BoardConverting Serving the North American Corrugated and Folding Carton Industries for 38 years October 31, 2022 VOL. 38, NO. 44
2023 Forecast: Gathering Clouds, Growing Turbulence BY PHILLIP M. PERRY Businesses are preparing for a more challenging operating environ- ment in 2023. After two years of frenetic commercial activity fueled by a post-pandemic recovery, strengthening headwinds will tap the breaks on a robust economy. Among the culprits: rising inflation, higher interest rates, a softening housing market, continuing supply chain dis- ruptions, declining capital investments, and escalating costs for wages and energy.
Weber Display & Packaging To Relocate Operations In PA According to local media reports, Philadel- phia, Pennsylvania based Weber Display & Packaging will relocate its operations in the Port Richmond section of Philadelphia to a state-of-the-art, 375,000-square-foot indus- trial manufacturing facility and office at 4630 Somerton Road in Bensalem. After spending nearly 130 years in Philadelphia, the compa- ny said it had outgrown its current facility and wanted to find a location where it would be able to keep its 170 employees. “Weber has been looking for years,” said the company’s attorney Edward Murphy. “It’s so heavily dependent on its employees. We- ber was reluctant to relocate because it had a limited radius and Bensalem Township was within that radius.” Murphy said the project recently received approval from the township’s planning board, completing the process that has taken more than a year. He said the company wouldn’t dismantle and relocate its current facility until the new one in Bensalem is completed. Weber Display & Packaging has a rich his- tory, Murphy said. The company is the lon- gest ongoing operating corrugated packag-
CONTINUED ON PAGE 5
The loss of some helpful economic initiatives is only adding to the downward pressure. “Government stimulus packages, ultra-low inter- est rates, and strong money supply creation had been helping to com- pel business activity until mid-2022,” said Anirban Basu, Chairman & CEO of Sage Policy Group ( sagepolicy.com ). “All those fundamentals have been inverted.” Economists are adjusting their forecasts to reflect the new normal. “We project real Gross Domestic Product (GDP) will increase by 1.4 per- cent in 2023,” said Bernard Yaros Jr., Assistant Director and Economist at Moody’s Analytics ( economy.com ). “The expectation for 2022 is 1.6 percent. Both figures represent much slower activity than the 5.7 per- cent increase of 2021.” (GDP, the total of the nation’s goods and ser- vices, is the most commonly accepted measure of economic growth. “Real” GDP adjusts for inflation.) CONTINUED ON PAGE 24
WHAT’S INSIDE 5 NAM: Manufacturing Stronger Than Expected In September 10 SupplyOne Confirms Strong Commitment To Sustainability 20 Buckeye Corrugated Leverages Winning Innovator Of The Year 40 Report: Labor Shortages Driving The Push Toward Automation
2 October 31, 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
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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$960.00 $995.00
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Weber To Relocate (CONT’D FROM PAGE 1)
ing and display manufacturer in the city of Philadelphia. Tastykake and Dietz & Watson are among its clients. The family-owned company has grown from its original facili- ty at Fifth and Locust Streets in Philadelphia to its current 110,000-square-foot facility in Port Richmond.
Bensalem Township officials said the company would be a welcome addition. “We have Routes 1 and 95, the train and also buses,” said Township Supervisor Joe Pilieri. “It’s a good fit.” Weber Display & Packaging’s current facility in Port Richmond.
