BoardConverting Serving the North American Corrugated and Folding Carton Industries for 39 years January 9, 2023 VOL. 39, NO. 2
Converter Outlook, 2023, Part 1: Shrinking Demand Is Concerning BY LEN PRAZYCH As is our annual tradition, Board Converting News solicits a represen- tative sample of the continent’s independent converters for a glimpse into their brilliant business minds as we embark on another year in the ever-dynamic corrugated and folding carton industries. While the effects of the pandemic and its variants on the global sup- ply chain continue to impact “business as usual” to a lesser degree, converters have largely recovered and have finally overcome their backlogs. The corrugated and folding carton industries have emerged stronger than ever, as evidenced by ongoing news of facility expan- sions and capital investments in new machinery. As predicted and expected, the corrugated industry has not only survived, but thrived, despite one challenge and obstacle after another. Based on a consensus of the converters who shared their outlook, the year 2023 is expected to be generally positive with decreased cus- tomer demand. Political and regulatory impacts notwithstanding, the biggest concern appears to be the significant amount of new supply expected to flood the market in 2023. Here’s how some of our indus- try’s leaders will manage their companies in the future. ACME CORRUGATED BOX CO. Hatboro, Pennsylvania: Bob Cohen reports, “As we enter the new year, questions abound about what direction the general economy is head- ed. I think most independent producers saw a surge in volume over the last two years, sometimes overwhelming in scope, mainly caused by the unusual circumstances surrounding the pandemic and its aftermath. “Even as 2022 started out, we saw strong demand but sometime in mid-year we saw a drop in volume as demand fell after June. It was almost two years to the day when the unprec- edented surge in demand ended. There are any number of reasons why the economy has suffered, not the least of it being related to an inflation rate not experi- enced since the 1980’s. “Prolifigate spending by the Federal government caused the de- valuation of the dollar, government policies on energy added to the financial woes of the consumer and as the covid panic receded buying habits changed and consumers redirected spending to services over goods. The later part of 2022 saw volumes more closely resembling Bob Cohen
NAM: Manufacturing Added Record $2.81 Trillion In Q3 After contracting in the first two quarters of 2022, the U.S. economy rebounded in the third quarter, expanding 3.2 percent at the an- nual rate, according to Chad Moutray, Ph.D. and Chief Economist at the National Associ- ation of Manufacturers. Despite the improve- ment in activity in the third quarter, significant downside risks remained in the economic outlook, with the risk of a recession elevated. With that said, the current forecast is for real GDP to increase 2.0 percent in 2022 on an annual basis, with 1.1 percent growth in 2023. Manufacturing value-added output increased to a record $2.809 trillion in the third quarter. Manufacturing accounted for 10.9 percent of value-added output in the U.S. economy in the third quarter. Meanwhile, real value-added output in the manufacturing sector inched up to $2.259 trillion in the third quarter, as expressed in chained 2012 dollars. This remained lower than the record high in the fourth quarter of 2021, which was $2.325 trillion. Much of the gain in output was buoyed by higher prices. New orders for durable goods fell 2.1 per- cent from a record $276.4 billion in October
CONTINUED ON PAGE 5
WHAT’S INSIDE 10 Congress Fails To Advance Manufacturing Tax Priorities 14 Burt Rigid Box, Taylor Box Co. Join Global Packager Pusterla 20 Zero Waste Packaging Market To Reach $502.6B By 2030 40 Rusken Packaging Receives ISO Certification At GSI In MS
CONTINUED ON PAGE 22
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AVERAGE CONTAINERBOARD PRICES The average prices reported are tabulated from prices PAID by various sources throughout the United States the week previous to issue. Prices in some areas of the country may be higher or lower than the tabulated average. The prices tabulated here are intended only for purposes of reference. They do not connote any commitment to sell any material at the indicated average. Transactions may be completed at any time at a price agreed upon by seller and purchaser.
