BoardConverting Serving the North American Corrugated and Folding Carton Industries for 39 years January 8, 2024 VOL. 40, NO. 2
Converter Outlook, 2024: Part I Preparing For Growth, Change BY SUSAN RILEY As is our custom, Board Converting News reaches out to North Amer- ica’s leading independent converters asking for insights as they see it as the corrugated and folding carton industries goes into another new year. As inventories and demand became more balanced, businesses were investing more in automation, embracing new technologies, up- grading their facilities to prepare for anticipated growth and sustain- ability, and celebrating each success that moved them forward. Despite concerns over price increases from the major producers, regulatory demands, and an uncertain economy impacted by 2024’s yet untold events, independents remain buoyed by their camaraderie, support for one another, optimism, and an always unsinkable spirit. ACME CORRUGATED BOX CO. Hatboro, Pennsylvania: Bob Cohen reports, “Anticipating economic prospects after years of volatility is no easy task. Always the optimist, I look to 2024 as a year that some normalcy returns and that business rebounds after an unsettled first quarter. We enjoyed a better than ex- pected fourth quarter in 2023. “Based on the comments I have heard from around the country, we may be an outlier. Still, it would be refreshing to have a period of stabili- ty after years of unpredictability. Eternally optimistic, or possibly having a crazed perception of the future, we embarked on a major expan-
Atlas Packaging Acquires Republic Packaging Of FL Miami, Florida based Atlas Packaging & Dis- plays Inc., announced the successful acquisi- tion of Republic Packaging of Florida in Miami. The company said that the strategic move helps strengthen Atlas Packaging’s presence and highlights the company’s commitment to delivering top-notch packaging solutions. With Republic Packaging’s established presence in Florida, the company said the union brings together expertise and promises innovation in serving its clients. The acquisi- tion also introduces new capabilities in wood crating and an expansion of fulfillment ser- vices, solidifying Atlas Packaging’s position as an industry leader. This acquisition reflects Atlas Packaging’s dedication to growth and excellence in the packaging industry. The company looks for- ward to the satisfaction of its customers and a successful future. Founded in 1980 by Walt Shields, Atlas Packaging & Displays designs and manufac- tures custom corrugated cardboard packag- ing and point of purchase displays with prod- ucts ranging from protective packaging, to retail packaging, to other specialty products.
sion at the height of the pandemic. The project encompassed major machinery upgrades and a new building section that added 30 percent more space to our building envelope. “Integrating the new equipment, installing a new work in process feature, full plant convey- orization (not to mention the building expansion) while operating was not for the faint of heart. Attempting to work around the logistical head- aches while the pandemic raged, is the reason I
CONTINUED ON PAGE 3
WHAT’S INSIDE 5 Wanted: Video Submissions For AICC Member Milestones 8 Year In Review: ICPF Expands Programs, Renews Partnerships 10 NAM: Manufacturers Contribute Record $2.85T To Economy 14 PPC Names Emily Leonczyk As Executive Director & VP
Bob Cohen
mentioned ‘crazed perception’ earlier. “The good news is that after full completion in April of 2023 we are now reaping the benefits of automating the entire process from the corrugator to our converting machine centers. During our Open House in May we were able to show the attendees the amazing technology we had installed. “While the period mentioned above was not without its turmoil, the CONTINUED ON PAGE 22
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In the early 1990s, Shields' son-in-law, Chip Meissner, joined the company and began developing high graphic packaging and point of purchase displays. Atlas Packaging Acquires (CONT’D FROM PAGE 1)
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 $955.00-960.00 $970.00-980.00 $970.00-980.00 $ 970.00-980.00 $1000.00-1010.00 $973.00-983.00
26# Semi-Chem. Medium
Short Ton Del. Short Ton Del. Short Ton Del. Short Ton Del. Short Ton Del. Short Ton Del.
