Tag: Featured

A new weight-measurement technology addresses some of the shortcomings associated with traditional systems.

By Arek Druzdzel and Arne Wieneke

The production of specialty filters and next-generation tobacco products requires precise measurements to ensure the quantities of raw materials applied are consistent with the brand formulations. Product quality parameters must mean the same to everyone in the production process. They must also comply with industry quality standards and local government regulations. Traditional scales with load sensors have limitations, however. This article will discuss the benefits of novel, contactless measurement systems.

Traditional methods of weight measurement are based on comparisons with accepted standards. Over the past 200 years, the kilogram has become such a standard. In the International System of Units, it is defined as a mass standard and is used as a base for weight measurements worldwide. Unlike other base units in the system, the kilogram is defined as an artifact: a chunk of metal, for comparison and reference, which is stored in Sevres, France.

For single measurements under laboratory conditions, using a standard mass in calibration procedures on load cells is sufficiently precise and repeatable. However, load cells require frequent maintenance and calibration, which is a disadvantage when fast and accurate measures of single milligrams and micrograms are required during the production process. Under such conditions, correct adherence to regulations and production targets might not be ensured at the same time.

For starters, scales with load cells require adjustment to the geographical location; otherwise the weight is measured incorrectly. This is because scales measure weight, which is then translated into mass, taking into account the local gravity force.

The mass-reading error is caused by variation in the gravitational acceleration and the resulting gravity force (weight), which varies around the world. For an object of a given constant mass, its weight depends on both latitude and altitude of the location of the measurement device. Diagram 1 shows the variation in gravitational acceleration around the world, at a constant altitude of 100 meters above sea level.

The gravitational acceleration at the equator amounts to approximately 9.78 meters per second squared (m/s² ), while at the poles it is approximately 9.832 m/s², resulting in a discrepancy of 0.052 m/s², or 0.53 percent.

Additionally, gravitational acceleration is affected by altitude, the tilt of earth’s rotational axis, precession, equatorial bulge, etc. Gravity-related effects apply when, for example, calibrating weight measurement devices to a mass standard. The greater accuracy required, the more time and effort are needed for scale calibration and measurement.

Furthermore, measurement precision and accuracy of scales and load cells change with time from the last calibration, as they depend on elastic properties of materials in load cells, environmental conditions and other components of a weighing system.

This discrepancy causes variation in weight readings when an object of a given mass is measured at different latitudes and altitudes. Scales compensate for this error by providing reference masses for pre-calibration. Evidentially, this calibration becomes critical when quickly measuring small masses—e.g., in the milligrams range—requiring more frequent calibration to ensure reliable measurement in line with regulations.

Moving away from the laboratory environment to the production environment, more factors start influencing the weight measurement of small masses. Machines vibrate, causing slow measurements and/or potentially incorrect readings; potent products require contained handling inside closed chambers, which in turn require controlled ventilation and frequent cleaning; products may vary in water content during processing where the dry weight is in focus. Accumulation of these factors limits the useable range of accuracy of load cells. Sometimes they even make it impossible to measure small masses accurately and quickly.

Furthermore, in the next-generation products primary department, substances are added and/or mixed in a way that does not permit the on-line monitoring of those processes. It happens mainly because the process yields a variety of quality-related issues, depending on the product’s dry mass and moisture content, its morphology, and whether the process is closed or continuous.

Such applications may prevent the use of load cells, leaving manufacturers only the options of off-line sampling and indirect weight estimation. These issues become even more challenging in the secondary department, where cartomizers, atomizers and other small containers are filled with novelty products, frequently in a pre-defined sequence. The off-line monitoring of small weights is not desirable, because it represents only products sampling, leaving thousands of product units uncontrolled.

Removing gravity and ambiance from the equation

Overcoming the described challenges requires a time-stable and gravity-independent measurement system, capable of measuring the mass of objects on-line—i.e., the amount of substance instead of weight of fast-moving objects, such as vials, capsules, liquids or powder. Such measurements would be identical around the world and independent of the external factors, allowing not only for tight and on-line monitoring of substances but also for direct data comparison.

Over the past years, Aiger Group has developed such a novel system and successfully installed it in a number of factories around the world. The system emits a local energy field, which is alternated as substances pass through it. Once measured, the signal can be instantly converted to mass or the local weight units. Knowing exactly the quantity of the substance dosed—that is, the mass of an object—the dosing-measuring combination is automatically calibrated to the conditions of the measuring device’s location, without the risk of overdosing or underdosing due to the earlier described factors.

As only the substance changes the output signal, the signal is ambience-independent and allows for positive, on-line process control. Also, the sensor signal data processing is fast enough for closed-loop control.

Aiger has built an industrial version of the described system and verified it with a variety of small objects, including pharmaceutical capsules in the 150 mg to 700 mg range, as well as with the micro-dosing of powders from 1 mg to 100 mg into various types of containers. The system has a proven stable precision and accuracy within one sigma ranging from 0.25 percent to 3 percent, the dispersion depending mainly on materials structure and morphology.

Most important for production environments, the proposed system ensures quick, precise and accurate mass measurement of a wide range of objects, with no need for major system adjustment, special environmental conditions, leveling, isolation from vibration and ventilation, or prolonged measuring time. The system has no moving or flexing elements, hence it is free from the disadvantages associated with load cells.

Aiger’s new technology is developed for the production of next-generation products that require compliance with pharmaceutical regulations. Not only does it ensure 100 percent product control by a gravity-independent weight measurement system, but it also documents all values for in-detail analysis. Equally important, the technology also helps maintain brand consistency.