NAM: Manufacturing Stronger Than Expected In September
Manufacturing production expanded at a stronger-than-ex- pected 0.4 percent in September, increasing for the third straight month, with the index at its highest level since July 2008, according to Chad Moutray, Ph.D. and Chief Econ- omist at the National Association of Manufacturers (NAM). In the third quarter, output in the sector grew 1.4 percent, rebounding from the decline of 0.6 percent in the second quarter and another sign of surprising resilience among manufacturers amid numerous challenges. The sector has continued to grapple with soaring costs, supply chain bottlenecks, workforce shortages and geo- political and economic uncertainties. Despite those obsta- cles, manufacturing production has risen 4.7 percent year- over-year. In addition, manufacturing capacity utilization increased from 79.7 percent in August to 80.0 percent in September, returning to the rate in April, which was the highest since July 2000. Nonetheless, sentiment surveys from the New York and Philadelphia Federal Reserve Banks reflected contracting manufacturing activity in both districts, with a negative out- look for the next six months. In the Philly Fed report, the index for future new orders dropped to its lowest reading since August 1979. These reports are consistent with in- creased worries about the economy and with current con- ditions at post-pandemic lows. Ohio created the most net new manufacturing jobs in
CONTINUED ON PAGE 6
5
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October 31, 2022
NAM: Manufacturing (CONT’D FROM PAGE 5)
Box Shipments ( U.S. Corrugated Product Shipments) Industry Shipments In Billions of Square Feet Month June 2022
September, adding 8,700 workers, and Texas generated the most workers in the sector over the past 12 months, adding 49,500 year-over-year. At 2.0 percent, Minnesota had the lowest unemployment rate nationally. Additionally, higher mortgage rates and issues with affordability have sharply lessened demand in the hous- ing market. The average 30-year fixed-rate mortgage was 6.94 percent last week, the highest since April 2002. Homebuilders felt negative in their assessments of the housing market for the third consecutive month, with the Housing Market Index declining to 38 in October, accord- ing to the National Association of Home Builders and Wells Fargo. It was the lowest value since May 2020. New residential construction activity fell 8.1 percent to 1,439,000 units at the annual rate in September. Sin- gle-family housing starts declined 4.7 percent to 892,000 units, the slowest pace since May 2020. On a year-over- year basis, new housing starts decreased 7.7 percent, with single-family construction activity plummeting 18.5 percent over the past 12 months. New housing permits—a proxy for future residential construction—rose 1.4 percent to an annualized 1,564,000 units in September. Yet, single-family permits declined 3.1 percent from 900,000 units to 872,000 units, decreasing for the seventh straight month to the lowest level since June 2020.
Year
Actual
Percent Change Avg Week Percent Change
2022 2021
34.771 35.948
-3.3
7.903 8.170
-3.3
Industry Total
Year-to Date
June 2022
Year
Actual
Percent Change Avg Week Percent Change
2022 2021
205.855 208.569
-1.3
8.019 8.170
-2.1
Industry Total
Containerboard Consumption (Thousands of Tons)
Year
Month
Percent Change Year-to-Date Percent Change
2022 2021
2.8451 2.9436
-3.0
16.8851 17.0466
-0.9
Container Board Inventory - Corrugator Plants (Thousands of Tons)
Corrugator Plants Only
Date
Percent Change Weeks of Supply
Percent Change
Jun. May
2.4415 2.3469
4.0
3.8 3.6
5.6
Shipping Days
Year
Month
Year-to-Date
2022 2021
22 22
127 126
SOURCE: Fibre Box Association
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Work Is Rewarding During FBA’s Busy Fall Season BY MARY DRAIN
As representatives of the corrugated industry, Techni- cal Manager, Chase Kammerer and I work on these com- mittees and engage with other organizations, promoting industry efforts. And that working knowledge helps us keep our members informed on standards, progress and regulations that relate to packaging. Recent work that some committees are tackling in- clude: • The ASTM D10.19 Packaging – Sustainability subcom- mittee we are on facilitates appropriate certification for paper-based packaging customers who insist their boxes are certified compostable. • Collaborated with American Forest & Paper Associa- tion (AF&PA), Forest Products Association of Canada (FPAC), Paper and Paperboard Packaging Environmen- tal Council (PPEC), Recycled Paperboard Technical Assn, USEPA and many others, to update the Product Category Rules for North American Market Pulp, Paper and Paperboard Products, Tissue, and Containerboard. • And we meet monthly with other International Organi- zation of Standardization (ISO) TC/323 TAG members to support development of the global circular economy with guidance, like consensus standards and positions. This Fall is also noted for two big events: Corrugated Week 2022, held in September in San Antonio and Pack Expo, in October in Chicago. TAPPI’s Corrugated Week and SuperCorrExpo focus on corrugated machinery while
Fall can be a busy time of year for those who work in technical areas of the corrugated packaging industry. For
Fibre Box Association (FBA) mem- bers, technical areas include envi- ronmental responsibilities, worker safety, health protection and other regulations, production, productiv- ity, quality, and sustainability. Not only are you trying to wrap things up for year-end but hopefully, you are also participating in meetings,
Mary Drain
events and conferences. Participating on industry-related committees and at- tending industry-related events are great ways to expand your knowledge, network with peers and help shape solu- tions to industry issues. It’s also an opportunity to give back to the industry that supports you. This late-Summer and Fall, the TAPPI Corrugated Pack- aging Division committees, Corrugated Testing Committee (Fiscotec) and Corrugated Technical Committee (Corbo- tec), held meetings. And so did American Society for Test- ing and Materials/ASTM International, and International Safe Transit Assn (ISTA), among others.