$ 890 .00-9 4 0.00 $9 0 5.00-9 2 5.00 $9 0 5.00-9 2 5.00 $9 0 5.00-9 2 5.00 $9 2 5.00-9 4 5.00 $9 0 8.00-9 2 8.00
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
Meissner has helped lead the company to its present day position of strength as one of the premier designers and manufacturers of corrugated products in the South- east United States. They have been in operation for more than 40 years, serving all of South Florida as well as the Southeast region. Republic Packaging is a multi-national corporation with sites in the US, Canada and Mexico serving the electron- ics, medical, automotive and aircraft industries, according to its website. In addition to corrugated boxes and chip- board and paperboard cartons, it’s products include end caps, corner pads and foam products. For more information, visit atlaspackaginginc.com .
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.
42# Kraft Liner 26#
Semi-Chem Medium
East West
$9 2 0.00 $ 96 5.00
$9 1 0.00 $9 4 5.00
3
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January 8, 2024
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Videos Sought To Celebrate Member Milestones At AICC Spring Meeting Is your company celebrating an anniversary? AICC’s Member Milestone program recognizes mem- ber companies that have been in continual operation for significant levels of time, starting at 40 years and increas- ing in increments of 10 years up to 100 years or more. Members celebrating anniversaries who wish to be included in this recognition should provide a 2-3 minute professionally produced video presentation featuring the history of their company, describing their growth, and sig- nificant milestones or achievements. The members who submit qualifying videos will be recognized at the closing general session on Wednesday, April 10, during the 2024 Spring Meeting being held at JW Marriott Desert Springs Resort in Palm Desert, California. The video compilation of all qualifying companies will be shown and then the member representatives will be called on stage to receive a recognition plaque. AICC will also recognize the members in a post-meet- ing press release, in BoxScore, and the videos will be post- ed on the AICC website. Each submitted video should be approximately two to three minutes in length. If you submit a video that is longer in duration, it will be edited down to two to three minutes (AICC reserves the right to select what portion of the video to show). Submissions for the program are due by Friday, February 23. AICC strongly suggests that submitted videos utilize: • Professional videography • Historical photos • Professional video editing • 16x9 widescreen format (.mov files preferred) • Professional voiceover • Licensed (legal) production music Videos should be submitted via memory stick, Drop- box, Wetransfer (or other large file transfer service), data disk (but NOT a self-playing DVD). To submit via Dropbox, contact Cindy Huber, chuber@aiccbox.org. Video submissions will be considered based on a first received basis (of those that meet the qualifying criteria and specifications and are of usable quality) as there is a limited amount of time to show the videos during the general session. If time does not allow for all videos to be shown during the meeting, some of the videos will be shown at the annual meeting in the fall. For technical questions, contact DwayneS@Griffcom. com, NickG@Griffcom.com or call (410) 296-7777 during normal (EST) business hours. The AICC Spring Meeting also coincides with AICC's 50th anniversary Celebration, the 10th Annual Indepen- dents' Cup Golf Tournament, and the Emerging Leader's 10 Year Reunion. For questions about the Spring Meeting, contact Huber or Laura Mihalick at lmihalick@aiccbox.org or (703) 836-2422. To register, visit aiccbox.org .
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January 8, 2024
Registration Open For AICC Spring Meeting In Palm Desert, California AICC, The Independent Packaging Association, invites members to take part a momentous occasion in 2024 as it celebrates 50 years of the independent during the 2024 Spring Meeting in Palm Desert, California. Additionally, it has announced two speakers slated to deliver powerful keynotes: Emmy Award-Winning Actor, Author, Director Henry Winkler and economic expert Dr. Pippa Malmgren, who served President George W. Bush in the White House as Special Assistant to the President and on The National Economic Council. Join AICC members for a momentous occasion as AICC celebrates 50 years of the independent. The eve- ning will feature a sit-down dinner, a special tribute to the AICC “founding fathers,” leadership, and members over the past 50 years. The evening will culminate with a Rat Pack tribute show as Frank Sinatra, Dean Martin and Sammy Davis, Jr. come to life in this nostalgic reunion concert. Following the trib- ute show, enjoy dancing with a Big Band Dance Band. To register, visit aiccbox.org . Book your rooms at the JW Marriott Desert Springs Report before the group cut- off date on March 12 to guarantee availability. For more information, contact Laura Mihalick at lmihalick@aiccbox. org or call (703) 836-2422.