REGION E. Coast Midwest Southeast Southwest
42# Kraft liner
26# Semi-Chem. Medium
$1005.00-1010.00 $1020.00-1030.00 $1020.00-1030.00 $1020.00-1030.00 $1050.00-1060.00 $1023.00-1032.00
Short Ton Del. Short Ton Del. Short Ton Del. Short Ton Del. Short Ton Del. Short Ton Del.
$940.00-990.00 $955.00-975.00 $955.00-975.00 $955.00-975.00 $975.00-995.00 $958.00-978.00
West Coast U.S. Average
SHEET PRICES BY REGION (AVERAGE) Per 1MSF, local delivery included, 50MSF single item order, truckload delivery. Sheets
E. Coast Midwest South-SW S. CA N.CA/WA-OR US Aver.
200# 275#
$62.26
$72.05
$62.69 $82.80
$85.35 119.54
$73.13 101.29
97.32
99.89
90.86
113.65
More box makers, brokers and end users are relying on the containerboard pricing in Board Converting News to negotiate their contracts than ever before.
OYSTER UP-CHARGE 8.34
8.34
8.34
8.34
8.34
8.34
275# DBL-WALL 350# DBL-WALL
107.46 118.45
114.69 129.32
116.54 137.25 117.82 145.56
141.08 148.46
122.76 131.80
CANADIAN SHEET PRICES (AVERAGE) In Canadian Dollars, per 1MSF, local delivery included, under 50MSF single item order, truckload delivery. 200# 275# Oyster UC 275#DW 350#DW $78.56 $99.18 $9.00 $96.32 $105.83 CANADIAN LINERBOARD & MEDIUM The average prices reported are tabulated from prices PAID by various sources throughout Canada. Prices may be higher or lower in various areas of the country. The prices tabulated here are intended only for purposes of reference. They do not connote any commitment to sell any material at the indicated average. Transactions may be completed at any time at a price agreed upon by seller and purchaser. Prices are Canadian $ and per metric ton.
See the current prices every week right here on Page 3.
Len Prazych at 518-366-9017 lprazych@nvpublications.com
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NAM: Manufacturing (CONT’D FROM PAGE 1)
to $270.6 billion in November, but excluding transporta- tion equipment, new durable goods orders increased 0.2 percent from $179.0 billion to $179.3 billion. Despite data that remain highly elevated, the manufac- turing sector has weakened notably in recent months, with durable goods orders excluding transportation equipment off 0.3 percent in the past five months (or so far in the sec- ond half of 2022). With that said, new durable goods or- ders have increased 6.5 percent year-over-year, or a mod- est 3.4 percent with transportation equipment excluded. Manufacturing activity contracted for the third straight month in the Kansas City Federal Reserve Bank’s district, with the composite index dropping further from -6 in No- vember to -9 in December. Respondents continued to pre- dict relatively flat growth over the next six months. Personal consumption expenditures edged up 0.1 per- cent in November, following solid gains in the prior three months, including a gain of 0.9 percent in October. With that said, spending on durable and nondurable goods de- creased 2.3 percent and 0.2 percent in November, respec- tively. Service-sector spending rose 0.7 percent for the month. On a year-over-year basis, personal spending has risen 7.7 percent since November 2021, with goods and service-sector purchasing up 5.3 percent and 8.9 percent over the past 12 months, respectively. At the same time, personal income increased 0.4 per- cent in November, with wages and salaries up 0.5 percent for the month. With income growth outpacing spending, the personal saving rate ticked up from 2.2 percent in Oc- tober to 2.4 percent in November. Both measures of con- sumer confidence moved higher in December, buoyed by lower gasoline prices and an improved economic outlook. Yet, overall sentiment remains less than desired. TAPPI/PIMA Student Summit To Be Held January 13-16 In Cincinnati The TAPPI/PIMA Student Summit is an annual event de- signed for students interested in the pulp, paper, packag- ing, and allied industries. It offers direct interaction with industry leaders as well as the opportunity to gain valuable information about employment and career development within their field. This year’s event on January 13-16 at the Hyatt Regen- cy in Cincinnati, Ohio, is an excellent venue for advanced undergraduate and graduate students to learn about op- portunities after graduation as well as some of the key challenges and opportunities existing in the industry to- day. It is the only event that brings students from paper and packaging schools together to reinforce their interest in joining the industry. Session topics have included Nan- otechnology, Printed Electronics, and the State of the In- dustry — all topics that are not regularly taught as part of their curriculum. Visit tappistudentsummit.org to register.
