BoardConverting Serving the North American Corrugated and Folding Carton Industries for 38 years April 18, 2022 VOL. 38. NO. 16
AICC Associates Get Valuable Input From Member Box Makers BY LEN PRAZYCH Joe Morelli, Chairman of AICC’s Associate Members, has been working with his executive committee on ways to address declining member- ship at AICC regional events. Member surveys have helped to bring more interest and focus to the events, which was successfully demon-
WestRock To Close Mill In Panama City, Florida
Norcross, Georgia based WestRock has an- nounced that it will permanently end oper- ations at its mill in Panama City, Florida. The mill employs approximately 450 and produc- es about 645,000 tons of containerboard, pri- marily heavyweight kraft, a year. Work at the mill is expected to end by June 6, 2022. The company will switch the manufactur- ing of select grades of containerboard cur- rently produced at the mill to its other facil- ities. Following the closure, West Rock will provide employees with severance and out- placement assistance in line with its policy and labor union agreements. “A decision to close a facility and impact the lives of our employees is never easy to make,” said WestRock CEO David Sewell. “As we implement our plans to close the Panama City mill, we do so with great appreciation for the many contributions of the team there. We are committed to assisting our Panama City team with exploring roles at other WestRock locations and outplacement assistance.” The decision to close the mill is part of WestRock’s efforts to maximize returns on its capital and increase its assets’ performance.
strated at the Associates Meeting at AICC’s 2022 Spring Meeting at the JW Marriott Desert Springs Resort & Spa on Wednesday, April 6. More than 675 members attended the meeting and more than 100 attended the Associates Meeting that was perhaps the most informa- tive and relevant ever conducted. Morelli moderated a “round table” of three suppliers – Greg Jones of SUN Automation Group, Tim Connell of AG Stacker and Pat Szany of ACM – and three box makers – Matt Davis of Packaging Express, Gary Brewer of Package Crafters and Finn MacDonald of Independent II – with questions whose answers would bring value to Associate Mem- bers when calling on their box maker clients: Morelli : Keynote speaker Mark Allen Roberts talked about how the pandemic would forever change the way sales process happens. As we’ve been coming out of the pandemic, has it altered the way you deal with your suppliers? CONTINUED ON PAGE 24 The AICC Associates Meeting featured a discussion among member suppli- ers and box makers. From left, Greg Jones of SUN Automation Group, Tim Connell of AG Stacker, Pat Szany of ACM, Matt Davis of Packaging Express, Gary Brewer of Package Crafters, and Finn MacDonald of Independent II.
CONTINUED ON PAGE 5
WHAT’S INSIDE 5 NAM: Federal Reserve Signals 50-Basis-Point Hike At Meeting 10 Saica To Expand New Ohio Corrugated Plant 14 Bob Landaal Provides Annual FBA Update 18 Seeing The Light After A Long Shadow
2 April 18, 2022
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
The Price is Right
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.
OYSTER UP-CHARGE 8.34
275# DBL-WALL 350# DBL-WALL
116.54 137.25 117.82 145.56
More box makers and brokers are relying on the containerboard pricing in Board Converting News to negotiate their contracts with end users.
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 IN PRINT OR ONLINE AT WWW.BOARDCONVERTINGNEWS.COM.