CONTINUED ON PAGE 10
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SupplyOne Confirms Commitment To Packaging Sustainability Newtown Square, Pennsylvania based SupplyOne, Inc., one of the largest independent suppliers of custom cor- rugated and other value-added packaging products, equipment, and services in the U.S., is highlighting and confirming its commitment to sustainability by reducing the environmental impact of its business operations and by delivering customized packaging solutions that enable customers to achieve sustainability goals without sacrific- ing performance or profitability. SupplyOne approaches sustainability with a complete perspective that spans every aspect of packaging owner- ship, from design and material selection to packaging-re- lated processes and distribution through end-of-life. Sup- plyOne packaging engineers and designers create custom
Work Rewarding (CONT’D FROM PAGE 8)
Pack Expo showcases packaging technology and supply chain solutions. It’s an opportunity to stay on top of the latest advances, examine technology in action, in person and build relationships with others in the industry. Signing up for committees will bring additional work, but it can also be very rewarding. It’s a chance to help shape the future technical aspects of our industry. And you won’t be disappointed if you give it a try. Mary Alice Drain is the Director of Technical Services at the Fibre Box Association, which has represented and served the corrugated industry since 1940. The FBA has actively promoted the benefits of corrugated by communi- cating with its members, their customers and others with an interest in the corrugated industry. Contact Mary Drain directly at mdrain@fibrebox.org.
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Enrollment Open For AICC Emerging Leader Program
AICC, The Independent Packaging Association, has more than 100 Emerging Leaders representing 82 AICC mem- ber companies. The AICC Emerging Leader (EL) Program is an exclusive series of training, networking, and leader- ship opportunities for ambitious young professionals (35 and under) in the paper and packaging industry. With the opportunities and information available in the EL Program, young professionals who are ready to commit to their pro- fessional development will have the chance to grow into reliable future leaders in their company and industry. Emerging Leaders have access to customized training and networking opportunities, both regionally and nation- ally, like on-site workshops, education-intensive field trips, and executive roundtables. They also get direct access to leadership opportunities within AICC, including participa- tion in industry committees like government relations, pa- perboard supply and regulation, and industry education; short and long-term mentorship programs with veteran industry experts; meaningful group presence on the AICC Board of Directors; and creating and executing education- al content for the industry. Applications are welcome from AICC General and As- sociate Members. There is no fee to join the program. Learn more at www.AICCbox.org/Leader .
Len Prazych at 518-366-9017 lprazych@nvpublications.com Board Converting News is read by more independent AND integrated decision-makers than any other industry publication. Advertise in BCN – in print and/or online – to leverage our expansive reach!
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12 October 31, 2022
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AICC Recognizes Winners Of 2022 Student Packaging Design Competition AICC, the Independent Packaging Association, has announced the win- ners in the 2022 Annual Student Packaging Design Competition. The competition honors the best student designs entered in three distinct categories and allows AICC members a glimpse of what’s in store for the future of the corrugated packaging industry.