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Grupo Mexipack Installs Kolbus AB300 Boxmaker
Box Shipments ( U.S. Corrugated Product Shipments) Industry Shipments In Billions of Square Feet Month September 2022
Adela Jauregui, Sales Manager, Kolbus Mexico, an- nounced the recent installation of a Kolbus AB300 short run boxmaker at Grupo Mexipack. Established in the city of León, Guanajuato, Grupo Mexipack manufactures special packaging and accessories made of corrugated board, plastic and wood. The company has distribution and as- sembly centers in Querétaro, Monterrey and Saltillo, with more than 100 active customers from different industries. “Our growth has been the product of understanding and responding to four of the main current packaging needs of the industry: sense of urgency, flexibility, order quantities and design focused on reducing costs that are the best option for products to be tailor packed,” said Juan Carreras, Production Manager, Mexipack. “Thanks to the Kolbus AB300, it has allowed us to achieve savings in la- bour and purchase of tooling for the manufacture of small orders, as well as special designs and low-volume boxes. We can add many style codes thanks to its computer setup time, which allows the operator to load an order in two to five minutes. “Having the AB300 has also allowed us to serve cus- tomers with various box sizes, as well as low manufactur- ing volumes and shorter delivery times, which allows us to offer better service, which is a real added value.”
Year
Actual
Percent Change Avg Week Percent Change
2022 2021
32.705 34.247
-4.5
7.787 8.154
-4.5
Industry Total
Year-to Date
September 2022
Year
Actual
Percent Change Avg Week Percent Change
2022 2021
305.168 312.525
-2.4
7.989 8.224
-2.9
Industry Total
Containerboard Consumption (Thousands of Tons)
Year
Month
Percent Change Year-to-Date Percent Change
2022 2021
2.6327 2.7773
-5.2
24.8959 25.4841
-2.3
Container Board Inventory - Corrugator Plants (Thousands of Tons)
Corrugator Plants Only
Date
Percent Change Weeks of Supply
Percent Change
Sep. Aug
2.5975 2.5867
0.4
4.1 4.2
-2.4
Shipping Days
Year
Month
Year-to-Date
2022 2021
21 21
191 190
SOURCE: Fibre Box Association
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AICC NOW Leadership Webinar Slated For January 23
What does leadership look like? Omar Abdullah Ph. D, Di- rector of Business Development at Guardian Computer will lead the AICC NOW webinar on January 23, “Defining the Modern Leader.” The webinar will discuss how management practices have shifted due to various societal/technological factors
and how you can create opportunities for growth and development due to these tailwinds. Abdullah, otherwise known as “The Resident Extrovert” at Guard- ian Computer, is primarily responsible for organizational growth, corporate development, and expanding brand
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Share the story of your company’s success with an ARTICLE in Board Converting News. The corrugated and folding carton industries are waiting!
awareness. This entails driving Guardian Computer’s strat- egy, sales, and marketing initiatives. He works to build re- lationships with various organizations and clients to help them meet their unique IT needs. He has a Doctor of Phi- losophy in Cultural Studies from the University of Califor- nia, Davis, and a Bachelor of Arts in Communication and Media Studies from St. Mary’s College of California. An All Access Pass must be purchased for viewing. Vis- it aiccbox.org to register or contact Taryn Pyle at tpyle@ aiccbox.org or (703) 836-2422.