Arek Druzdzel is business development director at Aiger Engineering. Arne Wieneke is business development manager at Aiger.

Pujadas marks 125 years in business.

By Stephanie Banfield

Pujadas of Barcelona, Spain, is celebrating its 125th anniversary this year, marking a major milestone for the family-owned business that has experienced a series of ups and downs throughout the decades and is currently enjoying considerable success in a highly competitive industry.

Pujadas’ roots can be traced to 1890, when Domingo Pujadas i Amigo founded a business with a focus on marketing chemicals for the textile industry. Twenty-five years later, the company had expanded its scope and extended its activities to include the manufacture of adhesives, sulfonated oils, softeners and auxiliaries for the textile, tanning and papermaking industries. By 1917, Domingo Pujadas i Amigo—a man well-known for his entrepreneurial spirit—became a founding member of the American Chamber of Commerce in Spain, where he worked to promote and develop new international alliances.

When Europe entered World War I, a wide array of raw materials was needed in order to supply and sustain the ongoing warfare, requiring Domingo Pujadas i Amigo to offer the support of his chemistry solutions to numerous European companies during the war. Following the social and political strife of World War I, as well as the passing of Domingo Pujadas i Amigo, his nephew, Josep M. Pujadas Badia, continued the family tradition and took control of the company in 1924. With Badia at the wheel, the second generation of the business was born, and the company began to expand its post-war activities—namely extending its business to the manufacture of sulfonate oils, softeners and auxiliaries for both the tanning and papermaking industries.

Though Pujadas had begun experiencing success manufacturing products for use in various industries, the company soon found itself face to face with two significant hurdles: the Spanish Civil War, from 1936–1939, and World War II, which lasted from 1939–1945. Because Spain was placed under a closed dictatorship system from that point on, the third generation of the family-owned company was forced to primarily develop the business from the Iberian Peninsula. Brothers Josep M. Pujadas i Calzada and Domingo Pujadas i Calzada greatly expanded the company’s manufacturing initiatives, and Pujadas soon had a presence within the food and beverage labeling industry—a significant new activity to add to the company’s growing portfolio.

In 1960, under Josep Pujadas Domingo—the fourth generation to take a leadership position in the family business—the company made its foray into the tobacco industry, manufacturing industrial adhesives for cigarettes, and six years later, construction of a new 1,300-square meter plant in Barcelona began. In 1970, the company’s export activity was well underway, with Pujadas supplying industrial adhesives throughout Europe, the Middle East and Africa, and another new plant and laboratory was constructed in 1980. With a decades-long dictatorship coming to a close, and the start of the transition to a democratic system beginning in Spain, the company sought to initiate a second stage in its international endeavors.

In the 1980s, a new location with the capacity to produce 14,000 tons of product per year was constructed, giving Pujadas the ability to develop its production capacities and further expand its international presence. And in 1990—the year that marked Pujadas’ 100th anniversary—the doors to a series of new offices on the 12,000-square-meter premises that house that plant and laboratory were opened.

At the turn of the 21st century, Pujadas’ international presence blossomed into global expansion within the tobacco industry. Led first by Raimon Pujadas Uriach and currently by Marc Subias Pujadas, the fifth generation to run the company focused on the development of the business with multinational cigarette companies. Today, Pujadas is present in more than 35 countries and has started its expansion in new areas, including Southeast Asia and America. With a focus on innovative formulations and best international manufacturing practices, Pujadas currently plays a significant role within multinationals’ supply chain networks.

Pujadas’ development in the cigarette industry is opening the adhesives category, offering to the cigarette industry new alternatives and a long-term competitive category, providing the industry with significant new options and innovative solutions. With more than 55 years of experience in the industry, homologated at all the multinationals, working also for significant independent cigarette companies and daily partnering with major OEMs, the company is promoting a more balanced adhesive category, in mutual interest of all the agents of the tobacco industry.

The company also prides itself on diversifying its product offerings as well as formulating and distributing “green” and healthy chemical specialties with a focus on reducing energy consumption and increasing environmental efficiency during the production and manufacturing phases.

After obtaining ISO 14001 and OSHAS 18001 certification in 2010, Pujadas set out to analyze and control its carbon footprint, reduce emissions and improve its waste management initiatives.

Keeping a close eye on the environmental impacts of manufacturing adhesives for the past half-decade, the company now boasts a greener product range that includes sustainable raw materials and glues that are based only on ingredients that can be classified as completely natural.

With 125 years of experience under its belt, Pujadas is well-positioned to offer innovative new alternatives to the adhesives used in traditional cigarettes and to infuse a breath of fresh air into an industry that has begun to demand “green” adhesives derived from natural and sustainable sources. As the company celebrates its 125th year of operations, Pujadas continues to keep a close eye on the environmental impacts of the development of its products while striving to be recognized as a world-renowned global adhesives company that provides exceptional formulations and chemical solutions for not only the cigarette industry but also an assortment of additional industrial sectors for another century to come.

As Hauni celebrates its 70th anniversary with an in-house trade fair, CEO Juergen Spykman reflects on the challenges and opportunities facing the business.

TR Staff Report

Juergen Spykman became CEO of Hauni Maschinenbau in April. He takes the helm of the world’s leading tobacco technology firm at a turbulent time for the global tobacco industry, characterized by stagnating cigarette sales, mounting regulation and the rise of a new generation of products. Despite the difficult business environment, Spykman sees plenty of opportunities for Hauni, as technology can help customers meet the rapidly changing market demands and regulatory requirements. Tobacco Reporter caught up with Spykman at Hauni’s Hamburg, Germany, headquarters.