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Entry into the student competition provides students with the best op- portunity to show off their talent and creativity to corrugated packaging and display professionals from around the world. All of the winners in the student design competition receive a monetary award and plaque. The challenge this year was to create a counter shelf display, which holds three promotional kits to promote their school. There was separate judging form structure and graphics. This year’s winners are: • First Place Structure & Third Place Graphics: Cal Poly, The Cal Poly Sur- vival Bundle Kit, Geneva Lindsley, John Kouretas and Henry Schmidt • First Place Graphics: Clemson University, Team Tiger Pack, Ciara Johnson, Rivers Ulmer, Cassidy Gaillard and Will Carvalho • Second Place Structure: University of Wisconsin Stout, Average Joe’s Packaging, Eli Weber, Alyssa Koehler, Caleb Meltz and Caleb Zahu- rones • Second Place Graphics: Millersville University, Skully’s Souvenirs, Ju- lia Meassick, Stephen Hammond and Raynelda Mondesir • Third Place Structure: University of Texas at Arlington, Mav Alumni Pack, Thomas Nguyen, Erik Perez, Daniel Monsante and Brayden Itz • Honorable Mention Structure: Cal Poly, Graduation Promo Kit, Saira Mapes, Carson Baer and Evan Biley The qualifying first place winners in the two “Design to an Opportuni- ty” categories also compete for cash prizes during ICPF’s annual Careers in Corrugated live broadcast to packaging, graphic design, business, and other college and university schools across the U.S. and Canada. Industry leaders will serve as judges for this event, which is another outstanding resume-building opportunity for students. Questions should be directed to Laura Mihalick, Senior Meeting Manager, Lmihalick@aiccbox.org. ICPF also offers assistance to all student team participants in acquir- ing local internships in the corrugated packaging and display industry. Students should e-mail info@icpfbox.org to learn more about corrugated internships. Learn more at www.AICCbox.org/StudentDesign . For more information and details on the annual AICC Student Pack- aging Design Competition, contact Cindy Huber at (703) 836-2422 or chuber@aiccbox.org. 14 October 31, 2022 Winners in the AICC 2022 Student Packaging Design Competition include, from left, Cal Poly’s Survival Bundle Kit, Clemson University’s Team Tiger Pack, and Millersville University’s Skully’s Souvenirs.
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Partnerships Needed To Build The Future Manufacturing Workforce BY RACHEL KENYON As Manufacturing Month continued, I’ve had the oppor- tunity to participate in the National Association of Manu-
graphic changes, and advancing technologies – the aim of the event was to provide ideas for “Forging Partnerships” to help find good people with the right skill set. The confer- ence acknowledged that it will take an industry-wide effort to build the manufacturing workforce base for the future. But, there were several ideas shared for manufactur- ers to expand their community exposure and engagement from building relationships with students, parents, and teachers to second chance organizations, military and mil- itary transition organizations, regional workforce develop- ment organizations and any other place where communi- ties come together. Some of the keys to success involve meeting the community where they are and understand- ing what’s important to them in jobs or career paths. Both industry and companies need to disrupt the think- ing about manufacturing and be able to demonstrate that it has evolved from performing a task at a station to a de- cision-making process that requires adaptive skills like
facturers (NAM) Manufacturing Insti- tute’s Inaugural Workforce Summit in Cincinnati, OH. The Summit brought together manufacturers from many different industries and across the country to learn about innovative solutions to address today’s work- force development challenges in-
Rachel Kenyon
cluding recruitment, retention, and training. In addition to defining the challenge – a highly compet- itive, tight labor market, work/life balance needs, demo-
learning agility, creative reasoning, systems thinking, analytical acumen and resilience. Workers today are attracted to company culture, to purpose-driven organizations who can communicate what they stand for. Communicating this can be as easy as tak- ing candidates on tours during the interview process, by including plant workers in the interview process or job fairs, and exposing the community to the work environment be- fore a candidate’s first day on the job. And opening your doors to the communi- ty isn’t just for today’s workers, it’s expand- ing the pipeline down through partnerships with educational organizations that reach not only technical and vocational institu- tions, but high schools, middle schools, and even elementary school-aged children to show what’s possible through manufactur- ing. In fact, many speakers and participants in the conference suggested that middle school was the right audience for engage- ment when opinions begin to form about work environments and careers. Another important aspect of attracting a new workforce was the ability to provide flexibility, whether that’s unique shift hours or the ability to pick non-traditional bene- fits. One company said their newest group of employees worked with the company to secure veterinary services as a benefit for their pets. There was a lot shared during the con- ference. I look forward to continuing the discussion with member companies to iden- tify how FBA can support efforts to recruit, retain and train the box plant workforce of the future. Rachel Kenyon is Senior VP of the FBA.
