Strategies And Tactics (CONT’D FROM PAGE 1)
Board Converting NEWS INTERNET DIRECTORY
SoCal has nineteen million people of all nationalities selecting their own popular brands. More imports are arriving from Mexico and LA’s two big ports than we are exporting, but most foreign consumer goods are already prepacked in corrugated paper boxes. Commodity corru- gated boxes for high volume American-grown produce are the domain of vertical integrated paper mills. They have close to 90 percent of containerboard market share. Does that mean they have evolved into such craving monsters that they will suffer the same fate of the dinosaur – too big and unwieldly to survive? Strategies To Beat Competitors If one has to choose between price, quality, and ser- vice, the conglomerated (AKA low-cost producers) will usually choose price. When paper mills raise their roll stock prices, about 80 percent of their sales transactions come from internal transfers strategy. This sets up a com- pletely false pricing metric, especially for the remaining eight percent independent corrugated box converters customers in the U.S. Thus, internal trades between paper companies can spark special predator advantages, especially when a pa- per mill builds a new corrugator plant in another state, as will now happen again in Arizona. Is it any wonder why so many independent corrugated box plants have disap- peared in the southwest? An old strategy to keep mill-owned high-speed cor- rugators running and income statements profitable was – and probably still is – to subsidize the inefficient box plant. The support can be based on tonnage consumed, increased sales, flexible terms, etc. These internal “ad- justments” can kick in management bonuses and permit discretionary pricing so more tonnage can be run on their hungry corrugators and paper machines. A note of cau- tion: antitrust cases of the past in our industry were based on the theory of predatory pricing which can turn into price fixing. (See the Clayton Act.) The ideal would be disciplined box sellers getting a price that reflects the value of the product and a more pre- dictable pattern of board and box price increases. In ad- dition, we need to disassociate ourselves from peer and “past due” customers who are not credit worthy or use very questionable business practices. The Future Of Pricing If both the seller and customer are capable of deal- ing with unique transaction pricing, then several dynam- ic pricing scenarios emerge. Ryan Fox, analyst at Green Markets, a Bloomberg Company, believes, “The future of market pricing may be driven by algorithms that account for input costs and other factors, rather than a survey of a very small group of open-market buyers, as is now.” The upside: For independents, this would make the open market essentially irrelevant to contracts, opening the floodgates to more flexible prices. Since open-market
ADVANTZWARE www.advantzware.com
Advantzware provides a comprehensive system to address the business management needs of the independent box business, as well as the ERP requirements of full scale pack- aging plants and integrated companies. With modules for estimating, scheduling, production, inventory and account- ing, this scalable system supports companies that produce corrugated boxes, folding cartons, point of purchase dis- plays, assembled partitions, and paperboard products. AIR CONVEYING CORPORATION www.accfilter.com Air Conveying Corporation is a leader in the industry of Pneumatic Conveying Systems and has been in business since 1968. As an equipment manufacturer rather than sim- ply a sales organization, we have complete control over the quality of material and products which make up your pro- posed system. Our equipment is found in printing, folding carton and corrugated plants throughout the world. We've been designing, manufacturing and engineering pneumatic conveying systems since 1984. We partner with our customers to ensure they operate efficiently and guar- antee our systems meet or exceed their specifications. ASDI specializes in full pull-through systems trim separators, and NFPA compliant systems with full electronic controls. AMTECH SOFTWARE www.amtechsoftware.com AIR SYSTEMS DESIGN, INC. www.airsystemsdesign.com Amtech offers the industry’s most innovative and com- prehensive corrugated and packaging ERP, integrated scheduling software, and engineered automation technol- ogy. For over 30 years, Amtech has kept our customers competitive in an ever-changing economy with customer digital storefronts and workflows, business intelligence, automated scheduling for corrugators, converting and shipping, proactive roll stock and inventory management. APEX INTERNATIONAL www.apexinternational.com World’s largest Anilox and Glue & Metering roll manufac- turer, providing the widest selection of corrugated engrav- ings and complementary services. Anilox engraving options available from our North American manufacturing facility include elongated 75°, 60°, 45°, plus Apex’s patented GTT technology. Glue rolls are produced with Hardened Stain- less Steel and a max TIR of 10 µ for Single, Double Facers.
ALBANY INTERNATIONAL www.albint.com
Albany International has a corrugator belt for every appli- cation. Our reputation for durable performance is the trade- mark of the most dependable belts in service today.
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October 7, 2024
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