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NAM: Congress Fails To Advance Manufacturing Tax Priorities The National Association of Manufacturers is calling on lawmakers to address critical tax provisions that were left
their workers, facilities, and communities,” said NAM Pres- ident and CEO Jay Timmons. Ketchie President and owner and Incoming Chair of the NAM Small and Medium Manufacturers Group, Courtney Silver recently highlighted that congressional action on these tax priorities will help prevent small manufacturers from feeling stuck between a rock and a hard place.
out of the 2023 Omnibus spending package, highlighting the negative im- pact to small manufacturers and their workers. “Congress’ failure to reverse tax policies that make it more costly to perform research, buy machinery and finance job-creating investments has
“It’s important that we take action on expanding and locking in that pass- through deduction, increasing those incentives around R&D and protecting those provisions around full expensing and interest deductibility,” said Silver.
Jay Timmons
Courtney Silver
“Although the appropriations package included import- ant manufacturing priorities, including the INFORM Con- sumers Act, with its protections for consumers against counterfeit goods, and the Electoral Count Reform Act,
put hundreds of thousands of American jobs and manu- facturing competitiveness at risk. Despite overwhelming support for addressing these issues, Congress’ inaction will now undercut small manufacturers’ ability to invest in
which supports a clear and secure demo- cratic process, pro-competitiveness tax pol- icy changes would have made a big differ- ence for businesses of all sizes across our industry,” Timmons said. “As the next Con- gress convenes, we urge lawmakers to pri- oritize these policies, and we will continue to work with manufacturing champions from both parties to provide tax certainty to the nearly 13 million people who work in manu- facturing today.” ISM: Growth To Improve In Second Half Of 2023 Economic improvement in the United States will continue in 2023, said the na- tion’s purchasing and supply management executives in the December 2022 Semian- nual Economic Forecast. Revenues are ex- pected to increase in 15 of 18 manufacturing industries while capital expenditures are ex- pected to increase by 2.6 percent (after a 12 percent increase in 2022). The manufactur- ing employment base is expected to grow by 3.9 percent. Growth in the second half of the year is projected to rebound. Expectations for 2023 are positive, as 45 percent of survey respondents expect rev- enues to be greater in 2023 than in 2022. The panel of purchasing and supply execu- tives expects a 5.5 percent net increase in overall revenues for 2023, compared to a 9.3 percent increase reported for 2022. Paper products are among the 15 man- ufacturing industries that expect revenue improvement in 2023.
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10 January 9, 2023
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ISM: Growth To Improve (CONT’D FROM PAGE 10)
The Perfect Combo Get Peak Performance From Your Equipment with Matched Component Sets
“Manufacturing’s purchasing and supply executives ex- pect to see overall growth in 2023. They are pessimistic about overall business prospects for the first half of 2023 but project growth returning in the second half,” said Timo- thy R. Fiore, CPSM, C.P.M., Chair of the ISM Manufacturing Business Survey Committee. “According to the ISM Report On Business, manufac- turing grew for 29 consecutive months from June 2020 through October 2022, but dipped into contraction in November after declining in five out of the previous six months. Respondents expect raw materials pricing pres- sure to increase in 2023, but still see H1 2023 profit mar- gins improving over H2 2022. Wages and employment will continue to grow. Manufacturers also predict growth in both exports and imports in 2023.” In the manufacturing sector, respondents report oper- ating at 88.4 percent of normal capacity, up 0.8 percent- age point from the 87.2 percent reported in May 2022. Purchasing and supply executives predict that capital ex- penditures will increase year over year by 2.6 percent in 2023, compared to the 12 percent increase reported for 2022 compared to 2021. Manufacturers expect employment to grow by 3.9 per- cent in 2023 relative to December 2022 levels, while la- bor and benefit costs are expected to increase an average of 5.8 percent. Respondents also expect the U.S. dollar to strengthen against the currencies of seven major trading partners in 2023. The panel predicts that prices paid for raw materials will increase 2.5 percent during the first five months of the year, with an overall increase of 2 percent for 2023. This compares to a reported 11.4 percent increase in raw mate- rials prices between the end of 2021 and 2022. Manufacturing purchasing and supply executives report their companies are currently operating at 88.4 percent of normal capacity. This is a 1.2 percent increase when com- pared to May 2022 (87.2 percent) and a decrease when compared to December 2021 (88.7 percent). Paper prod- ucts rank third among the eight industries operating at or above the average rate of 88.4 percent. Production capacity in manufacturing increased 6.7 percent in 2022, as 49 percent of purchasing and supply executives reported an average capacity increase of 15.4 percent, seven percent reported an average decrease of 12.4 percent, and 44 percent reported no change. This compares to a May 2022 predicted increase in production capacity of 5.8 percent for 2022. Expectations for 2023 are for an increase of 5.3 percent. Paper products ranks fifth in the 15 industries expecting an increase in production capacity in 2023. The principal means of achieving increases in pro- duction capacity in 2022 were (in order of importance) additional personnel, more hours worked with existing personnel, additional plant and/or equipment, and fewer shutdowns.