Box Shipments ( U.S. Corrugated Product Shipments) Industry Shipments In Billions of Square Feet Month September 2023
Year
Actual
Percent Change Avg Week Percent Change
2023 2022
3 0.911 3 2.734
-5. 6
7. 728 7. 794
- 0.8
Industry Total
September 2023
Year-to Date
Year
Actual
Percent Change Avg Week Percent Change
2023 2022
285.619 305.519
- 6.5
7. 556 7.998
- 5.5
Industry Total
Containerboard Consumption (Thousands of Tons)
Year
Month
Percent Change Year-to-Date Percent Change
2023 2022
2. 5387 2. 6314
- 3.5
23.3187 24.8978
- 6 .3
Container Board Inventory - Corrugator Plants (Thousands of Tons)
Corrugator Plants Only
Date
Percent Change Weeks of Supply
Percent Change
Sept. Aug.
2.2 15 2 2. 1606
2.5
3. 5 3. 6
- 2.8
Shipping Days
Year
Month
Year-to-Date
2023 2022
2 0 2 1
1 89 1 91
SOURCE: Fibre Box Association
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Year In Review: ICPF Expands Services, Renews Key Partnerships BY CAITLIN SALAVERRIA It has been a busy year for ICPF as we focused on strength- ening and expanding ICPF’s foundational programs and services, while re-establishing rela- tionships with key stakeholders.
tutions to make them aware of the many different career paths available within the corrugated packaging industry. Corporate Partner Outreach: We’ve focused on provid- ing transparent and consistent communication with our Corporate Partners through emails and monthly newslet- ters. We also created a Talent Acquisition Committee with corporate partner representatives to share best practices, discuss trends and develop resources to aid in recruitment efforts. The Holiday Weekend in New York event was also reinvigorated with a new hotel partnership and trending reception locations. Rebranding ICPF: This year, we worked to rebrand and redefine our mission to better serve the needs of the in- dustry. ICPF launched a new tagline and established a so- cial media presence to share marketing and promotional tools with a range of audiences. We also created video testimonials from industry employees, as well as an indus- try-wide culture document to share the value of a career in corrugated packaging. We will continue to expand this arsenal of resources and make them easily accessible on our soon-to-be updated website. Partnership Opportunities: ICPF has also been examin- ing opportunities to collaborate with other organizations and associations, to capitalize on their strengths and re- sources to ensure we get the most value for our efforts. We’ve begun conversations and re-established relation- ships with many related organizations such as the Insti- CONTINUED ON PAGE 10
Education & Student Outreach: We’ve rebuilt our partnerships with the education community, regularly participating in Packaging Program Council meetings (a council con- sisting of the nine largest university packaging programs in the coun-
try), sending monthly newsletters to University Partners, re-establishing the University Awards Program, serving as ambassadors for students at industry events, and pro- viding sponsorships to increase student exposure to the industry. We held a webinar to share how the industry pri- oritizes sustainability and released Phase 1 of an updated Corrugated Industry Curricula to educate students about the industry. In the coming year, we will promote that Cur- ricula to establish relationships with trade schools and community colleges. In addition to outreach to packaging programs, we also connected with career services and other relevant academic departments at our partner insti-
Do you need printed sheets? We have your answer.. Introducing Heartland’s ColorCorr. This is “flexo-printing in the round”. On our corrugator we can print up to 109” wide. The advantage is that we can print the equivalent of ½ roll at a time and not be required to keep several rolls of very expensive preprinted paper on the floor. Much less waste and risk. In continual print mode, we use either laser-engraved rubber rolls or solid rubber rolls to print a “flood coat” or a repeating pattern. If we are printing a repeating pattern, we can run a two-color design on the paper. Customers have found that running sheets we print can allow them to run a lighter-grade due to reduced caliper loss, and in some cases eliminate one or more machine passes.