Hauni is celebrating its 70th anniversary this year. What do you consider to be the company’s greatest accomplishments?

All companies in the Hauni network consider themselves to be global partners of the tobacco industry. This has been our basic understanding for the last 70 years, since the founding of Hamburger Universelle, today known as Hauni.

We are proud to be leaders in cutting-edge technologies for tobacco processing, cigarette and filter manufacturing, as well as in service offerings for our industry. The Business Area Tobacco within the internationally leading technology group Koerber grew out of Hauni through a continuous development and broadening of our offerings for customers in the international tobacco industry.

Sixty years ago Hauni broke through on the international market with its filter-application machine Max. Today, Max is still the synonym for high-tech industrial filter application, while our Protos line of machines is the established market leader.

With the Protos M generation, we again set new standards. Everything we do is oriented toward the needs of our customers and changes in the market. That’s why we use market intelligence to always stay a step ahead—and on the side of our customers—when it comes to developing solutions for the requirements of tomorrow. With more than 4,000 employees worldwide and more than 20 locations, we combine the skills of our experts in the individual companies with the benefits of a global network of competences.

How has the stagnation of cigarettes sales worldwide affected your business?

The international tobacco industry is reacting to changing consumer behavior and stricter regulatory conditions. Everyone in the industry is faced with the challenges that this long-term structural change brings with it, including us. But we see opportunities: Changes always bring about new technological possibilities or other potential for improving our products and processes in the interest of our customers.

Adapting our range of services in anticipation of changing customer requirements is a matter of course for us, because we are always looking for ways to improve—and often simplify—and find new approaches to solutions for the needs of our customers. I am thinking in particular of [overall equipment effectiveness] strategies and increasing digitization, but also of relocation and rebuild overhaul. There are several new trends to be observed in the industry. And we are the right partners for developing suitable solutions for our customers.

What is your strategy for competing in a smaller market? Please comment on the strategic realignment that has been underway at Hauni. What have you accomplished to date, and what remains to be done?

We have tackled the new market conditions with the clear goal of not only adapting all of the companies in Business Area Tobacco; we used the occasion to increase our Business Area’s overall effectiveness by becoming better, faster and more flexible when it comes to operating in a changing market environment.

In doing so, we have already achieved significant milestones: We have continued to sharpen our focus for development projects—particularly for customer-specific developments—and accelerated important production processes using Lean methods. This also means a lot of new challenges for our teams, but thanks to consistent involvement, our employees worldwide are actively contributing to our strategic realignment. We are even more pleased that this is already showing results; we have made a positive start to the new fiscal year. The aim now is to build on this and further accelerate our accomplishments.

In recent years, Hauni has embarked on a bit of a buying spree, purchasing companies such as Sodim, Borgwaldt and Garbuio Dickinson. How does each of these acquisitions fit into your growth strategy?

Our acquisitions over the previous years have allowed us to round out our portfolio for our customers. With Borgwaldt we have supplemented our product range with physical measuring devices and smoke machines and expanded our analysis business, which we had already extended with Sodim. With the area of flavor, a new business field was added that represents additional expertise for us as an international supplier of the tobacco industry.

Roughly two years ago, with the purchase of the Garbuio Dickinson Group [GDG], the Hauni network expanded into the primary area. GDG offers a full range of tobacco preparing technologies such as high expansion, green-leaf treshing and recon, which makes it an ideal complement to our existing portfolio.

All of our new companies set the same high technological standards for themselves and for solutions for our customers as the more established ones do. In the age of globalization and global customer presence, this cultural mix is enriching because everyone across our network learns from one another and with one another, and we benefit from the different approaches applied in the different companies.

Based on all this, we are creating synergies. And we want to utilize the expertise that all of these companies bring to the table throughout the Hauni network for our customers, because from their comprehensive product and service portfolios arise more innovative and more comprehensive solutions. As a result, we can offer our customers one-stop shopping for the best solution.

Critics may argue that consolidation reduces competition among suppliers, which may not be in the best interest of customers. What is your response to such concerns?

Consolidation is part of normal market development cycles, regardless of which industry we’re talking about. But that is not a disadvantage for our customers because their end customers have very high requirements, which keeps major momentum in the market. The entire environment in our market has been, and will continue to be, permanently changing; no one can rest on the laurels of their past successes. And we would certainly never want to do that—simply because change, ongoing development, technological progress and upheaval are part of our network’s self-understanding, stemming from the mindset of our founder. They are also an invaluable motivation for our teams all over the world.

Illicit trade is a major concern in the cigarette industry. What can machinery suppliers do to prevent their machinery from falling into the wrong hands?

We have integrated a sophisticated internal audit system called “Know your customer” into our organization worldwide. New customers go through a very discerning verification process before we enter into business with them. This system is, in our opinion, one of the most effective means of preventing illicit trade.

Is Hauni developing equipment for the manufacture of e-cigarettes?

The issue of e-cigarettes is complex. With around 160 different types of e-cigarettes currently on the market, the market share numbers are still relatively low, though the market has also reached a very significant size. We have been observing the development of the e-cigarette market for years and look into all of the various products. We are particularly driven by the following question: What will the e-cigarette of tomorrow look like? We have always been leaders and innovators when it comes to new developments in the area of alternative tobacco products. Our motivation is and will always remain to excite with innovations.

What about other “next-generation” products and alternative tobacco products?