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42# Kraft Liner 26#
Aprill 18, 2022
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WestRock To Close (CONT’D FROM PAGE 1 )
The company said that the mill would require “signifi- cant” capital investment to maintain and improve, but that fluff pulp production is not a priority in WestRock’s strategy to focus on higher-value markets. WestRock will divert the funds required to maintain the mill towards improving other key assets. In February this year, the company posted a 12.5 percent net sales growth of $551 million to $4.95 billion for the first quarter of the fiscal year 2022 (FY22), which ended on December 31. Sales of the company’s paper, corrugated packaging and consumer packaging segments rose by $262 million, $201 million and $76 million respectively during the quarter. NAM: Federal Reserve Signals 50-Basis-Point Hike At May Meeting In the minutes to the Federal Open Market Committee’s March 15–16 meeting, participants were determined to deal with inflation in the U.S. economy. While many mem- bers were prepared to increase the federal funds rate by 50 basis points at that meeting, the Russian invasion in Ukraine posed new uncertainties to the outlook, with the FOMC eventually opting to increase rates by just 25 basis points, now ranging from 25 to 50 basis points, according to Chad Moutray, Ph.D. and Chief Economist at the Nation- al Association of Manufacturers. (NAM) Nonetheless, the Federal Reserve seemed positioned to do more at an upcoming meeting, including the next one on May 3–4. From the minutes: “Many participants noted that one or more 50 basis point increases in the target range could be appropriate at future meetings, particularly if inflation pressures remained elevated or intensified.” Recent speeches from Chair Pro Tempore Jerome H. Powell and Gov. Lael Brainard (who is awaiting confirma- tion as vice chair), as well as the FOMC’s economic projec- tions, lend further credence to a 50-basis-point hike at the May meeting, with aggressive increases also coming later this year. Those projections predict a federal funds target of 175 to 200 basis points at year’s end. Bond markets have taken note, with yields soaring last week. For a sign of the real impact of this on everyday Americans, the average 30-year fixed-rate mortgage for the week of March 31 was 4.67 percent, according to Fred- die Mac, the highest since the week of December 6, 2018. These rates are likely to move even higher over the com- ing weeks. Meanwhile, new orders for manufactured goods pulled back 0.5 percent from a record $544.7 billion in January to $542.0 billion in February. These data were pulled lower by declines in sales for motor vehicles and nondefense aircraft. Excluding transportation equipment, manufactur- ing orders rose 0.4 percent to a record $459.2 billion in February.
CONTINUED ON PAGE 6
Aprill 18, 2022
NAM: Federal Reserve (CONT’D FROM PAGE 5)
Box Shipments ( U.S. Corrugated Product Shipments) Industry Shipments In Billions of Square Feet Month December 2021
Despite lingering supply chain, workforce and pricing pressures, the manufacturing sector has proved quite re- silient over the past year. New factory orders have soared 12.6 percent year-over-year, or 13.4 percent with transpor- tation equipment excluded. Factory shipments increased 0.6 percent to $541.0 bil- lion in February, an all-time high. On a year-to-date basis, factory shipments have risen 13.7 percent, a very strong figure. The U.S. trade deficit inched down from a record $89.23 billion in January to $89.19 billion in February. The data continue to be skewed by supply chain disruptions, the chip shortage and higher costs for petroleum. The goods trade deficit pulled back from an all-time high, down from $108.60 billion to $107.47 billion. Goods imports have jumped to new heights, rising from $264.59 billion to $266.25 billion, with growth in imports outpacing the gain in goods exports, which increased from $155.98 billion to $158.78 billion. Goods exports were just shy of October’s record high ($159.02 billion). Lastly, the week ending April 2 saw 166,000 initial un- employment claims, the lowest level since the week end- ing November 30, 1968. NAM represents 14,000 member companies in every industrial sector, for manufacturers across the country. For more information, visit nam.org.
Percent Change Avg Week Percent Change
Percent Change Avg Week Percent Change
Containerboard Consumption (Thousands of Tons)
Percent Change Year-to-Date Percent Change
Container Board Inventory - Corrugator Plants (Thousands of Tons)
Corrugator Plants Only
Percent Change Weeks of Supply
SOURCE: Fibre Box Association
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40 ft of paper travel from preheater to hot plates 3 seconds of heat, glue and bonding 1 chance to get it right! the ZONE
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Chicago Electric offers 10 technology solutions to control ‘the Zone’ CORRUGATOR Sectoral preheating plate
Our sectoral preheating plates provide direct heat by means of a double steam circuit, allowing for efficient heating in hard-to-access locations, as well as to act as a steam shower to open the paper’s fibre, making it receptive to absorbing the heat and the glue.
This translates into increased speed and improved quality of the cardboard sheet finish.
