2.4 billion. And that is, of course, a strategy of growth, growth in our core markets, growth in our new geographic investments we have made, and also growth in a third area that we invest behind. And that is what we call P2C, plastic to carton.

So very short on these, all three of them. When it comes to the geographical expansion and getting the most out of that, Little Rock and the investment we made here is absolutely a key investment for us. This enables us to drive the business in Americas to pretty much double the size of what we've been within a given time period that we defined. We've also at the same time invested, well, not the same time, but last year, two years ago, we invested in a setup on two plants, a Morocco and one in Saudi. And also we established a joint venture with a plant that we have expanded since in India, New Delhi. So that's the geographic part.

The core business part of this is innovating in the sustainability. That means materials, that means openings, and a whole set of consumer-friendly improvements that we're introducing in Europe and elsewhere as they get ready. And the last part is really about replacing plastics. All of us, including US, use a lot of plastic packaging. In US, we talk about 50 billion plastic bottles being used every year. Many of these will remain in plastic, but many of them can be replaced with carton solutions, which has a much lower emission level and provides consumers with great alternatives. So we work with filling detergents, soaps, softeners, et cetera, from plastic into carton.

Well, Thomas, I think you would be happy with my consumption habits. I drink a lot of coconut milk, a lot of oat milk, a lot of juice. And that is all carton. That is really all carton.

So you're going throughout your site selection decision. Oftentimes these take several months. You're evaluating a lot of things. You're trying to get that final green light from company leadership to invest the capital. You're doing the site visits. Many good options out there. Can you take us kind of to the end? What were some of the key factors that helped you make the final decision for Little Rock, Arkansas?

To be honest, we have been quite impressed by the proactivity and the support we got from Jack here. And we also get introduced to an amazing partner who is Isom, who also played quite a good role. We met then a key stakeholder with who we could design that project. I'm thinking at Arco, who is quite an impressive company. And to be fair, we didn't make it easy for the city and the region. But you know what? Those guys are amazing. Everything was there for us to ensure that we will be able to build that plant within 12 months. And we have all the support that we need. And we did all that in full trust. You told us that you will make happen a discussion with the port of Little Rock to get the train up to the land. You walk the talk. So, you know, it was a good choice. And we do not regret at all the fact to be here. The region and the city are so welcoming. You know, it's a great choice. Yeah, glad you're happy with it. Jack, jump in. Yeah, no, I was just going to say thank you very much for that. And thank you for doing what you said you were going to do when you said you were going to do it, right? I mean, we hear from so many companies, we're talking about the site visit process where you never know who they are. You never know how legitimate they are. You have to treat them all like they're the next big thing, right? But to have a company who did what they said they're going to do, actually do more than they said they were going to do, when they said that they were going to do it is so refreshing. So thank you very much. And yeah, shout out to James Isom and Arco. They did a fantastic job with that facility to make sure that it was delivered when you guys wanted it and that we were able to cut the ribbon on it and get you guys operational.

I can just add, you know, from a central point of view, we evidently had, you know, the steering group meetings, et cetera, that you would have. And we frankly had our doubts with certain skepticism in time plans in that we could really do what was said. And I think it's pretty amazing what has been done in a short period. And we all were there yesterday. We looked at the plant to think this is all done in a year's time, roughly, is pretty amazing, actually.

I want to ask about the steering committee. So I would get, back during the site selection process, I would get these emails at like 10 p.m. at night from Reinard saying, hey, we have a steering committee meeting tomorrow morning at 9 a.m. Can you get me this? So what did you guys talk about through the steering committee? Who was a part of that steering committee? How often did you meet? Walk us through that.

So we have a steering and we have that generally on big projects. And this is for us a very, very big project, by the way. But we would have steering group meetings consisting of different functions, right? You have the CFO there. Of course, Lionel is there. Reinard is there. He's presenting. He's not a member of the group, but he's presenting to the group. And I would be there. And what you simply do is we have then a regular set of plan of meetings, which if I'm not wrong, it was once a month from probably a little bit more frequent in some periods where we need to make the decision. But this process is all about, in one hand, we need to get this to a state where we can get it through the board. That's of course very important. And once that is done, we're just very keen on making sure we meet the milestones which have been defined.

To my point, when I looked at the time plan and knowing from construction at home, it's always delayed and always more expensive. And it's always, yes, but that wasn't included. This is not included. And here it's been really, really smooth. It was a super well-planned project, excellently executed. And I think I can only support anything Lionel has said. That's a good news. That means that I should ask for more money now. That's right. That's right.

But to be fair, it hasn't been only smooth sailing, it has been quite challenging. So not what we were telling to the steering committee, because we wanted to secure them, but we had a couple of headaches. And most of them, we got the support with key stakeholders, sometimes yourself, Jack or Arco to make it happen. And beyond those specific stakeholders, I'm also thinking at the company which provides also the electricity, the energy. So they did also quite a lot to support in due time because you can build whatever you want. If you don't have the power, you're not doing. That's right. Yeah, absolutely.