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Burt Rigid Box, Taylor Box Co. Join Pusterla As First U.S. Sites Of Global Packaging Group Oneonta, New York based Burt Rigid Box, Inc. and Warren, Rhode Island based Taylor Box Company have announced their combination with re- spected European secondary packaging group, Pusterla 1880. With es- tablished manufacturing sites across the European Union, UK, Moldova, and Tunisia and offices in Asia, Pusterla will enter the North American market through a merger with Burt Rigid Box and the acquisition of Taylor Box Company. Serving clients in the fragrance & skincare, confectionary, entertain- ment, and retail markets, Burt has been a leading supplier of rigid boxes to international and regional clients since its founding in 1886. Taylor Box, started in 1885, offers a design-forward approach to best-in-class rigid box packaging for the wine & spirits, financial, brand-marketing, luxury internet and other industries. Roberto Marini, CEO of Pusterla, says “Our U.S. expansion continues our strategic focus on the high-end market. We are honored to serve our clients wherever they are and want to be, and doing so regionally advances our foundational commitment to sustainable production. The addi- tion to our group of two thriving American compa- nies known for their quality, innovative solutions, and manufacturing experience will allow us to be present on a truly glob- al scale.” As a result of the merger, Laura Brodie, President and co-owner of Burt, will become the first non-family shareholder in Pusterla, and will Roberto Marini
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serve as President of the group’s North Ameri- can operations. “To offer our clients and team the chance to participate in a global, yet very per- sonal, business with a humble approach to ser- vice alongside industry-leading innovation and know-how is a privilege,” said Brodie. “I’m very excited to join owners Luca Meana, the Meana family, and Roberto Marini as a member of the leadership team of a company I believe in, serv-
600 + Plants 60,000 Users North America Latin America
Laura Brodie
ing an industry I love. I look forward to integrating Burt and Taylor, two historic rigid box leaders, as the foundation of Pusterla’s North American presence.” Dan Shedd, President, and owner of Taylor Box Company comments: “I have enjoyed the past 45 years with my amazingly talented and hard-
working team. Together, we built the award-win- ning, innovative, customer-focused market lead- er, Taylor Box Company. Merging with Burt to become part of Pusterla 1880 will continue to power our growth. As a fourth generation, fam- ily-owned business, it is exciting to join with an- other multi-generational group that shares our culture of excellence and integrity. My team are all looking forward to a future filled with new op-
Dan Shedd
portunities to grow as an organization and as individuals. Most impor- tantly, our clients are excited to explore with us the new capabilities and global luxury packaging presence of Pusterla’s international footprint.” Both deals will close in January. Terms have not been disclosed. Visit burtbox.com and taylorbox.com for more information.
14
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January 9, 2023
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Registration Open For ICCA/WCO Global Summit, FBA Annual Meeting The International Corrugated Case Association (ICCA)/ World Containerboard Organisation (WCO) 2023 Global Summit and Fibre Box Association (FBA) Annual Meeting is scheduled for June 18-22, 2023, at the Fairmont Banff Springs in Alberta, Canada. The Summit and the Annual Meeting will bring together corrugated industry leaders for meetings, insightful speak- ers, recreation, and plenty of networking time. Attendees will enjoy a welcome reception on Monday evening, fol- lowed by three general sessions on Tuesday and Wednes- day, a casual reception on Tuesday evening, and a recep- tion and gala dinner on Wednesday evening.