The system’s main advantages are as follows:
• The plate may only be used to heat, only to humidify, or both options at the same time. • The plate is sectored, which allows for applying humidity to the sections. • It provides temperature in previously inaccessible locations and near the location needed. • It compensates the loss of temperature dissipated due to distance, speed or limitations of the exiting preheaters. • Quick transferring of heat to the paper. • The combination of the hot plate and steam shower allows for providing heat even to the hardest papers to heat. • Does not dry out the paper. • Possibility of operating as a humidifier and pre-conditioner. • Maintains and improves the fibre’s elasticity. • Acts according to the operator’s needs. • Facilitates the paper’s hygroscopy to absorb the glue and improve rubberising.
1. Wrap Arm - Position & Temperature 2. Preheater Direct Drive
3. Steam Plate 4. Contact Roll 5. Glue Machine Direct Drive Touch Productivity Issue—Glue Unit Many glue units run with a rider roll or a guiding bar system. The rider roll with paper gap allows a precise glue application, but requires frequent Contact Roll
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calibrations and settings. Bar systems avoid this, but compensate this with the risk of exces- sive glue application. The system contains many wearing parts. Solution The contact roll combines the ad antage of both systems and ensures minimum contact between board and applicator roll. The system uses small pneumatic cylinders in order to achieve a “soft touch.”
6. Gap Control 7. Curved Plate 8. Roller Shoe Press When it comes to a short-term increas of web tension, spring loaded systems with shoes or airpressure activated system have problems in compensating these. The system is lifted for a short time. This may result in de-lamination and in the ‘double kiss’ effect. Solution For a defined and exact bonding point of the web fiv weight rollers will be installed usually over the first flat hotplate of the heating section. The rolls are mounted into a frame, which is actuated by means of two pneumatic cylinders. P oductivity Issu —Double Kiss Bonding
9. Thin Wall Hot Plates 10. Pressure System Benefits —Exact glue application due to defined contact of applicator roll to web. Web is in contact to less flute tips compared to bar systems. • High precision glue application • Less moisture applied to web —No wear of shoes and springs —No adjustment of shoes or paper gap —Uniform glue application over entire w orking width for all flutes by use of pneumatic cylinders instead of springs — Less contamination by paper dust and glue remains —No jam of board because of web breaks caused by splice joints going through 630-784-0800 Benefits —Rollers secure exact defined first point of contact of liner and single-faced board - No double kiss —Frame design avoids unintended lifting of roller shoe (compared to spring or air loaded systems) - No double kiss —Pressure can be increased or released for special grades or products 490 Tower Blvd., Carol Stream, IL Contact Chicago Electric to GET IT RIGHT 630-784-0800 firstname.lastname@example.org chicagoelectric.com Solution The ProPress system ensures an optimum heat transfer to the board. It offers a wide range of set- tings. The loadi g pressure can be varied, the number of shoes can be lifted in accordance t the line speed. The outer shoes can be lifted in accordance to the paper width. The shoe bars will be delivered pre-assembled for a short installation time. —Liftable for easy paper infeed and for cleaning of the machine —Position adjustable in paper direction to avoid grooves in hotplate Press Productivity Issue—Poor Heat Transfer Rollers are usually limiting the heat transfer, since they often have contact mainly on the edges of the plates due to wear or bent plates. They also cause often loss of caliper and bearing need to be replaced frequently. Airpressure actuated systems can only supply a limited pressure and have com- pared to shoe systems a closed surface. Pressure Shoe
Plate vity Issue—Poor Heat Control l hotplates are slow to react to pressure due to high steam volume and massive y also have high heat radiation and heat profile. Worn plates can damage crease edge crush.
Thin-Wall Hot Plates
t by peripheral drilled hot plates. anufactured out of special wear and nt steel, through which a continuous is drilled, with one inlet and one outlet. ecured by a massive steel frame.