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Barry-Wehmiller’s Bob Chapman Named SHRM’s CEO Of The Year The Society for Human Resource Management (SHRM) named Barry-Wehmiller CEO Bob Chapman the Tharseō
Chapman. “SHRM’s validation of our work to bring more human-centered leadership, not just to Barry-Wehmiller but to the world, helps us amplify that effort, allowing us to impact even more lives.” Chapman became CEO of the St. Louis, Missouri based Barry-Wehmiller in 1975. Since then, he has applied a unique blend of strategy and culture to create a thriving global organization. His work is chronicled in the Wall Street Journal bestseller, “Everybody Matters: The Extraor- dinary Power of Caring for Your People Like Family,” co-au- thored by Raj Sisodia, founder of Conscious Capitalism. In 2016, Harvard Business School released a case study about Barry-Wehmiller’s unique approach to business that is now taught at 80 business schools. A non-profit, Chap- man Foundation for Caring Communities, and a leadership consulting firm, Chapman & Co. Leadership Institute, bear Chapman’s name and share some of the foundational learnings that helped transform the culture of once-tradi- tional Barry-Wehmiller into a caring, dignity-honoring, ful- filling place to work. Chapman has sponsored leadership programs in K-12 schools and universities and partnered with Fordham Uni- versity and other Jesuit business schools to launch the Hu- manistic Leadership Academy. SHRM is the world’s largest HR professional society, representing more than 300,000 HR professionals across the globe, impacting 115 million workers and their families. Visit barrywehmiller.com for more information.
CEO of the Year in recognition of his leadership and positive influence on the global workforce. The event took place during an awards ceremony on October 17. The Tharseō (thar-seh’-ō) — derived from the Greek word for “courageous, confident and bold” — awards are
Bob Chapman
given to those who demonstrate innovative and impactful business practices leading to better workplaces and a bet- ter world by serving as visionaries, innovators and change agents. “The Committee selected Bob unanimously for the CEO of the Year Award after considering some of the largest multinational companies on the globe because there was specific, tangible proof that the culture Bob envisioned and nurtured resulted in that rare business that has done well financially while also providing an amazing work ex- perience for its employees,” said Johnny Taylor, Jr., SHRM president and CEO. “Having our effort recognized by the world’s most in- fluential HR organization is profoundly meaningful,” said
18 October 31, 2022
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Buckeye Corrugated To Leverage Winning Innovator Of Year Award Buckeye Corrugated, Inc. (BCI) won the 2022 AICC/ Board Converting News Innovator of the Year Award during AICC/TAPPI Corrugated Week, September 19-21 in San Antonio, Texas.
marketing and/or customer service operations that have improved the business operations, increased productivity, or provided the solution to a specific problem. AICC President Mike D’Angelo said, “AICC congratu- lates BCI for winning this award. AICC members are al- ways out front when it comes to keeping their employees safe. This year’s winning idea is simple and so very effec- tive. It serves as a great example.” BCI submitted its Roller Conveyor Platform, a safety innovation allowing team members to safely stand on an otherwise dangerous roller conveyor. You can watch a video demonstrating the conveyor platform at www.AICC- box.org/Innovator . “Buckeye Corrugated is honored to have been present- ed this award. We strive for perfection in everything we do, and at the top of that list is safety. The Roller Conveyor Platform is the result of a great group of people forming great ideas,” said Adam Williams, General Manager, Buck- eye Corrugated, Inc., Houston, Texas. The next Innovator of the Year competition will feature non-machinery innovations from AICC Associate (supplier) Members. Submission information on the 2023 Innovator of the Year Competition will be available in mid-2023 at www.AICCbox.org/Innovator . Questions and details about the Innovator of the Year Award can be directed to Cindy Huber, AICC Director of Conventions & Meetings, at chuber@aiccbox.org or (703) 836-2422.