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ICPF Expands (CONT’D FROM PAGE 8)
that I have received since taking on the president role. There are so many individuals dedicated to the corrugat- ed packaging industry, and more specifically, dedicated to growing the industry’s workforce. Together, we will make a difference. To read the ICPF's annual report, visit icpfbox.org . Caitlin Salaverria is the President of the International Cor- rugated Packaging Foundation. NAM: Manufacturers Contributed Record $2.85 Trillion To US Economy Real GDP soared 4.9 percent at the annual rate in Q3 2023, the best quarterly gain since Q4 2021 while the U.S. economy continued to show signs of strength and resil- ience despite ongoing challenges and worries about the
tute of Packaging Professionals (IoPP), PMMI, TAPPI, and the Canadian Corrugated and Containerboard Association (CCCA). We also attended the Manufacturing Institute’s second annual Workforce Summit and made corporate partners aware of national resources that can help them find solutions to their hiring needs. Our work in 2023-2024 is dedicated to developing effective strategies to strengthen existing programs, ini- tiate outreach, increase industry exposure, and evaluate impactful partnerships. Future years will include ongoing and new short-term objectives as we implement a variety of new strategies and evaluate performance. Stay tuned in 2024 and beyond, as we continue to expand the foundation’s work to address other critical in- dustry needs. I am humbled by the outreach and support
outlook, according to National Association of Manufacturers (NAM) Chief Economist Chad Moutray: “The U.S. economy is expected to grow 2.5 percent and 2.0 percent in 2023 and 2024, respectively, with 2.4 percent growth in Q4. The probability of a “soft landing” has increased in recent weeks, but there contin- ue to be sizable downside risks in the eco- nomic outlook. “Encouragingly, manufacturing val- ue-added output increased to $2.853 tril- lion at the annual rate in Q3, an all-time high. Manufacturing gross output also rose to a new record, at an annualized $7.271 trillion in Q3. Real value-added output in the man- ufacturing sector increased to $2.313 trillion at the annual rate in Q3, as expressed in chained 2017 dollars. This figure was not far from the record high set in Q4 2021, which was $2.314 trillion. “New durable goods orders jumped 5.4 percent in November, or 0.5 percent with transportation equipment excluded. These data have trended higher year to date, providing resilience to the sector despite lingering challenges. Through the first 11 months of 2023, new durable goods orders have risen 4.7 percent, or 1.7 percent growth year to date with transportation equipment excluded. “Orders for core capital goods — a proxy for capital spending in the U.S. economy — rose 0.8 percent to a record $73.97 billion. Core capital goods orders have risen 1.4 percent year to date, or 2.0 percent over the past 12 months. “Michigan created the most net new manufacturing jobs in November, rebound-
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ing from the auto strike, adding 8,200 workers for the month, while Texas reported the greatest growth in manu- facturing employment over the past 12 months, up 28,100. “Meanwhile, the Index of Consumer Sentiment jumped to 69.7 in December, a five-month high, with consumers across all demographic groups feeling more upbeat about both current and future economic conditions. “Personal consumption expenditures rose 0.2 percent in November. Consumer spending has provided continued resilience to the U.S. economy despite lingering uncertain- ties in the economic outlook, with personal spending ris- ing 5.4 percent year-over-year. The personal saving rate inched up to 4.1 percent in November but remained below pre-pandemic rates. Personal income increased 0.4 per- cent in November. Wages and salaries rose 0.6 percent in November, but with manufacturing wages and salaries jumping 1.4 percent. Over the past 12 months, total wages and salaries have increased 6.5 percent, with manufactur- ing wages and salaries rising 5.9 percent year-over-year. “The Federal Reserve is not expected to make any changes to rates at the next meeting on January 30-31, pausing on rates for the fourth straight FOMC meeting. Participants at the most recent meeting signaled there could be three rate cuts in 2024 in economic projections. Pending incoming data, those rate cuts could come as soon as the March 19-20 or April 30-May 1 meetings.”