ance from steam to paper surface results in fast heat flow
AICC To Host New Webinar On Troubleshooting Printing Problems AICC, The Independent Packaging Association, will host a new webinar, Troubleshooting Printing Problems, Tuesday, April 26 with Kern Cox, Senior Lecturer, Clemson Universi- ty. Troubleshooting Printing Problems will teach operators the root cause of print problems and builds on the foun- dation of operators who have learned how to set accurate settings. Kern Cox will bring his experience on issues with ink transfer, anilox rolls, and ink drying to help attendees overcome their challenges. Cox is a lecturer in Clemson University’s Department of Graphic Communications, teaching undergraduate-lev- el courses in all major printing processes, electronic pre- press, package printing technologies, and color man- agement. He brings with him ten years of experience in professional education development, where he provided various training and R&D services through Clemson Uni- versity’s Sonoco Institute of Packaging Design and Graph- ics. Cox has served the post print corrugated, narrow web and wide web flexographic market segments as well as the offset lithography market segment. His professional and research interests span flexography, corrugated, color management, and technical training and human develop-
Box Genie Appoints Doherty General Manager
Box Genie, a division of Vanguard Packaging and an on-demand e-commerce platform for custom packaging, has announced the appointment of Sean Doherty as Gen- eral Manager. Doherty will lead all aspects of the Box Ge- nie business, including building and leading a team across marketing, product development, engineering, customer service, sales, and account management. He will drive all aspects of the long-term product roadmap and strategy to execute against the goals of the business. He will also provide direction for the ongoing efforts to drive improved production and fulfillment execution. Doherty is a results driven marketing executive with hands-on experience in eCommerce, lead generation, merchandising, operations and large-scale project execu- tion. In his most recent position, he was General Manag- er of Mimeo Photos, where he launched Mimeo Photos globally. During his tenure, the business saw strong reve- nue growth through the addition of new products, partner- ships, new regions of the world and new channels includ- ing a new sales team, macOS, the Web and iOS platforms. “Box Genie is excited to have Sean join the team to lend his experiences to strong business growth” said Chris Stoler, CEO. “I am looking forward to Sean taking Box Ge- nie to a dominant position in the eCommerce market.”
ment in the packaging and printing fields. Register at www.AICCbox.org/Calendar .
8 April 18, 2022
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Saica To Expand New Ohio Corrugated Plant
Saica has started its production of corrugated packag- ing in its new plant in Hamilton, Ohio. The new facility is Saica’s first U.S. corrugated plant, a newly-built 360,000- square-foot building, which includes manufacturing, con- verting and production areas, along with a warehouse and office space. With its new Fosber state-of-the art corrugator, the plant will have a production capacity over 1,500 MSF/year of corrugated board. Along with the corrugator, the plant also has a 4-color 50-inch by 50” flexo folder gluer, which allowed Saica to deliver its first orders late last year. With the finalization of the installation of a 4-color rotary die-cut- ter and a Vega specialty gluer, the comapny will be able to operate at its full capacity.
“We are excited with this new milestone. We have in- vested in the technology, equipment and people needed to bring performance packaging solutions to this market,” said Akin Burak Onder, General Manager. “Our offering
can help businesses be more cost effective and efficient. We’re happy to begin our jour- ney in the U.S., and honored many compa- nies have joined us.” As part of a second phase of the proj- ect, Saica is already working to improve and expand its Hamilton facility. With the addi- tion of two converting machines – a 4-color Bobst flexo folder gluer and a 2-color Bobst rotary die cutter, the company will increase its production capacity. Work for this stage is scheduled to start in the coming months with the objective of having both machines in operation in the second half of 2023. The company also will be announcing a second plant location, most likely in Ohio or Indiana, in the coming months. This is part of a previously-announced $800 million in- vestment Saica plans for the U.S. market, growing through strategic acquisitions or new plant construction during the next five years, as part of its global strategy. Saica’s investment will also bring approximately 500 jobs to the market. “This has been a challenging project but, at the same time, very rewarding, we are so thankful for all the support received. We are convinced that we can provide products that will differentiate us in a crowded mar- ket,” said Ramón Alejandro, President. For over seven decades, Saica Group has worked to revolutionize the packaging industry across Europe, providing innova- tive, high performance and environmen- tally sustainable solutions. Its long history reflects a focus on the future, an ability to create opportunities for its employees and customers, as well as its drive to continu- ously innovate to improve efficiency.