Fairmont Banff Springs
Fairmont Banff Springs is a luxury mountain resort that offers skiing, an award-winning European-style spa, and local cuisine. Nearby are galleries and museums, upscale shopping and restaurants, Banff Lake Louise events, and local attractions including the Banff Gondola. Speakers will include: • Dr. Pippa Malmgren, former U.S. Presidential Advisor, and best-selling author of “The Infinite Leader,” which won the International Press Award for the Best Book on Leadership for 2001 • Paul Leclair, Vice President of Numera Analytics, an economist and pulp and paper expert • Saverio Mayer, CEO, Smurfit Kappa Europe, Paper & Board and Corrugated & Converting divisions • Jake Hall, The Manufacturing Millennial. Hall is an advo- cate for manufacturing, automation, the skilled trades, and the next-generation workforce. The event will also host the ICCA Board of Directors’ Meeting, WCO Board of Directors’ Meeting, the FBA Board of Directors’ Meeting and other meetings to be held while industry leaders are together. Dress attire for the General Sessions and evening events is business casual. Jackets are required for the Gala Reception and Dinner on Wednesday evening. Register before January 15 to receive a $100 discount. Visit iccanet.org for more information.
16 January 9, 2023
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AICC ‘Designing For Success’ Webinar Set For January 16
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Members of AICC, The Independent Packaging Associa- tion, are invited to a webinar on January 16 featuring corru- gated industry expert Geoff Roznak of Further North LLC. The “Designing for Success” session is for structural and graphic designers, and customer service and sales professionals, in addition to anyone in a leadership role who would like things to run smoothly from conception through production on their projects. Estimators and Pro- duction team members might consider the session as well. Roznak spent more than 36 years in the corrugated in- dustry in varied roles, starting on the plant floor in the ear- ly 1980s and progressing through structural design, cus- tomer service, a stint as quality manager when corrugated plants were first certifying to the ISO 9000 standards, and finding his way to championing the high end of direct print on corrugated. That experience was spread over both integrated and independent converters with positions at Longview Fiber, Packaging Corporation of America, and Great Northern Corporation. He has a passion for printing on corrugated as well as a passion for front end process that efficiently gather critical information from customers and deliver it to the plant floor. This webinar is available only on AICC NOW at now. aiccbox.org . An All Access Pass must be purchased.
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the forecast period owing to its sustainability and eco-friendliness. Increasing awareness about this new- ly developed packaging solution across developing economies is further driving the market. • Based on the distribution channel, the offline segment accounted for the maximum revenue share of more than 50 percent in 2022 and is projected to maintain its dominance throughout the forecast period. The high penetration of the offline system in the end-use market is a major factor supporting its dominance in the global market. • The e-commerce application segment is expected to expand at the highest CAGR of 10.3 percent in terms of revenue over the forecast period. The continuously expanding customer base for online purchasing, espe- cially post the coronavirus pandemic, is supporting the growth of the segment. • The Central and South America region is expected to expand at a CAGR of 9.8 percent in terms of revenue over the forecast period. The region is projected to ex- hibit growth on account of the increasing internet pen- etration and awareness about sustainable packaging solutions in major countries including Brazil and Argen- tina. The rising awareness about various types of environ- ment-friendly packaging solutions offered by internation- al organizations through the electronic medium is further supporting the demand for zero waste packaging.