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Paperboard Packaging Council Names Emily Leonczyk Executive Director & Vice President The Paperboard Packaging Council (PPC) has announced the promotion of Emily Leonczyk to Executive Director and Vice President. A servant leader with a strong business and nonprofit association management ca- reer — including five years in the paperboard industry — Leonczyk will oversee PPC’s operations while facilitating stakeholder collaboration and driving strategic initiatives.
Leonczyk has served PPC since 2018, first as Director of Marketing and Communications followed by a promotion to Director of Operations. Notably, her role in overseeing the 2018 rebrand of PPC underscores her contribution to shaping a modern-day vision for the organization. Leon- czyk was also crucial in guiding PPC through the COVID-19 pandemic, including the successful transition to virtual events and the subsequential resurgence of in-person engagement to pre-COVID numbers. “I am honored to serve as the Executive Director and Vice President of PPC, and grateful to the entire PPC community for their support and trust,” said Leonczyk. “It’s my commitment to listen and respond to the needs of our members and empower our passionate and hardworking team to elevate the industry for the benefit of all.” In charting the course for the potential challenges and opportunities ahead, Leonczyk underscores her commitment to thoughtful listening and cross-industry collaboration. She believes this approach will enable PPC to tailor its programs and initiatives to meet the evolving needs of its members and the industry. “My goal is to have the systems in place so that we can be agile, as- sess the impact of our programs, and ensure they positively impact our members,” she explained. Sustainability takes center stage in Leonczyk’s vision, including both the promotion of paperboard as a renewable and recyclable packaging material as well as the development of a viable future workforce. She is CONTINUED ON PAGE 16 Emily Leonczyk addresses the crowd at PPC’s recent Fall Meeting and Leader- ship Conference.
14
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January 8, 2028
Our long-awaited 2023 Packaging Playbook is finally here. We talk through all the challenges present in
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PPC Names (CONT’D FROM PAGE 14)
dustry. Collaborating closely with Laura and other women leaders, we aim to inspire positive change and drive the industry forward,” said Leonczyk. To understand the nuanced needs of PPC's diverse membership, Leonczyk plans to embark on a series of member plant visits across the country. Furthermore, le- veraging technology such as the newly implemented PPC Member Portal, she aims to create a collaborative envi- ronment and facilitate the sharing of valuable insights and best practices. Leonczyk extends an invitation for con- versation, expressing her eagerness to connect with PPC members, stakeholders, and the broader community. “I want to hear from our members and encourage ev- eryone to get to know our team,” said Leonczyk. “We're here, energized, excited to try new things, and ready to increase PPC’s value to all.” To learn more, visit paperbox.org .