“Heat not burn” is the most similar to the classic cigarette. That’s why we can effectively apply our know-how from cigarette machines here—and we’re already doing it. We have been involved in heat-not-burn developments for more than 30 years—and we were already expanding our basic know-how and developing solutions for new products in the late 1980s.

Alternative tobacco products are just as important though. We already offer machines for the production of shisha capsules and integrated solutions for the increasingly internationally popular snus. Overall, the following applies: Whenever any of our customers have a special product or a special request, we will stand by their side as an effective partner as we offer them customized solutions.

What have been your priorities since becoming CEO?

After more than 20 years with the Business Area and through my several different positions, I have gotten to know the most diverse aspects of our companies, regions and our market. Every new position came with added responsibility and a new perspective on the industry. My five years as CFO of Hauni further increased the scope of my management and market experiences.

As CEO of the Business Area, it is my role to continue to write the success story of our network of companies as a whole. And I am convinced that, together with Dr. Juergen Heller and Dr. Martin Hermann, two colleagues with strong experience in market and technology, we will succeed in this.

The ongoing further structural and strategic development of the Business Area tops our list of priorities. Currently, market trends undoubtedly add a few demands. The most important thing for us, however—and by “us” I mean our more than 4,000 colleagues worldwide—is customer satisfaction. This is what we all get up for in the morning, and it is thus also our highest priority on the executive board.

In the interest of our customers, we also consider encouraging transparency, networking and joint developments in the Hauni network as some of our most important tasks. Because this is the only way we can make sure that we continue to offer our customers the best and most innovative solutions for their challenges. This, in turn, will form the base for making sure that, in 70 years, we are still the leading partner of the tobacco industry.

Your post-deeming strategy starts with a proper understanding of the FDA’s new rules.

By David Jaroslaw

On May 5, 2016, the U.S. Food and Drug Administration (FDA) published its long-awaited final rule for deeming other tobacco products to be subject to its authority. While cigarettes and smokeless tobacco have been subject to FDA regulation since the original passage of the Family Smoking Prevention and Tobacco Control Act (TCA) in 2009, the deeming regulations set forth what additional types of tobacco-related products will be regulated by the FDA, and which restrictions will apply to the introduction, sale, marketing and labeling of those products.

Some had advocated that the FDA apply different rules to different products, based on an assessment of their comparative health risks and usage patterns, particularly the extent to which they were used by youth. However, the FDA has instead opted to “deem”—i.e., to subject to its jurisdiction—all tobacco or tobacco-related products, including e-cigarettes, cigars, pipe tobacco and hookah tobacco, and to apply to all these products a generally uniform set of standards, with the only significant differences being related to product warning labels. The deeming regulations were formally published in the Federal Register on May 10, 2016, and have an effective date of Aug. 8, 2016.

This article addresses (i) the methods the FDA has established for gaining FDA approval for tobacco products, (ii) the relevant time periods for submissions of applications for such products, (iii) the FDA’s rationale for regulating e-cigarettes and cigars in essentially the same manner as cigarettes, (iv) the relevant restrictions on sale and marketing of such products, and (v) the warning labels that such products must carry.

1. Introduction of new tobacco products

Following the passage of the TCA in 2009, the FDA issued regulations regarding the regulatory approval of the sale of cigarettes, the dominant tobacco product in the market. These regulations set forth three “pathways” for approval. These pathways were:

• Substantial equivalence (SE)
• Exemption from SE
• Premarket tobacco product application (PMTA)

Under the SE pathway, the FDA allowed manufacturers to make comparisons with products already on the market as of Feb. 15, 2007 (the “grandfather” date for product approval). Thus, because cigarettes have been on the market for over a century, manufacturers of cigarettes that were essentially similar to a product already on the market as of the grandfather date (such a pre-2007 product is referred to as a “predicate product”) could apply for FDA approval using the SE pathway. Substantial equivalence was defined as a product not differing from a predicate product in ingredients, mode of heating or health risks. If a cigarette manufacturer could show such substantial equivalence, the product would be eligible for FDA approval. Once a product was approved, minor changes in characteristics, such as the use of previously approved flavorings, would require only an application using the “exemption from SE” pathway. Manufacturers of all other products—i.e., those that had no predicate product or those that differed from existing products in ingredients, mode of use or health risks—would have to submit a detailed application using the PMTA pathway. Under this pathway, a manufacturer would have to submit information regarding product composition and mode of use and, of particular note, scientific data regarding the likely health risks of using the product.

Under the TCA as originally passed in 2009, the FDA provided cigarette manufacturers with a relatively straightforward approval process, using the SE pathway to address relatively uniform products arguably little different from commonly available predicate products. However, under the new deeming regulations, manufacturers of e-cigarettes and cigars face a more difficult road.

For e-cigarettes, the problem is the lack of predicate products, without which manufacturers cannot use the SE pathway. E-cigarettes differ fundamentally from combustible tobacco products. They do not burn or even contain tobacco, and thus do not produce tobacco smoke. Rather, e-cigarettes heat and vaporize a nicotine-containing liquid. They were first invented in their current form in the mid-2000s and were not generally commercially available until this decade. Manufacturers and others commenting on the proposed deeming regulations noted that while the grandfather date of Feb. 15, 2007, was uncontroversial for cigarette manufacturers, application of this same date to e-cigarettes would effectively exclude e-cigarette manufacturers from using the SE pathway. Instead, such manufacturers would be required to use the far more burdensome and costly PMTA pathway. Estimates of how much it would cost to complete a PMTA vary, but the deeming regulations note that costs are expected to be more than $800,000 per manufacturer in the first year of compliance. In the final deeming regulations, however, the FDA concludes that it is compelled by the language of the TCA to use the same Feb. 15, 2007, grandfather date for all tobacco-related products. The FDA comments that there may have been products on the market as of that date that could be used as a predicate product (it referred specifically to one unflavored e-cigar as a possibility) but notes that this will require further analysis.