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AICC Announces Midwest Region Scholarships, Meeting Dates Casey Shaw, Director of Customer Service at Batavia Con- tainer and AICC Midwest Region Director, is excited to an- nounce that the Midwest Region is again offering a $5,000 scholarship to children or grandchildren of full-time em- ployees of companies who are members or associate members in good standing of AICC Midwest Region. The AICC Midwest Region’s objective is to provide fi- nancial assistance to young men and women with their college education and encourage students to strive for higher scholastic ideals. The scholarship will be awarded at the golf outing on Monday, July 18, 2022. The deadline for applications will be June 4, 2022. As in past years, the AICC Midwest Region Golf Out- ing will take place at the St. Charles Country Club in St. Charles, Illinois, a club rich in history, tradition, and fel- lowship. Another event to save the date for is the AICC Midwest Region Spring Meeting, which will take place on Tuesday, May 24, 2022, at the Chicago Marriot Oak Brook in Oak Brook, Illinois. More information on the golf outing will be released soon. For more information on the scholarship and to ob- tain an application, contact Tim Engle at engle@baysek. com or (715) 496-0253 or Shari Saeger ssaeger@inspi- reautomation.com or (715) 204-0288.
Board Converting News is read by more end users and decision makers — your potential customers — than ever before. Tell them you’re a QUALITY PRODUCER www.boardconvertingnews.com Producing Quality Leads
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Bob Landaal Provides Annual FBA Update, Recognized For Service To The Association BY BOB LANDAAL It has been a pleasure and an honor to serve as Fibre Box Association (FBA) Chairman for the past year. For me, it is a duty I have not taken lightly given the history of my family’s involvement with the association. My great grand- father was a past FBA Chairman. My grandfather, along with Mr. Shine, had the foresight to gather their peer group into what would become the FBA
Cosmo DeNicola Chairman, Amtech Software
Packaging ERP Algorithmic Scheduling Web-Based Access Online Customer Portals
Independent Sheet Plant Workshop. My Uncle Steve served on the FBA Board of Directors, and I attended my first meeting 18 years ago. I am the 4th generation of my family to be involved in FBA and I can’t begin to tell you how much it has meant to me. From my first FBA meeting until now, it has been my privilege to learn from and to serve with some of the greatest minds in our industry. I have learned so much and I have forged so many great friendships and relation- ships by being involved with FBA. It is truly immeasurable the amount of knowledge and success in the room when you attend an FBA meeting of any kind. This past year, I had the opportunity to reflect on the benefits FBA pro- vides to its members and to lead the association though a strategic eval- uation. The work we did as Board members and as the Board’s Executive Committee will help forge FBA’s path forward for the next several years. In this past year alone, FBA has: • Transitioned from monthly to quarterly reporting of industry statistics and created a new monthly Box Segment Demand Indicators Report. The report contains macroeconomic and market segment data sum- marized and illustrated in graphs with accompanying bullet point in- formation. Data is sourced from the latest government resources and compiled to keep you informed about the drivers of demand for box shipments between quarterly statistical reports. • Completed Year 5 of the Corrugated Industry Promotion Program and launched a new three-year commitment to the program with support from our industry supplier partners. • Held the association’s first ever virtual Annual Meeting. • Conducted virtual meetings with customers including Amazon (twice), Bob Landaal, left, is presented with the FBA Chairman’s gavel by his uncle, Steve Landaal, at the FBA 2022 Annual Meeting in Laguna Beach, CA, last week.
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CONTINUED ON PAGE 16
April 18, 2022
WE KNOW THE ANSWERS TO THESE QUESTIONS...
Get Answers-Be Proactive. • There’s a board increase or decrease? • My volume goes up or down? • I lost my largest customer? • My MIX changed ? • I bought a new machine? • I sold more sheets? • My labor costs go up 5%? • I added OT or another shift?