passionate about equipping PPC members with the tools to champion the sustainable value of paperboard packag- ing while nurturing the next generation of industry leaders. PPC President Ben Markens will continue to serve as the association’s chief staff officer, owning overall vision and strategy. He expressed his confidence in Leonczyk's capabilities: “Emily’s leadership and dedication have been evident throughout her time with PPC, and her background in trade association management, business development, and marketing positions her well for the new role. I am sure that her approach will take the organization to new heights, provide an elevated experience for members, and ultimately lead us into the future.” “I’m excited to see Emily step into this role and support our vision for the future,” said Laura Brodie, Chair of PPC’s Board of Directors. “Her commitment to engaging the next generation aligns seamlessly with our goals, and we look forward to her continued contributions.” Not only is Leonczyk's appointment significant for PPC, but it also highlights the power of women in the paper- board packaging industry. Stepping into the future, Leon- czyk and Brodie represent a dynamic leadership duo that reflects the industry's commitment to diversity and prog- ress. “As a woman in a leadership role, I feel a deep respon- sibility to empower and support other women in the in-
NAM Helping Manufacturers Accomplish Top Tax Priorities
The National Association of Manufacturers (NAM) an- nounced it is firing on all cylinders to accomplish manufac- turers’ top tax priorities: restoring immediate R&D expens- ing, pro-growth interest deductibility and full expensing. Congress must act by early 2024 to allow manufac- CONTINUED ON PAGE 18
16 January 8, 2024
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NAM (CONT’D FROM PAGE 16)
and spotlight the numerous companies that will be hard hit if pro-growth policies are not reinstated. Why it matters: All three of these tax provisions are crucial to manufacturers’ ability to innovate, invest in their employees and make the American economy more com- petitive. R&D: The U.S. is one of only two countries (the other being Belgium) that doesn’t permit immediate expensing of R&D costs, a vital incentive for innovation. China, on the other hand, gives companies a “super deduction” for R&D expenses. Interest deductibility: A recent tax policy change made it more expensive for manufacturers to make critical pur- chases for their facilities, by imposing a stricter standard for deducting interest. This is a particularly heavy burden for a capital-intensive industry like manufacturing, amount- ing to a tax on companies’ investments in their operations and workers. Full expensing: This provision allows companies to expense their equipment purchases in the year they are made, supporting manufacturers’ investments in their busi- nesses. But the policy is set to be phased out soon and must be saved, as it is crucial for small and medium-sized manufacturers looking to expand their operations. “Manufacturing is the backbone of America, and the NAM is going all-out to make sure Congress acts on these critical priorities,” said NAM Managing Vice President of CONTINUED ON PAGE 20
turers to benefit from these provisions for the 2022 and 2023 tax years. Here’s what the NAM is doing to reach the finish line and why it matters so much to the industry and to the economy as a whole. What we’re doing: The Executive Committee of the NAM Board of Directors recently sat down with House Speaker Mike Johnson (R-LA) to emphasize the importance and ur- gency of these measures. The Executive Committee has also raised the issue directly with the White House, and the NAM’s members — 90 percent of which are small and medium-sized firms —have been contacting legislators to urge immediate action since early this year. In addition, while pressing the case relentlessly with the White House and congressional leaders himself, NAM President and CEO Jay Timmons has met personally with House and Senate tax negotiators to make manufacturers’ case for these reforms. NAM experts have also hosted multiple briefings for key legislators and congressional staffers, featuring manu- facturers who explained how the withdrawal of these poli- cies has harmed their businesses. Ratcheting up the ante on air and online, the NAM has applied pressure publicly in key districts, running a new ad campaign urging congressional action that has garnered about 80 million impressions so far. It also launched an ac- tion center to help manufacturers contact their legislators
18 January 8, 2024
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NAM (CONT’D FROM PAGE 18)
recycled content, according to a peer-reviewed indepen- dent life cycle assessment. The production of the paper bags requires a drying process to remove moisture from the bags before they can be wrapped in plastic stretch film, to avoid condensa- tion within the packaging. Mondi’s Advantage StretchWrap is breathable and can therefore be used to wrap and pack products immediately after paper bag production within one in-line process.
Policy Chris Netram. “Right now, leaders on Capitol Hill need to hear from manufacturers in their communities with a simple, clear message—act on our critical tax priorities now.” Congressional leaders, including Speaker Johnson, have recently pointed out a need to hear from more man- ufacturers. Lend your voice and check out the resources at nam.org to learn more.