And you know, on the steerco side, maybe I should have said that as well, that one part of the job of the steerco, and this is why you have so many involved, is because we, of course, involving many, many people in our group, process owners and printing experts, et cetera, et cetera, who need to get involved. And a lot of what you do there is actually aligning, coordinating, and ensuring that they're actually available, right? Because this is for us in any project, in particular the big ones, it's pretty much the same people you keep pulling to different places. So resource is always a big, big topic. And this is the compromise you make or the priority setting. Do they go here or do they go here? And so that's why it's so important that the steerco's meetings follow the milestones. And we always agreed that it was America first. So when you get down to the very end, there's a decision to make. You're looking at all these numbers, right? But at the very end, it came down to three different cities. Who's making that final call? And how do you guys go from there in terms of the marching orders from making that final decision to implementing the project? You know, we don't have democracy, actually, in the company, but we try to agree. But if there is a final, final goal, I'm getting paid for that, right? Right. So that's how it works. But we did actually agree. And the whole point is we find something that we all agree on. Then at the end of the day, we present it to the board. The board doesn't get choices this or that location. We present them to say this is the best. And then they hopefully, and which they did, sign off and say we agree.

What I can add, you know, we had a matrix with also the key elements that were important for us that Thomas mentioned previously. And it allows us to put a score. And I will say that you were scoring pretty high. So just by mentioning that, you're doing quite a good job, you know, compared to the other states. No doubt of it. Very good. Thank you. That's a very good point in steering groups. Agree on the criteria. Once you have agreed on that, it's not so much who decides what, right? Because that's why you have the criteria. So you make the calculation, the little scoring, and then it's very difficult to say, well, I think it should be something completely different. Right. We wanted Hawaii at the beginning. And finally, following the right governance, we end in Little Rock and we're quite happy.

Yeah, I was going to say it's good that the steering group was all together. Thomas, if you would have said Lionel was really pushing for another state, it would have made for an awkward podcast. It would have. There is no chance, you know, if I wanted to have the capex, it has to be Little Rock, you know. Right. Well, for us, we think about a project like this and what a great job you guys did on this grand opening event earlier this week. I met so many people from out of state who came in to celebrate with you, your customers, your suppliers. And for them to hear you say we did this multi-month, multi-state analysis and we landed on Little Rock, Arkansas. You know, this project is so good for us because of the investment, because of the jobs, the long-term economic benefits. But just from a momentum standpoint, to hear such a global leader like Elopak put their stamp of endorsement on Little Rock, Arkansas is a real encouragement to us. So thank you for that.

I want to talk a minute about Elopak’s larger strategy. Where do you see yourself in the next five to ten years and how does this Arkansas facility fit into that? Well, you know, the Arkansas facility is actually really, really, really essential. And, you know, after you guys left yesterday, we had our own team in the plant and we tried to explain the impact of this for us. But back to the repackaging tomorrow strategy, the America's development we have here. And when we say America's, it's because we are currently active in Canada, US, Mexico and the Caribbean, not South America. But that development is essential for us, is absolutely essential for us to deliver. If I take the bigger picture, then we are convinced that carton packaging is gaining an even bigger share. We have a lot of different statistics on that, including consumers in the US who are 90% actively talking about more sustainable choices, including reducing their plastics, which comes out in all studies. So we look at a continued growth in our core business, a further expansion and growth in our newer markets, including US, Canada. And then we think that the business of plastic to carton will bring us into completely new categories. I mentioned before the detergents, the softeners, soaps, etc. But what we also see in many countries, and we have technologies that we are currently working on, is something like yogurt cups, something like sour cream cups, etc. Go into a store in a supermarket and look at the immense amount of plastic available. In some cases you need it, definitely, but in many, many cases there are equally good or better carton alternatives.

It's the companies that we work with, there's a very large team in many cases that come to the market, whether that's somebody on the engineering side, somebody on the human resources side, all the different players that make up what sounds like was on the steering committee back home. But in this case, there was just one gentleman that came to town. That's right. Reinard Dressman. So tell us about Reinard's role, the trust you placed in him, and some of what he came back to report to you guys.

You know, I think from my point of view, Reinard is a guy who's been in the company for many, many years. He's highly trusted as an individual. So that's a little bit how we start with it. But what he did was he not only took the more, let's say, very business-related facts in the criteria, we also looked at something like crime. Because we looked at the cost of living. Is it an attractive place for our guys to move here? So because we expected that we would have people moving in, as well as we would recruit people already living here. So this was a consideration that we made.

And the way Reinard presented it was, you know, as with any place in the world, there will be ups and downs. So it's not that he tried, at least we didn't feel it like that. So we didn't think he was not trying to oversell it, saying everything is fantastic. That was not the case. And to be fair, it has been addressed to you guys, you know, about that situation. And you give us the level of comfort that we were looking for.

Maybe a fun thing that happened that makes us a bit emotional. Then when you decided to put the colors of ELOPAK on the two bridge, you know, in Little Rock. And we were very sensitive to it, you know, it was quite a nice attention. That is a very good point. And it's a point that we have been using, by the way, when we talk about friendliness, the welcoming. And it's always, for instance, they did colors of the bridges. This is, for us, it was just a good sign.