Additionally, the deeming regulations state that a product that differs from a putative predicate product in any significant way, including differences in flavoring or strength, is in fact a different product, requiring its own PMTA. Indeed, given that the various e-cigarette products differ from each other precisely in flavoring and strength, each product (rather than a brand family) will likely require its own PMTA. Moreover, a significant percentage of the current e-cigarette market consists of small “manufacturers,” such as vape shops, which often create their own custom products. It is unlikely that many such small-scale producers could afford the cost of a PMTA for even a single product, leave aside the cost of an application for each individual blend. Thus, in what is a considerable understatement, the deeming regulations note that the proportion of vape shops that mix their own blends is likely to fall during the initial compliance period.

For cigar manufacturers, the problem is not the lack of predicate products on which to base an application using the SE pathway—cigars have been on the market even longer than cigarettes. Rather, the difficulty lies in the variations in tobacco blends between types of cigars. While the deeming regulations state that blending changes made solely to address natural variations in tobacco, such as seasonal variation, will likely not prevent a manufacturer from using the SE pathway, changes that affect characteristics such as pH, nicotine levels or flavors (the regulations refer specifically to changes in “smoothness” and “harshness”) will require a manufacturer to use the PMTA pathway for each product variety. An important part of the cigar market is the introduction of new products, particularly in the premium cigar sector. Further, much as is the case with e-cigarettes, many cigar manufacturers, particularly in the premium market, are relatively small-scale operations and might not be able to afford the substantial expense of a PMTA.

1. Time periods for new product applications

The deeming regulations provide a “staggered” schedule for the submission of applications seeking FDA approval for newly deemed tobacco products. The period for the simplest application, the “exemption from SE” pathway, is the shortest; the period for the most complex application, the PMTA pathway, is the longest. These time periods are as follows:

• Exemption from SE: 12 months from the effective date
• SE: 18 months from the effective date
• PMTA: 24 months from the effective date

If an application for a product is not submitted for review within 24 months of the effective date, the product will be subject to enforcement action by the FDA, meaning its removal from the market, along with possible penalties or injunctive action. The deeming regulations state that the FDA expects that it should take 180 days (six months) to complete its review of an application. However, the deeming regulations also state that, regardless of the state of review, enforcement will begin 12 months after the application is submitted.

There is, however, an important caveat to this schedule: Tucked into a footnote in the deeming regulations is a statement that the delayed enforcement period applies only to products on the market as of the effective date. Any products introduced into the market after Aug. 8, 2016, will be subject to immediate enforcement. Thus, it can be expected that many manufacturers will seek to bring new products to market before this date, in order to take advantage of the 36-month window prior to enforcement.

All manufacturers will be required to provide a list of “hazardous or potentially hazardous constituents” within 36 months of the effective date, though the FDA has indicated it will provide additional guidance in this regard.

Restrictions on sales and marketing (see Section IV, below) take effect 90 days from the effective date.

III. Rationale for deeming

Much of the text of the deeming regulations consists of a series of comments, essentially FDA summaries of comments submitted by interested parties with regard to its proposed regulations, and responses by the FDA to these comments. Many of these comments and responses address the merits of extending the FDA’s existing regulatory structure for cigarettes to e-cigarettes and cigars. E-cigarettes and cigars (especially the former) are generally considered to have lower health risks than cigarettes. The following provides brief analysis of the FDA’s rationale for its approach.

1. E-cigarettes

A broad discussion has occurred in scientific, public health and regulatory circles, in the U.S. and worldwide, with regard to e-cigarettes and the concept of tobacco harm reduction. Tobacco harm reduction proceeds from the principle that there is a continuum of risk among tobacco products, with some products posing a higher health risk to users and others a lower risk. It posits that tobacco users should be encouraged to move from higher-risk products, most commonly referring to combustible cigarettes, to those with lower risk. The working premise is that if cigarette smokers smoke as a way of obtaining nicotine, but die from the smoke itself, then such smokers should be encouraged to find other ways of obtaining nicotine—ones that do not produce tobacco smoke—that they find sufficiently satisfactory to reduce or eliminate their use of cigarettes.

Two major public health bodies from the United Kingdom, the quasi-public entity Public Health England (PHE) and the Royal College of Physicians (RCP), a body analogous to the American Medical Association, have recently published reports accepting the basic principles of tobacco harm reduction and continuum of risk; these reports take the position that smokers of combustible cigarettes should be actively encouraged to switch to e-cigarettes. The PHE report states that the “current expert estimate” is that the use of e-cigarettes is “around 95 percent safer than smoking” and further notes that there is an “inaccurate perception” that e-cigarette use is “as harmful as cigarettes.” The report also states that there is no evidence that e-cigarette use is “undermining the long-term decline in cigarette smoking,” and that “encouraging smokers who cannot or do not want to stop smoking to switch to [e-cigarettes] could help reduce smoking related disease.” The RCP report similarly states that new products such as e-cigarettes fit into a harm reduction strategy by “providing smokers with the nicotine to which they are addicted without the tobacco smoke that is responsible for almost all of the harm caused by smoking” and adds that these products provide a “viable harm-reduction option.”