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Mondi, a global packaging and paper company with loca- tions in the United Kingdom and Austria, has announced the introduction of its Advantage StretchWrap, a paper wrapping solution, to Sentrex, a European manufacturer of paper bags. Advantage StretchWrap is a fully recyclable kraft paper designed to stretch and resist punctures, making it an al- ternative to plastic stretch film that has traditionally been used for pallet wrapping and transportation. The Advantage StretchWrap has 62 percent lower greenhouse gas (GHG) emissions when compared to vir- gin plastic stretch film, and 49 percent lower GHG emis- sions when compared to plastic film made with 50 percent
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Converter Outlook: Part I (CONT’D FROM PAGE 1)
machines has been packaging grades. Consequently, ma- chines are being inaugurated without full integration. “We see that the majors have reduced containerboard production to balance the market, but the fallacy is that their volume is being replaced by new mill systems (almost all recycled) that are not aligned with the major producers. Can giving up market share really preserve pricing in the end? Hard to conceive when Europe is adding even more capacity, capacity it is unable to fully consume. Bigness is not a panacea as most majors can plainly see. Being an in- dependent these days is a little like being a kid in a candy store. You are on everyone’s ‘dance card.’ “The recent announcement of the WestRock/ Smurfit Kappa merger (to all outward appearances it really is an acquisition) is a case in point on the hazard being big. When is an enterprise too big to succeed? How unwieldy is a 500+ box plant and 61 mill system behemoth? “We run one plant, and it takes all hands-on deck to make that successful. It seems ego becomes more import- ant than performance. The truth is with bigness comes the inability to relate to clients on a micro level. In the end that is the real reason a business exists — to serve its clients. I find it hard to believe that a message of true customer commitment can be carried through a mega plant system like the one contemplated. I guess time will tell. “Finally, we are all part of an industry that has ultimately been very kind to us. There is a camaraderie and gener- CONTINUED ON PAGE 24
result will allow us the option of adding the needed volume for growth in our marketplace. We are now well positioned to enjoy any surge in business that might occur in 2024. “In assessing the general market, we see the major producers announcing a significant upward price adjust- ment for the first part of 2024. It is hard to conceive that a price increase would be on the table when most economic indicators are pointing to a slowdown in consumer spend- ing, and concomitantly, economic activity. “I can understand trying to stabilize the market after the two most recent decreases which have had a nega- tive impact on the results major containerboard producers report. Still, the market is the ultimate decision maker. The problem is, and remains, the way pricing is determined. What is behind the methodology of the pricing model RISI uses? The fact that it is opaque to the market should con- cern everyone. Is this really an acceptable benchmark for a $43 billion dollar industry? I don’t necessarily possess a plan B, but plan A obviously has many flaws. “Ryan Fox, at Bloomberg , is at least attempting to show a far truer picture of why and when pricing should change. Should all our costs be tied only to paper, or should oth- er real input cost factors be considered? I guess rocking the boat can come with uncertainty, and unknown con- sequences. Overcapacity should concern everyone. The default position for presently retrofitted containerboard
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al willingness for independents to assist each other when possible. We remain open to sharing information and knowledge with other industry participants. It has always been part of our DNA. I think it was Blanche Dubois (The Tennessee Williams play, ‘A Street Car Named Desire’) who said she relied on the ‘kindness of strangers.’ Well, in a way, we all can use help occasionally and when we have a problem needing a solution, we look to others who have already faced that problem. Even with the competitive na- ture of our business, there remains a general goodwill and a ready willingness to help others. I hope we can maintain that positive impulse! It says a lot about who we are.” BAY CITIES Pico Rivera, California: Greg Tucker reports, “Walking into 2024 will be a very interesting stroll. We have an election year, a hangover from inventory and a promised recession com- ing. But wait, how can there be a recession looming after the stock market blasted through the strato- sphere just after cratering earlier in the year? Well, like I started this commentary, it’s an election year! How do you think Chair Powell sud- denly ‘postured’ that interest rates will drop three times Converter Outlook: Part I (CONT’D FROM PAGE 22) Greg Tucker