With Amtech’s NEW AUTOMATED PERFORMANCE COSTING To Learn More or Schedule a Demo Darren Artillio: firstname.lastname@example.org 215.639.9540 www.amtechsoftware.com/accurate-costing
Landaal Provides (CONT’D FROM PAGE 14)
tions/future leaders involved with FBA. Being involved is such a special experience and I can’t imagine why anyone wouldn’t want to be involved. I want to thank Dennis Colley and his tremendous staff for the work they do on behalf of our industry. I also want to thank my fellow Board members. Thank you for allowing me the opportunity to serve you this past year. Vanguard Companies Names Wilkins New Regional Sales Manager In AR Kansas City, Missouri based Vanguard Companies, a de- signer and manufacturer of value-added point-of-purchase displays, retail-ready packaging, industrial packaging products has announced the appointment of Drew Wilkins as new Regional Sales Manager – Bentonville, Arkansas. “We are very excited to promote Drew to this position
Kroger (twice), Costco, Walmart, Target, and Bolthouse Farms. In addition, Dennis was a speaker at E-Pack. • Created a new Cybersecurity Committee. Led by com- mittee chair Tim Bergwall, the committee includes representatives from 19 different companies who met regularly to hear from expert speakers and complete a Vendor Directory and IT Spend Survey.The group also hosted an awareness training webinar and FBA Board training. • Updated the industry’s go-to Hazardous Materials Packaging Training Program to include new videos, training materials and tests.Directed research on speci- fied scoring profiles in order to characterize their effect on BCT strength. I’m so proud to be involved with FBA and I encourage everyone to attend meetings and get younger genera-
where he will act as a champion, creator, and thought leader for the business, inter- nally and externally,” said Jennifer Wulf, VP Sales. “This is a critical role to our long-term success with not only the excellent team in Bentonville we have today, but how we grow and work cross functionally with our St. Louis and KC teams as well.“ Wilkins will help shape the next chapter of Vanguard’s future by executing the Ben- tonville sales strategy, team development, and strategic relationships. As a cross-func- tional leader, he will be responsible for driv- ing organizational change to develop a fo- cused sales team that protects Vanguard’s key revenue streams, while also diversify- ing and growing the business. “We have such an amazing group of tal- ented professionals in the Bentonville re- gion that are always striving to exceed our customer’s expectations. I am excited and honored to lead such a great group of peo- ple,” he said. A veteran of the retail and packaging industry, Wilkins has been instrumental in growing the Bentonville region the last 18 months. Drew came to Vanguard from Walmart, where he was the Retail Ready Packaging Senior Manager responsible for running the RFP bid process for multi-ven- dor and multi-department corrugated dis- play programs, assisted buyers and suppli- ers in transitioning their items to shelf-ready packaging and managed Annual Event PDQ’s for Walmart. Drew Wilkins
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Seeing The Light After A Long Shadow BY TOM WILLIAMS
The Perfect Combo Get Peak Performance From Your Equipment with Matched Component Sets
It is too soon to speak of a “post-COVID” packaging indus- try, or a post-COVID anything else. The pandemic does not yet have (and perhaps may never have) a past tense.
But, it is fair to think of the industry as emerging from the worst of the ex- perience, and to consider what this might mean for buyers and sellers of packaging businesses. One of the most notable trends we have witnessed is – despite the pandemic – the increasing activity
of private equity (PE) firms in the packaging space. This is quite different from the days when anything associated with printing was almost a dirty word to these choosy in- vestors. But, how times have changed. An acquisition we antic- ipate closing as of this writing will add a major commercial print provider to the portfolio of a private equity owner in the Midwest. This financially-motivated investor did it by submitting a winning bid ahead of any strategic buyers (expansion-minded companies) who may have been inter- ested. In a transaction for a smaller digital and offset plant in the Southeast, the same thing happened. What would have been a perfect purchase for a strategic buyer instead went to a PE investor who led the field of potential buyers with the best offer. Private equity participation in print & packaging indus- try M&As is here to stay. In some cases, the interest shown by PE investors from outside the industry exceeds what we are seeing from strategic buyers within it. Most attractive to private equity are packaging firms – folding carton, cor- rugated, flexible, tag and label – and providers of specialty graphics. If your company does business in any of these areas, an overture from a PE buyer could be in your future. Spectrum of Suffering The damage that COVID-19 did to a packaging business depended mostly on the kinds of packaging it specialized in. That, in turn, hinged on what the pandemic did to the business performance of the firm’s customers. Among the worst hurt were providers of signage, banners, and display graphics to producers of trade shows, concerts, sporting events, and other activities that had to be cancelled be- cause of lockdowns. Many were decimated as demand for their products all but dried up in 2020 and 2021. On the other hand, some businesses continued to do well either because they were in a “pandemic-proof” seg- ment like packaging, or because they managed to pivot to manufacturing products that the outbreak drove a surge in demand for. One of our Mid-Atlantic clients, for example, enjoyed a record year in 2020-2021 both by making pack-