The deeming regulations specifically discuss the concept of continuum of risk, and Mitch Zeller, the director of the FDA’s Center for Tobacco Products, has publicly discussed the opportunity for the FDA to develop “a comprehensive nicotine regulatory policy that is agency-wide and that is keyed to … the continuum of risk.” However, in the deeming regulations, the approach formally adopted by the FDA is very different, choosing to treat all tobacco-related products similarly. This is so despite language in the deeming regulations that suggests a split within the FDA with regard to whether e-cigarettes can serve a positive role in reducing the harm from tobacco use.

For example, although the deeming regulations contain a subsection titled “Continuum of Risk,” this subsection does not actually provide any data regarding the comparative risk of using the various tobacco-related products covered by the regulations. Rather, it states only that “there is general evidence of harm for all classes of newly deemed products.” The deeming regulations note the assessment by PHE that use of e-cigarettes is likely around 95 percent safer than smoking combustible cigarettes but conclude that there is a “lack of hard evidence” regarding the health risks of e-cigarette use and that, as a result, “the FDA does not find the beliefs … to be sufficiently conclusive on the relative risks of using different tobacco products.” Similarly, the deeming regulations state that while “the effects from nicotine exposure by inhalation are likely not responsible for the high prevalence of tobacco-related death and disease” and that “nicotine has not been shown to cause the chronic disease associated with tobacco use,” there are still “risks associated with nicotine.” With regard to potentially harmful constituents found in at least some samples of e-cigarette vapor, the regulations refer to a Japanese study reporting that e-cigarette vapor contains formaldehyde at one-fiftieth the level found in cigarette smoke, but they once again conclude that there is not adequate long-term data regarding health effects. Finally, in its discussion of usage patterns of e-cigarettes, the FDA states that it must take into account “the increased or decreased likelihood that existing users of tobacco products will stop using such products … and the increased or decreased likelihood that those who do not use tobacco products will start using such products.” The deeming regulations add that while some studies report that usage of e-cigarettes is more common among persons trying to quit smoking combustible cigarettes, “it cannot be determined by the research findings: (1) whether former cigarette smokers who now exclusively use e-cigarettes would not have ceased smoking cigarettes regardless of e-cigarette use; and (2) whether the e-cigarette use preceded quitting or the quitting occurred first and then was followed by later e-cigarette use.”

1. Cigars

Cigars have been on the market for centuries, and there is a considerable body of scientific studies regarding the long-term health effects of their use. The major question regarding how the FDA would treat cigars was posed in the proposed regulations and request for comments published by the FDA in April 2014: whether premium cigars (in part defined as those retailing for $10 or more), which have distinct use patterns, would be exempted from the deeming regulations, or at minimum be subject to less onerous regulation. In the deeming regulations, the FDA has opted to treat all cigars similarly. While entities supporting differential regulation of premium cigars noted that users of these products are adults, not youth, and tend to smoke relatively few cigars, typically less than one per day, and that epidemiological data did not support there being an increased risk of mortality among cigar smokers who smoked fewer than two cigars per day, the FDA relies on data reporting that premium cigars are not inherently different in toxicological profile from other cigars, and therefore should be considered to pose the same health risks. The FDA identifies three key reasons for its decision to treat all cigars similarly: that all cigars are similar in composition, from a health risk perspective; that the data provided did not sufficiently establish a difference in usage patterns between cigar types; and that the data regarding youth usage were not sufficient to convince the FDA that this group did not or would not use these products.

1. Restrictions on sale and marketing

The deeming regulations extend the restrictions on sales and marketing of tobacco products, which are currently applicable to cigarettes and smokeless tobacco, to all newly deemed products, including e-cigarettes and cigars. The primary restrictions, which take effect 90 days from the effective date, are a prohibition of sale to persons under 18 years of age, with proof of age required for purchase, and a prohibition of sales via vending machines (unless the machines are located in areas where entry by persons under 18 is prohibited).

1. Warning labels

The deeming regulations draw one major distinction between e-cigarettes and combustible tobacco products—they will require a different health warning. E-cigarettes will be required to carry a single warning that states: “WARNING: This product contains nicotine. Nicotine is an addictive chemical.” Alternatively, the products may replace the first sentence with the following statement: “This product is made from tobacco.”

Cigars, in contrast, must carry a rotating series of warnings. These warning are:

• WARNING: This product contains nicotine. Nicotine is an addictive chemical.
• WARNING: Cigar smoking can cause cancers of the mouth and throat, even if you do not inhale.
• WARNING: Cigar smoking can cause lung cancer and heart disease.
• WARNING: Cigars are not a safe alternative to cigarettes.
• WARNING: Tobacco smoke increases the risk of lung cancer and heart disease, even in nonsmokers.
• WARNING: Cigar use while pregnant can harm you and your baby. (Or, as an optional alternative statement: SURGEON GENERAL WARNING: Tobacco use increases the risk of infertility, stillbirth and low birth weight.)

For cigars sold in boxes, these warnings must cover at least 30 percent of the two main display panels of each box, while for cigars sold individually, they must be displayed on a sign located at the point of sale. For advertisements, the warnings must cover at least 20 percent of each advertisement.

It remains to be seen how the FDA will implement the deeming regulations in practice. Will a predicate product be found to allow e-cigarettes to use the SE pathway? Will there be some additional leeway granted to small manufacturers (of both e-cigarettes and cigars)? If not, will the group of manufacturers shrink to a small set of large entities with the resources to afford the costs of the PMTA pathway? What sorts of information will the FDA deem suitable for submission in connection with the evaluation of newly deemed products? (The FDA has begun the process of providing draft guidance in this regard, but the path ahead is far from clear.) Given the likely complexity of each new product application, manufacturers of newly deemed products will have to start by navigating with relatively few tools.