This year’s competition was open to box makers and focused on highlights, new ideas or innovations in on pro- duction, administration, in-house training, management, Len Prazych, BCN’s Editor in Chief, left, and Gene Marino, AICC Chairman, right, present Adam Williams, holding cup, and Jack Nebesky of Buckeye Corrugated with the AICC/BCN Innovator of the Year Award.
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converters acquire the information they need to assess digital technology options and understand trends in the market. A team of industry experts, advisory board mem- bers, brand owners and your peers, will drive the agenda. Some of the topics to be covered through keynotes, panels, and breakouts include: • State of the Industry, Trends & New Developments to watch as we exit COVID • How are brand owners/packaging buyers utilizing the capabilities of digital • Packaging Leading the Way: Analyzing the Industry’s Success and Digital Printing’s Evolving Role • How can you take your digital advantage to your cus- tomers - Leverage your investment • Small, Medium, and Large Brand Owner/Retailer Per- spectives Panel • M&A implications for packaging converters • Deep Dives on Corrugated, Labels, Flexible Packaging, & Folding Cartons • Breakout sessions & small group user case study pre- sentations • Networking Receptions, Dinners, Casino Night, Option- al Golf Tournament, Awards & Entertainment If you are interested in being a fully hosted attendee, fill out the attendee qualification form at DPS Hosted At- tendee Qualification Form at digitalpackagingsummit.com. For questions, email Brian Ludwick, Publisher at Pack- aging Impressions, at bludwick@napco.com.
AICC, the Independent Packaging Association, will again be a sponsoring partner in the 8th Annual Digital Pack- aging Summit, which will host 100-105 executives at the Ponte Vedra Inn & Club in Ponte Vedra Beach, Florida from November 7-9, 2022. As an AICC member you should consider attending the event. Qualified executives attend the event at no cost. This includes travel, hotel accommo- dations and meals, ensuring a cost-effective experience. The event, organized by Packaging Impressions Maga- zine /NAPCO Media, is an invitation-only, hosted event de- signed for senior managers and business executives who want to understand how current and future digital produc- tion printing technology, software and solutions will impact their business and investment decisions. To ensure the Digital Packaging Summit offers the highest degree of relevancy for attendees, only senior level executives involved with research, purchasing and implementation of digital solutions are invited. This exclu- sive format allows you to connect with those peers whose insights you respect the most – through exceptional net- working, business meetings and strategic information sharing sessions. The Digital Packaging Summit has helped numerous labels, flexible packaging, corrugated, and folding carton
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2023 Forecast (CONT’D FROM PAGE 1)
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.