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CONTINUED ON PAGE 20
18 April 18, 2022
3/31/21 6:09 PM
Seeing The Light (CONT’D FROM PAGE 18)
was the Internal Revenue Service’s Employee Retention Credit (ERC) program, which applied to qualified wages paid from March 2020 through September 2021. For some firms, PPP and ERC credits were a way to smooth a temporary rough patch, but for others, it was a life preserver that is no longer there to keep them afloat. It is doubtful, however, that some of them could have stayed the course very much longer even if the financing had con- tinued. Legacy shops like these typically have not invested in new technologies or in Internet-enabled solutions for keeping their customers close. They compete, for the most part, in commoditized markets. Most of their remain- ing value consists of the books of business they have car- ried for years – an asset that PPP stimulus has kept them from properly capitalizing on. This is because their PPP life preservers have let them put off taking their opportunities to be acquired in tuck-ins, the type of transaction in which the buyer’s principal inter- est is in acquiring the seller’s active sales accounts. Plant, equipment, and personnel may or may not be part of the deal. For a legacy firm that is not likely to be acquired as a going concern, a tuck-in is often the wisest and most re- warding exit strategy – certainly preferable to closure and liquidation, which could be the only other option. With no more PPP to tread water on, many of these firms will have no choice but to come to market as tuck-
aging for COVID-19 test kits and by using its dye sublima- tion equipment to custom-decorate protective masks. But, stories like this one were exceptions, and on the whole, more firms suffered than thrived as the pandemic took hold. At this point, we think it is safe to say that the worst of the business contractions are over and that most seg- ments of the industry should start to see activity returning to pre-pandemic levels. That will be good news for M&As as firms rebuild their sales, bottom lines, and valuations, becoming more desirable to buyers as a result. But, the rebound will be uneven, with companies in some segments (for example, packaging) showing more vigor than those in others (general commercial printing). Another distinction that the recovery will highlight is the gap between firms that survived the pandemic using their own resources and those that would not have made it We are referring to cash infusions from the federal gov- ernment’s Paycheck Protection Program (PPP), first signed into law in March 2020. This provided employers with up to three rounds of financing, in the form of forgivable loans, in return for maintaining their headcounts. PPP offi- cially ended on May 31, 2021, ending applications for loans under the program. Another temporary source of financing through without life support. Stimulus, but Not Salvation
CONTINUED ON PAGE 22
20 April 18, 2022
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Seeing The Light (CONT’D FROM PAGE 20)
overwhelming – printing and packaging firms have sur- vived scarier economic periods than this one. By mid-year, we will have a better handle on the state of the economy and a clearer picture of what a post- COVID industry might look like. But the view at the pres- ent moment is encouraging, and we fully expect the pace of mergers and acquisitions through the remainder of the year to make the outlook even more upbeat. Thomas J. Williams is a partner in New Direction Part- ners, an M&A advisory firm specializing in sales, acquisi- tions, valuation, financing, and strategic planning for the printing and packaging industries. Contact him at (203) 856-0120 or at email@example.com. Chicago TAPPI Confirms May 24 As Date Of Table Top Trade Fair TAPPI has confirmed it will host its popular 2022 Chicago TAPPI Table Top Trade Fair on May 24 at the Marriott Oak Brook at 1401 West 22nd Street in Oak Brook, Illinois. The event will start at 3:00 p.m., followed by the AICC Evening Meeting. The event is free to attend for all converters, with an open bar and hor d’oeuvres. The cost is $75 per per- son for non-converters. The mission of Chicago TAPPI is to build business relationships and promote the corrugated industry by educating our members through the exchange of new ideas and technical expertise. Visit tappi.org .