David Jaroslaw is a shareholder in Greenspoon Marder’s litigation practice group. He has litigated a broad spectrum of complex civil and criminal matters in both federal and state courts, at the pretrial, trial and appellate levels. Jaroslaw has provided product liability advice and litigated on behalf of manufacturers of products, including tobacco and e-cigarettes, in the United States, Europe and Asia. 

Smart supply chain solutions facilitate the procurement and storage of spare parts.

By Stefanie Rossel

In a previous report on tobacco equipment consumables (see “The real stuff,” October 2014), Tobacco Reporter found that parts are as important to cigarette machinery as capsules are to modern coffee makers. High-quality, properly fitting parts ensure smooth operation and consistent product quality for tobacco producers and coffee connoisseurs alike. Low-quality, improperly fitting parts, by contrast, are likely to create problems. Any savings on the initial purchase price are likely to be wiped out by reduced efficiency, compromised product quality and shortened machinery lifespans.

As the tobacco industry navigates fundamental market changes, perhaps it’s appropriate to develop this analogy a little further: Imagine that, in addition to offering a vast array of flavors, your favorite coffee vendor would also know when your ristretto is running low. Instead of requiring you to order and stock large volumes, your suppliers would automatically send to you the next batch of coffee—exactly the desired amount and just in time. And this, more or less, is how the supply of spare and wear parts, in its most advanced form, works nowadays.

While optimizing efficiency has always been a main objective in cigarette production, the speed of such efforts has accelerated in recent years, after leading tobacco manufacturers, in light of falling cigarette sales, began closing factories and centralizing production.

As a consequence, a lot of relatively new machinery has become available, stifling demand for new equipment. Spare and wear parts have been “set free” as well. For the manufacturers of such consumables, however, the cigarette companies’ moves have turned out to be less negative than might have been expected.

“The movement of production undoubtedly has an effect on suppliers, as the transition periods can be lengthy and factories seek to run stocks down before relocating,” says Paul Farrell, spares manager at Molins Tobacco Machinery. “We have found that as machinery has ‘cascaded’ it is an opportunity for Molins, as older machinery is brought out of storage and requires spares and overhaul projects. The market is still very nervous about committing to new equipment, however; this has worked in favor of our spares business in the short term.”

“There is a short impact due to the consolidation of spare parts from other factories,” says Russell Greenwood, spares operations manager at Garbuio Dickinson, which specializes in primary department (PMD) equipment and was acquired by Hauni Maschinenbau in 2014. “This impact is small on PMD equipment, as the level of spares held in stock is minimal.”

Farrell goes on to explain that, with the tobacco business depressed, his company had lowered its outlook for the spare parts business correspondingly. “However, we have found that for spare parts and additional equipment the market has been very positive,” he says. “Customers who were previously running down inventories now have requirements, and machinery that would previously have been put into storage is still running.”

Like Garbuio Dickinson, ITM has experienced stable regular spare parts sales. “At ITM Poland we have even seen a boost in the start-up and consumable spares due to the sales of recently launched equipment,” says Henk Meijer, manager of services at ITM.

The better-than-expected sales are not due to good fortune alone; they are also a result of hard work. “We have worked hard with our customer base to keep the appropriate level of consumable parts in stock constantly and have excellent freight links globally,” says Farrell.

Meijer points out that all multinational cigarette manufacturers have introduced cost-reduction schemes. “This is also affecting the spare parts business,” he says. “The targets set for spares prices are putting pressure on the margins, and we nowadays have to go through various rounds of negotiations before new spares contracts can be signed.”

In order to remain competitive, spare parts suppliers must take fresh approaches, says Heiko Geissler, head of service operations at Hauni. With worldwide cigarette production stagnating, he believes the demand for spare parts will stay the same. “Growth can only be generated through new products or added value in the after-sales service,” says Geissler. As an example, he points to the integration of the Decoufle spare parts business into Hauni’s Hamburg operations. “Through this, our customers get some added value as far as performance is concerned,” says Geissler. “In addition, purchasing processes have been facilitated.”

Growing complexity

Supplying spare and wear parts to the tobacco industry has become an increasingly complex business, holding ever-new challenges for suppliers. Geissler says Hauni has used the past 18 months to develop, among other things, a technology that automatically creates certificates of origins for its spares. “This tool will accelerate customs procedures by up to four days,” he says. In addition to having a good understanding of the world’s increasingly complex customs regulations, today’s spare and wear parts suppliers must be aware of the interaction between many independent products and comprehend the interlaced, intelligent supply chain, according to Geissler.

Meijer observes that, in addition to seeking state-of-the-art parts at the best possible price, clients now also demand obsolescence management. They emphasize issues such as sustainability, recycling and power consumption, which places new demands on equipment manufacturers. “This will have its impact in the long term,” he says.

After a round of spare part redistribution to accommodate reduced manufacturing footprints, Meijer expects tobacco companies to introduce “meaner and leaner” procurement procedures. “This requires a new approach in the way client and supplier are managing the spare parts supply lines,” he says.

To comply with cigarette manufacturers’ mentioned requirements, as well as demand for shorter lead times, longer-lasting parts and reduced stocks, additional efforts are required from parts suppliers, according to Meijer.