The global zero waste packaging market size is expect- ed to reach $502.6 billion by 2030, expanding at a Com- pound Annual Growth Rate of 9.6 percent from 2023 to 2030, according to a new report by Grand View Research. The increasing awareness about sustainable packag- ing products across industries, developing infrastructure for waste management, and sensible disposal practices across developed and some developing countries are driving the market. • The paper and cardboard material segment held a dominant revenue share of more than 75 percent in 2022. The developed infrastructure for closing the loop of old corrugated containers (OCC) in the man- ufacturing industry, where it has the highest recycling rate of around 90 percent across the globe, is support- ing the segment growth. • The reusable/recyclable packaging type segment ac- counted for the largest revenue share of more than 95 percent in 2022 and is projected to maintain this position throughout the forecast period. The reusable and recyclable packaging products are usually manu- factured from paper and paperboard, glass, and metal. • The edible packaging type segment is expected to expand at the highest CAGR of 18.9 percent over
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Converter Outlook: Part 1 (CONT’D FROM PAGE 1)
All are efforts to tighten supply in the present market. “Frankly, I don’t see that succeeding as new supply, committed for 2023, is almost double what is being shut domestically. Not to mention the new capacity in Europe and in South America. Without further closures there will be an additional 2.1 million tons of new capacity in North America. In Europe the news concerning oversupply is even worse, 3.6 million tons in 2023 and another three million tons scheduled for 2024. So the question is, who will set market prices as the pricing power of the major producers is now diluted? Can the five major domestic producers still set pricing? I believe that day is over. In fact, every paper machine that is taken down by a West Rock, or another major producer is being replaced by a recy- cled mill from an independent/international source. So ul- timately, past consolidation may not have had the desired, long-term effect. “If I were a major producer, I am not sure how happy I would be about reducing capacity while other corporate entities open new mills. In fact, bigness may be the ulti- mate barrier to healthy performance. Further consolida- tion may well be blocked by the current administration’s anti-trust policies. Being an independent producer, being closer to the customer, making the right investments in people and equipment, not tied to quarterly performance, being flexible in outlook seems to be exactly where I think our success lies.
the demand found in 2019. It was not at all surprising that we would see a correction after such a tumultuous period of consumption. “The concern now moves to what should we expect for the first half of 2023. I don’t think the news is especial- ly good. You can see it in the way buyers have adjusted to the new reality. More business is up for bid. You can’t blame clients for testing the market. During the last two years they were tied to the vendor they had, whether hap- py or not. There were an extraordinary number of price in- creases for containerboard during that two-and-a-half year period. The net effect was an increase of $220.00/ton which meant boxes would have to reflect the increased cost. There were times during that two-year period where we saw a tightening of the supply of containerboard. De- mand outpaced supply. The market reflected the volatility of the moment. Prices escalated and there was a signifi- cant imbalance between supply and demand. Four price increases over 17 months. Unprecedented but explainable. “Now times seem more normal. Competition is more keen and new entrants may find it hard to get a foothold into business they might have assumed would be open to them. Containerboard supply is about to increase beyond current demand. Mill systems are taking downtime, and some have announced permanent closures, some tempo- rary shuts and others have taken maintenance downtime.
CONTINUED ON PAGE 24
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Converter Outlook: Part 1 (CONT’D FROM PAGE 22)
AIR CONVEYING CORPORATION is a recognized leader in the industry of Pneumatic Conveying Systems and has been in business since 1968. As an equipment manufacturer rather than simply a sales organization, we have complete control over the quality of material and products which make up your proposed system. Our equipment is found in Printing, Folding Carton and Corrugated plants throughout the country and the world.