All of the above conditions should have a depressing effect on corporate profits, projected by Moody’s Analytics to increase at a 5.2 percent clip in 2023. That represents a decline from the 7.9 percent figure anticipated for 2022. Both estimates are much lower than the 25 percent in- crease of 2021. Strong Employment Reports from the field reflect early glimmers of a less ro- bust business environment. “In the first half of 2022 many of our members were still experiencing high demand,” said Tom Palisin, Executive Director of The Manufacturers’ Association, a York, Pennsylvania based regional organi- zation with more than 390 member companies ( mascpa. org ). “But as the year progressed there was a significant slowdown caused by the labor shortage, inflationary is- sues, and global events.” With its diverse membership in food processing, de- fense, fabrication, and machinery building, Palisin’s asso- ciation is something of a proxy for all American industry. The good news is that a strong employment environment at the association’s members—as well as at companies elsewhere in the nation—is helping alleviate the negative
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impact of the economy’s headwinds. Moody’s Analytics expects a continuation of that favorable condition, fore- casting an unemployment rate of 4.1 percent by the end of 2023. That’s not much higher than the 3.7 percent rate of late 2022. (Many economists peg an unemployment rate of between 3.5 percent and 4.5 percent as the “sweet spot” that balances the risks of wage escalation and eco- nomic recession). On the downside, low unemployment usually increas- es business costs by forcing employers to boost wages to attract scarce workers. Today is no exception. “Our orga- nization surveys members annually on their baseline entry level hourly wage figure,” said Palisin. “Increases typically run around 2.5 percent to three percent, but the figure was eight percent in 2022.” While Moody’s Analytics forecasts a continuation of labor cost increases, they should mod- erate to 3.5 percent in 2023, down from their current five CONTINUED ON PAGE 26
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2023 Forecast (CONT’D FROM PAGE 24)
percent. Even so, those increases are expected to affect business profitability. Worker Shortage The tight labor market hits business profitability not only in the form of higher wages, but also in a scarcity of the very workers needed to produce goods and services. “Employers will be very focused on labor availability in 2023 as Baby Boomers continue to retire and the supply of immigrant labor has yet to fully recover from severe pan- demic-related disruptions,” said Yaros. “Despite a slowing economy, layoffs are low, indicating that businesses are holding onto labor in a reaction to the hiring difficulties they encountered during the pandemic.” When will workforce availability increase? Not anytime soon, say observers. “The labor market’s going to be tight for years to come,” said Bill Conerly, Principal of his own
consulting firm in Lake Oswego, Oregon ( conerlyconsult- ing.com ). “The decade from 2020 to 2030 is expected to have the lowest growth of working age population since
the Civil War. One reason is the retirement of the Baby Boomers; another is the low rate of immigration over the last few years.” Palisin agreed that a labor shortage is go- ing to be a long-term condition, and said his members are making moves to lessen the effect. “Employers are trying to be creative in the way they keep and retain workers, not only by offering higher salary rates but also by extending benefits and encourag- ing work flexibility. They are also invest- ing more in automation for labor-intensive tasks.” Retail Slowdown If high employment levels can stress the bottom lines of many employers, they can also fill workers’ pockets with spendable cash. And flush consumers can help drive a robust retail sector, an important slice of the economic pie. “Wage rates, as measured by the Employment Cost Index (ECI), remain very high by the standards of the last cou- ple of decades,” said Scott Hoyt, Senior Di- rector of Consumer Economics for Moody’s Analytics ( economy.com ). Even so, activity is decelerating at the nation’s stores. “2023 is likely to be a chal- lenging year for retail, with growth only at 2.8 percent,” said Hoyt. The projected growth is well below the sector’s historic 4.3 percent average as well as the 8.3 percent increase expected when 2022 numbers are finally tallied. The recent trend is well be- low 2021 when a 17.5 percent increase was fueled by a consumer shift away from ser- vices and toward goods. A slowing economy is contributing to retail’s deceleration, as is a penchant for
CONTINUED ON PAGE 28
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2023 Forecast (CONT’D FROM PAGE 26)
noted Palisin. “The war has created an energy crunch and a disruption in raw materials from that region that have trickled through the economy to exacerbate the supply chain issues.” Companies are responding by moving to re- duce their reliance on China, he added. “They’re sourcing from additional countries to reduce disruptions.” Housing Headwinds Housing, a key driver of the economy, has also en- tered a period of correction. “The underlying dynamics
post-pandemic consumers to shell out less cash on mer- chandise and more on services such as hotels, travel and restaurants. Any softening of inflation from recent highs should also depress results, since retail activity is mea- sured in nominal terms. Supply Chain Disruptions Higher wages and scarce workers are not the only forc- es depressing business profits. Another major factor is a rise in interest rates—the Fed’s favorite tool for fighting in- flation. “The purpose of increasing interest rates is to drive down demand,” said Palisin. “So, our members are expect- ing to see a decrease in new orders that will impact the overall economy. Too, many of our companies have lines of credit that rely on floating interest rates. Rising rates will take a hit to the bottom line as companies decide whether to utilize those lines to support their cash flow and invest- ments.” Adding further downward pressure are disruptions in the delivery of goods that continue to plague companies large and small. “Supply chain problems have improved over the past year, but there hasn’t been the significant resolution we had hoped for,” said Palisin. “Random short- ages in materials and deliveries are still plaguing our mem- bers, and that’s leading to backlogging of orders—compa- nies just can’t get the materials or parts.” The Russia-Ukraine war has worsened the situation,
of the housing market are changing as lower affordability spurred by higher prices and mortgage rates is starting to significantly weigh on demand,” said Yaros.