ins. The good news is that a pent-up demand will be wait- ing for them when they do. We get calls almost every day from strategic buyers in search of tuck-in opportunities, but over the last couple of years, there have been few to bring them. This will change as reality sets in and legacy owners take an overdue step toward winding their busi- nesses down. What to Do Now Every owner benefits from the fact that right now, the M&Amarketplace has more buyers than sellers on both the financial and the strategic sides. Owners of firms that have come through COVID-19 in decent shape, on their own, are well positioned to attract offers from multiple sources. Owners of less healthy firms, and especially those still in business only by virtue of PPP, should take a frank look at their numbers and try to project how long it will be before cash flow and profitability can be restored. If the answer is no time soon, the time has come to plan an orderly exit through a tuck-in. Comparing our states of mind between now and a year ago, to say nothing of two years ago, should tell us that the climate for doing business in the industry is improving. Attitudes have changed: people are willing to work around COVID-19 until it either disappears or at least recedes into the background as a threat. Concerns about inflation, cost increases, and supply-chain issues are genuine, but not
22 April 18, 2022
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AICC Associates (CONT’D FROM PAGE 1 )
Morelli : We have a very experienced industry but we’re noticing that a lot of purchasing agents are of a younger generation or they’re Millennials. Do you have any tips as to how we may have to adapt to a younger buyer? MacDonald : It’s a mix of experienced gatekeepers versus newer entry level buyers. You still have a gatekeeper who will begin by telling you how long they’ve been in the in-
Brewer : We’re back to normal, I like that we’re back to face-to-face meetings. It’s what we all like and what we all want. It’s what I want. MacDonald : It’s not what we’re doing as far as letting folks into our plant, it’s what we’re doing inside as far as getting groups together for training, trying to do working lunches and trying to get ahead of problems rather than reacting to them. Internally, as we open the doors to our employees it helps open the doors to our suppliers, as well. Morelli : One of the statistics that Roberts mentioned was that 70 percent of business-to-business buyers are com- fortable purchasing up to $50,000 worth of product with- out ever meeting the supplier. Is that something that ap- plies to you? Davis : Yes, I think that applies but it depends on the prod- uct or the piece of equipment that I’d want to be familiar with, like a bander or similar piece of machinery Brewer : Yes, as long as you have a good “out” and good expectations of what the product is and how it will per- form. I recently made a purchase of more than $75,000 without meeting the folks. MacDonald : Certainly if we know the supplier or know of them, they have a better shot of making a sale without ever seeing them. Carte blanche is still not something that we’re comfortable with.
dustry. Usually they’re blocking a lot of good information from even getting into the company. So you’ve go to get around the gatekeeper to get to all the “hungry fish.” I’m willing to help, but they’ve got to find a way to figure out the challenge. CONTINUED ON PAGE 26 AICC Associates Chairman Joe Morelli of Huston Patterson.
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AICC Associates (CONT’D FROM PAGE 24)
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.
Morelli : Most box makers feel that post-pandemic, they could be a lot more efficient with their time if they’re not dealing with suppliers day in and day out. How much of that do you think is still true or do you think “old school” relationships are going to be around forever? Davis : I think those relationships are going to be around for a long time. And to your earlier question, spending $70,000 without seeing our supplier might be our thresh- old but any bigger, we want to have a relationship. During the pandemic, we never missed a shift. We’re used to go- ing into the office and it’s still business as usual. That’s how we’re making decisions. We still want to see our suppliers. Morelli : So aside from having a great product, what makes a great supplier? MacDonald : A lot of the relationships I’ve developed were built over dinners and the exchange of information. We have people in plant who weren’t in those positions three years ago. We’re open to opportunities for new relation- ships but we have a deperate need for knowledge and we need that information to be brought to us in a way that’s accessible. Don’t tell me how much you know; help some- body who knows nothing learn something. Take that first step. If you can do that, then you’ll be able to crawl and then run with us pretty successfully.
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CONTINUED ON PAGE 28
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