“This often means tailor-made solutions that can only be achieved in partnership with the client; therefore we have to move away from the traditional client-customer relationship,” he says. “In order to come to sensible and sound solutions, all aspects of the aftersales business should be taken into account.”

VMI rising

Supply chain optimization—particularly inventory management—has increasingly become the focus of suppliers’ efforts. The companies interviewed for this article provide various digital solutions that allow their customers to check availability of spares, obtain online quotations and place orders. All of them have implemented vendor-managed inventory (VMI) systems.

Garbuio Dickinson uses a customer-relationship management (CRM) tool to help predict demand based on a combination of history, machinery in operation and machinery likely to continue to be in operation.

“Customers are rightfully seeking to push back inventory holding onto suppliers and request ever-decreasing lead times,” says Farrell of Molins. “We did a large-scale exercise scrutinizing our supply chain, determining what inventory needs to be held in stock, pushing inventory vertically down the supply chain and providing more supply options,” he says. “This has led to Molins being able to reduce the lead times for proprietary parts by an average of 42 percent. We are also happy to work with customers’ needs and hold stock of key items for call-off orders.”

According to Farrell, spares demand levels vary rapidly and Molins’ systems are constantly monitoring and adjusting stock levels to ensure the perfect balance, maintaining the highest percentage of in-stock availability. “Our machinery design team always considers the reduction of parts count and use of common parts for various machine groups, which in turn reduces our and our customers’ stock level requirements,” he says.

Molins experience with VMI has been positive. “We frequently receive requests from customers to provide recommended essential spares lists for their machinery; we then provide the customer with an update on what we recommend they purchase now and in the future,” says Farrell. “This has to be a two-way process to work, as our estimations on consumption come from the customer providing us with production information; however, this helps to foster trust and understanding within our relationships.”

One of the challenges in implementing such an advanced management tool, notes Meijer, is that its success depends largely on the sophistication of clients’ IT systems and customers’ ability to predict their parts requirements. VMI has been an option in recent ITM projects, and the company can offer it as part of a service package. “Such a package is part of an agreed after-sales service contract with a mutually agreed scope and fee,” says Meijer.

The latest generation of tobacco machinery features smart sensors to accurately predict when parts must be replaced, according to Geissler. “Combined with the remote service Hauni offers, technicians at our site in Hamburg-Bergedorf can directly access the machine, make recommendations and intervene if necessary,” he says. “Supported by our intelligent-supply concepts, the required spare part can be sent out immediately.”

He adds that, in addition to Hauni’s web shop and electronic data-interchange (EDI) system, VMI has established itself as an independent e-commerce service. “Our VMI services continue to be in high demand,” says Geissler. “We now have connected around 50 customers with this tool. While clients were skeptical in the beginning, they are now increasingly willing to shift responsibility for their materials supply to the supplier. This readiness is the basis for talks about further developments because an active management of customers’ inventories leaves ample scope with many chances for the client. The integration of Decoufle’s spare parts provides us with the potential to expand our VMI offer for existing and new customers.”

Carefree sourcing

“Challenges to deliver a high-quality product with ever-decreasing resources relies on reliable and effective operations not only from individual assets but [also from] all the processes that make up a manufacturing unit,” says Alex Cormack, operations director at Gemba Solutions, a U.K.-based IT solutions provider specializing, among other things, in overall equipment effectiveness. Many manufacturers now run a mixture of OEM and older equipment—a situation that, according to Cormack, can affect reliability and failure rates, impacting the manufacturer’s return on investment.

To optimize performance even in a mixed-equipment scenario, ITM uses Gemba Solutions’ production-efficiency software and services. Taking a holistic view, ITM is able to monitor not just its own equipment but any machine or process in the production process. This ability enables the company to pinpoint failures in real time and manage capacity improvement activity while maintaining output levels from older equipment.

“Excellent support and spares strategies can reduce the impact of older equipment failure, though the frequency and modes may become more difficult to manage when assets age beyond their predicted reliable years,” says Meijer. “This old equipment may not employ the latest condition-based monitoring systems. The introduction of modern manufacturing techniques is increasingly becoming a must-have culture within the cigarette industry. The basis of Lean, Agile and Six Sigma methods are all reliant on the ease of collection and analysis of good data; the ITM Gemba system and support helps drive these seamlessly.”

Hauni also offers a comprehensive spare parts supply chain-management solution. The company provides spare parts from more than 1,100 suppliers. Its system offers customers more than 400,000 items 24/7, 365 days a year.

Based on forecasting methods, Hauni can take over its customers’ spare parts planning. The company independently defines the optimal inventory level of each spare that needs to be in stock at the customer’s site. “To achieve this, we file each spare part in different clusters, based on its history of consumption,” explains Claus Peters, group manager of services at Hauni. “Dependent on this, we determine the desired scope of supply together with our customer in an initial provisioning study. We then agree [on] a service level. The service level is aligned to the availability of the agreed range of spare parts. In combination with the spares permanently available ex-Hauni and the articles stored at the customer’s site, it stands at 99.5 percent.”

As soon as the initial provisioning study has been finalized, the scope of supply is being mapped onto Hauni’s forecast and planning tools. The company then takes on the materials planning of the agreed array of spare parts. The cluster assignment of the individual parts with regard to ongoing consumption is checked regularly and adapted if necessary. “The customer profits in many ways from this solution,” says Peters. “By means of tailor-made logistics concepts it significantly improves the availability of materials and ad hoc supply; through optimized stock levels it enhances capital lockup. In addition, it considerably reduces the complexity of customers’ procure processes and brings about operational relief, thus creating more room for clients to focus on their core business.”