Yeah, it's never just about business. It's personal. It's never just about the data. It's a relationship business. It's about confidence. It's about trust. And so really honored that we've built that up with you and look forward to maintaining that for a long time. And it's a good thing that we have the two flags from Norway and United States have the same colors. That's right. That's right.

Well, Lionel, I know that you've been here once before back in town for this grand opening. Thomas in central Arkansas for the grand opening. Have you had an opportunity to eat any good food, to do any sightseeing, anything fun while you've been here in town?

Well, it's not a lot, to be honest. But I tell you what, we're staying at a lovely hotel, which is really, really very nice. We're staying at the Capitol Hotel. I think that's the most fun I've had, actually, is staying there. I think that's great. We came in, when was it again? Tuesday, right? Tuesday afternoon, night. We're leaving tomorrow morning. Unfortunately, then again, we're both back with the board in September. And hopefully and definitely there will be more fun events than what we had this time.

What I can add, I will say that I came here only twice. But talking to the taxi driver, talking to a waitress, people are so kind, so nice. So it's amazing. The city is incredible for that.

Well, I'm glad nobody messed up our reputation for Southern hospitality. I do have to say, it's like we spend so much time talking about lighting the bridges and preparing all the maps and all this stuff. It's like you can do everything right. But if that one taxi driver says something's going on, then all of a sudden it blows the whole thing up. So I promise we're not training the taxi drivers. Maybe we should. We rented a car anyway. Well, big shout out to all the Arkansans who came across Thomas and Lionel without knowing who they were, but just they were themselves, Arkansans, hospitable, welcoming, and glad you got to experience that.

Let me ask you a question about the culture of Elopak. We saw your state-of-the-art facility. When you go to recruiting Arkansans, can you tell us more about the company from the standpoint of why they would want to work for Elopak? I need to be very cautious because my boss is here, so I'm going to do my best. Look, this is an incredible company. In my career, I have the opportunity to work for different companies in different parts of the world. First time that I was working for a Norwegian company, you know, so sustainability is part of our DNA. And when we say sustainability, you know, we really mean it. And there is also people part of it, you know, meaning that the company is obviously about people. And at Elopak, it's not only that we respect the people, that we have good values. I think that we make that job very, very interesting.

And, you know, just to go back to an individual who is Reinard. Reinard is almost born in Elopak. He started his career at a very low level as an operator and made himself up to vice president of operations in America. He participates to so many projects, even worldwide. So we have the loyalty and the trust of our employees and colleagues, you know, and we have a level of collaboration that is incredible. And this project shows you that so many people came from different parts of the world to support. And I can tell you that everyone is very proud about what has been achieved, you know. So the environment of work is simply incredible. And not only in America, in Little Rock, but in every country where we are.

Did I did that well, Thomas? This is very well, Lionel. You passed. I can just, you know, I think the diversity is actually something that we really strongly believe in. And if I think of our technical center in, not in Oslo, a little bit outside Norway, out of 120, 30 people, something like that, we have 30 different nationalities. And, you know, these are highly skilled individuals, many of them. And they will come from, of course, surrounding markets and all the big countries you can imagine. But it's all part of this kind of business. This is a global business. We're selling to companies who are selling to global consumers. And having a workforce that really understands the sense of that is very valuable for us.

Maybe if I may, I would love to pass a message to the citizens of Little Rock. It's just the beginning for us here. We're just starting. We're going to grow significantly. So don't be shy. Please apply to Elopak.

Great. Good word. Jack, any final words from you? Yeah, no, I just want to say thank you to you guys. I mean, again, you've done what you said you were going to do when you said you were going to do it. And I think you were elevating the expectations of the workplace when we walked through that facility. And it's so clean. You can eat off the floor and just so high tech and so impressive in many ways that all of a sudden that elevates the expectations that now raises the standard for other companies operating in the market that only helps the people of Little Rock and the people of Arkansas ultimately to increase earning opportunities and their quality of life as well.

Thanks, Jack. Well, our guests today on the Arkansas Inc. podcast, joining Jack Thomas and I, have been Thomas Koremendi, president and CEO of Elopak, and Lionel Ettedgui, president of the Americas for Elopak. Thomas and Lionel, thank you so much for spending time with us today to talk about Elopak, bringing your new facility to Little Rock and your company's investment in the state of Arkansas. Thank you very much. It was a pleasure.

You've been listening to the Arkansas Inc. podcast. I'm Clint O’Neal, executive director of the Arkansas Economic Development Commission. You can subscribe to the Arkansas Inc. podcast on Apple Podcasts, Spotify, and other podcast apps. For more information about the Arkansas Economic Development Commission and to sign up for the AEDC monthly newsletter, visit arkansasedc.com and connect with monthly newsletter, visit ArkansasEDC.com and connect with us on LinkedIn, Facebook, X, and YouTube.

As always, thanks for listening.