Converter Outlook: Part I (CONT’D FROM PAGE 1 )
ducers might not? The question arises as containerboard producers try to position themselves for the future. While everyone spins in their own orbit, do the producers take into account how the market will absorb this new capacity? Where will the integration come from? The independent converter segment is stagnant and sits at about 9-10 per- cent of the market. How does new capacity find a home? It should be quite interesting. Frankly, I would rather be us than the companies faced with this demand dilemma. “As I mentioned earlier, we enter into the New Year with an overwhelming backlog. We know this can’t last forever, but like all of you reading this, we will ride it out as long as possible. The downside is that we have disappointed cli- ents but probably no more than other raw material suppli- ers in the supply chain. Paper supply has been tight - some of the tightness manufactured but some caused by uncon- trolled circumstances. It didn’t help that Mills were produc- ing in the low 90s as the demand surged dramatically in
into account capacity creep. In Europe, which is a far more fragmented market, there will be an additional 4.5-5 mil- lion tons of both Kraft and recycled capacity (a 17 percent increase) by the end of 2023. Also added will be another one million tons from Klabin in Brazil. So, the question is, how will this capacity be absorbed? “Sometimes, I think I am watching a train wreck in slow motion. While I was amazed that the market was ripe for a late fourth quarter price increase, I do wonder what the effect rising prices will have in the future. Is the pricing power once held by the four majors eroding even as pric- ing elevates? It would seem that attaining higher prices is just an invitation for new entrants. We see the result as companies like Pratt, Smurfit Kappa, DS Smith, ND Paper and now SAICA find their way into the domestic market. What are the opportunities they see that domestic pro-
the fall. In the month of October, we scram- bled like most other Independents for supply. Fortunately, we have come out of what I de- scribe as a “once in a decade” demand surge not met by open market capacity. “I expect the Acme Corrugated Box Co. to continue to find new products, introduce innovative use of flutes and substrates in our efforts to meet market requirements for 2021. We have always viewed ourselves as a “structural” box company. Our approach has always been, “What can we bring to clients that is not readily available” but has demon- strated value? We search globally for those answers and I would say we have done so successfully. We are focused on the perfor- mance of the packaging. Does it work? All other criteria seem superfluous to us. “We, like most independents, compete on competency, innovation and service. To prove value, you must find ways to differ- entiate yourself in a market that is too often based on ”me too!” value, is established by introducing the best material available, uti- lizing the best equipment available and then being led by an executive group that truly un- derstands that success is dependent on find- ing new products and new ways to service our clients. It’s a simple formula but one that has worked extremely well for us. “As a sign of our overall optimism, we have embarked on a multi-million dollar expansion of our present facility. We do this fully aware that even now there is uncertainty coming out of a worldwide pandemic. Still, the signs we see tell us that we have a duty to meet the future with confidence and forbearance. Our plans have been three years in the making. I
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January 11, 2021
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