“To enhance our ability to compete and to play a com- manding role in the regional market has always been our aim. To that end, we are now completing a two-year major expansion of our facility. Trying to tie in full plant convey- orization, replacing a corrugator with a new one, putting in new steam and starch systems and erecting one of the few WIP systems involving high rack placement of sheets has had its share of challenges. The internal group that carried the project forward did an amazing job. We would like to thank our equipment partners Fosber, WSA-USA, Warak, BSP, Vortx, AES and KTC (ifas) for their unending cooperation. These subcontractors worked through very difficult situations, compounded by the ever-present threat of Covid, and maintaining an ongoing operation. “I think we know the next six months may be challeng- ing. The impact of inflation and energy costs continue to affect buying habits, and therefore the consumption of our product. I don’t think we can accurately predict what comes next. We all know that labor availability, Federal Reserve interest rate hikes and government policies will not be helpful to us as the recession looms. Yet, I remain strangely optimistic. Not sure why, but if there is a recov- ery in the later part of 2023, we will be more than ready. “One last thought. When are we as an industry going to rid ourselves of RISI’s price watch and the lack of transpar-
AIR CONVEYING CORPORATION PH: 901-454-5016 FAX: 901-324-7979 e-mail: sales@accfilter.com • www.accfilter.com
CONTINUED ON PAGE 26
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24 January 9, 2023
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It’s time to revolutionize The new CorruCUT rotary die-cutter pushes what is possible
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Converter Outlook Part 1 (CONT’D FROM PAGE 24)
ency in the way prices are determined? I know we all want some type of benchmark, but should one man’s opinion shape a 39+ billion-dollar industry ability to pass on costs? It seems archaic and woefully subjective. I think it’s time to weigh all the factors that go into making a box. I believe it is past time to have that discussion.” CAL BOX GROUP Santa Fe Springs, California: John Widera and Chris Wid- era report, “The Cal Box Group is focused on the insight and preparation of the bleak slowdown of our chaotic pa-
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per industry, not on a blind eye to the past. There the gamesmanship of a few big dogs over the last de- cades has transformed paper mar- kets from the gored ox of consoli- dation to the sacred cow of market share. At this point, entrepreneurs and their independent box plants are fading in a number decline
John Widera
for at least one reason. Battered paper mills need more domestic converting for its containerboard to raise their operating rates. “As U.S. export and domestic containerboard prices will keep falling, domestic cost and retail prices are rising. This
CONTINUED ON PAGE 28
26 January 9, 2023
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Converter Outlook Part 1 (CONT’D FROM PAGE 26)
“We will continue facing a dysfunction in our labor mar- kets. By the way, you may be thinking, unemployment was low. Actually, the percentage of the workforce not working is high. The statistics reported are only those who’ve filed claims, which is a different story. In using statistics, such as decreasing unemployment, government data claims often means it is increasing but at a decreasing rate. Currently Calpers, California’s public pension suffered investment losses in 2022 of almost $30 billion. Solution? Pick tax- payers’ pockets to make assumed payment guarantees for chiefly public union members wages and benefits. “California’s state budget depends on investments with capital gains. Its higher tides of our taxes, more regula- tions and derailed opportunities are warning us to build the corporate equivalent of Noah’s ark that can carry the weight of the current federal and state debt ceiling of $31 trillion. The increase, in government’s unlimited spending, tells us to batten down the hatches, and take down the main sails. Businesses need to have more cash and less cost of debts, as a global financial tsunami surges by the middle of 2023. “Living only off cash flow instead of paying off debt is for bottom-feeding zombie businesses to survive or pros- per, often not for long. Fortunately, there are calculated risk-taking entrepreneurs with successful ROI spending programs. Their secret? Open the books, whittle down bloated inventories, enhance efficiency, and selling un- CONTINUED ON PAGE 30
supply/demand condition is measured by inventories and percent of capacity. To turn the stagnation tide, paper mills are taking costly market-related ‘maintenance’ downtime.
Will that be enough to cover the impact of two million tons of add- ed containerboard capacity in the U.S. in 2023? “On a broader scale, Covid lockdown version turned off the economy and collapsed consumer confidence. It’s trade-off solutions by federal policy makers kicked
Chris Widera
off an epic bout of $6 trillion in spending with stimulus checks, supplement of unemployment benefits, etc. When done, the fast pace of interest rates, inflation, immigration, crime, social and supply chain issues, etc. geared to print- ing all this new money is again relentlessly pushed into the future. “When a vessel is sinking, the number one priority is to stem the water from pouring in, otherwise the ship will eventually flounder. Likewise, Biden and our states should pump the brakes on inflationary spending. It reduces pur- chasing power and maxes out credit cards. Profits are the magnets that draws capital to industry. So, as we worship on the altar of analytics, competition increases to restore price stability.
28 January 9, 2023
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He calls it ‘Truckloads More Capacity’. You can do your own math.
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