CONTINUED ON PAGE 30
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2023 Forecast (CONT’D FROM PAGE 28)
Board Converting NEWS INTERNET DIRECTORY
Limited affordability is discouraging consumers from signing on the bottom line. Median prices for existing single-family homes are expected to increase 11.5 per- cent when 2022 figures are finally tallied. That comes off a strong 18 percent increase in 2021. Any relief will only come in 2023, when prices should decline by 2.6 percent. While affordability has sunk to its lowest level since late 2007, the 30-year fixed mortgage rate is within striking distance of its highest level in over a decade, leading to a decline in purchase applications. Tight housing supply is only adding to upward pricing pressure. The inventory of for-sale homes remains his- torically low, and new ones will be scarce on the ground. “We expect housing starts to fall by 1.8 percent and two percent in 2022 and 2023, respectively,” said Yaros. “This compares with a 15.1 percent increase in 2021.” There’s only so much the industry can do to bolster housing supply—one big reason being the above-men- tioned labor shortage. “The unemployment rate for expe-
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Advantzware provides a flexible and comprehensive system to address the business management needs of the independent box business, as well as the ERP re- quirements of full scale packaging plants and integrat- ed companies. With modules for estimating, scheduling, production, inventory and accounting, this scalable sys- tem supports packaging plants that produce corrugat- ed boxes, folding cartons, point of purchase displays, assembled partitions, paperboard products, foam fab- rication, as well as distribution of packaging supplies. AIR CONVEYING CORPORATION www.accfilter.com Air Conveying Corporation is a recognized leader in the in- dustry 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 coun- try and the world. Let us build you the best Trim Removal System you ever had. Contact us today. Amtech offers the industry’s most innovative and compre- hensive corrugated and packaging ERP, integrated sched- uling software, and engineered automation technology. For over 30 years, Amtech has remained at the backbone of successful businesses from the independent box makers to the largest integrateds. We keep our customers competitive in an ever-changing economy with options such as custom- er digital storefronts and workflows, business intelligence, automated scheduling for corrugators, converting and shipping, proactive roll stock and inventory management. APEX INTERNATIONAL www.apexinternational.com AMTECH SOFTWARE www.amtechsoftware.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.
rienced construction workers is about as low as it’s ever been,” said Yaros. “Capacity limits have delayed housing completions and contributed to a record number of hous- ing units in the pipeline.” One bright spot in the housing picture: Mortgage credit quality has never been better. “The percent of loans de- linquent and in foreclosure is at a record low,” said Yaros. “This goes to the stellar underwriting standards since the financial crisis, and borrowers’ credit scores are much higher.” While lending standards for mortgage loans are now tightening, the credit spigot is unlikely to seize up as it did during the financial crisis of 2008. Looking Ahead Given the above concerns, it’s little wonder corporate confidence is taking a hit. As the calendar turns to a new year, companies are responding to soaring interest rates and inflation by scaling back the capital investments that help fuel the economy. “Up until the second half of 2022, most companies were taking advantage of low rates to plan ahead for equipment purchases and expansion op- portunities,” said Palisin. “Now, though, many are taking
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CONTINUED ON PAGE 32
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