next year? Because it is an election year. O’ Biden got to- gether with Powell and begged him to signal that rates are coming down. Sure enough, the stock market rallied, the Christmas cheer boomed, and everyone is happy as clams. “What is a bit striking is we still have M2 high as a kite, business loans are dropping off, housing is a mess (try buy- ing one) and one of the worse things we have going for us is that we are now 33.7 trillion smackers in debt. This made treasury auctions a bit scary during the last few terms. We are lucky, because where would the world go to build the next ‘dollar?’ China? Russia? Europe? Who knows. “The other giant issue about to smack us in the face is the commercial real estate market. Large cities have no renters thus the vacancy rates are huge, and the property owners are now having to refinance all of their debt with valuations of their skyscrapers in the tank. This is not only happening in big cities it is everywhere. One of the worst is Minneapolis. That bright shining city of the north, pinned down by Target and storied companies like 3M. Our Sum- mer of Love wiped the town out and nobody wants to come back and rebuild. Who knows, that could be the next Detroit. There are many others. Anyone want an of- fice building in downtown Portland? “What we as box makers need to be very careful of, is our friends in the business and their customers who may have loaded up on capital expansion and now have to re- CONTINUED ON PAGE 26
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finance themselves with very high interest rates. Many of their clients are in the same boat depending on what in- dustry they may be in. “Secondarily to that, is the explosion of industrial real estate. We have seven buildings under our umbrella and a couple of those leases are coming due. We are look- ing at huge rent increases that would scare the wart off a witch’s face. Some undercapitalized businesses will get that shave and it will hurt. Thus, this next year may just be a banner year for people dumping their businesses or falling by the wayside. “I could continue on with the doom and gloom but that isn’t very much like me. I just want all of you reading this mess to understand what ground our economy is on and realize is not very firm. There are still some very good things going on for our Industry. Did I say we are in an election year? We all know Uncle Sam opens up the sad- dle bags and repositions the optics of our shaky terra firma to look like a beautiful green pasture with a meandering river cutting right through it. That will be great for us box makers. “What else is taking place is that our binging from covid and mass buildup of inventory is finally getting balanced. I don’t have the final figures for this Christmas spending season, but I think we spent like drunken pirates and may have balanced a bunch of the inventory that has been sit- ting in warehouses. This means we will begin to see the need for packaging restore itself to a steady level starting anywhere from June to August. “Also, coming from LA LA land, the writer’s strike is over and movies along with the billions of dollars spent on li- censed goods will fire up again thus we will need to build packaging for that segment. Our industry will come around and the next new normal of steadiness will occur in those few months. The chop will drop, and the industry will have some forward guidance through the rest of the year. “I also think what our integrated brothers are doing right now is brilliant. First of all, they are defying Mad Mag- azine and completely reducing the legitimacy of that rag’s reporting to rubble. The idea that Alfred E. Newman can come out and write a definitive piece on paper dropping is simply amazing. Let’s review that one. Just a few bad players who made terrible timed investments in mills in the USA with no demand and no ability to sell their wares are now the ‘market leaders’ and Alfred proposes that our market has been driven down by these imposters is as- tounding to me. Just how much of the total market do they control? I am making things up here because I really don’t know, but maybe if the wind is to their back and they are running downhill, 2-3 percent of the market? “Mad Magazine seems to think more than 90 percent. Thus, again Alfred E. Newman set the market up with a drop and every ding dong came out of the woods look- ing for a decrease in our wares. The groupie followers of Converter Outlook: Part I (CONT’D FROM PAGE 24)
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Mad Magazine failed to realize that we idled or shut down 70 percent matched to the poor investments made in the US. Also, OCC (the furnish for linerboard in a great many mills) has been escalating along with just about everything else. This to me is great news. Once again, the big boys are trying to balance our market in a solid way. So, we will see stabilization of prices and steadiness in demand with inventories coming down. This is good news for all of us in the wonderful world of box. “Another great thing that is happening and has been happening for years is this word sustainability. Our friends across the pond have been signaling to us that produc- ers will be taxed for building packages, if, of course, they are made from earth harmful products, especially plastics. What we see on screen are turtles getting strangled by beverage carriers and giant islands of plastic bottles are smothering our oceans. “Extended Producer Responsibility (EPR) is the next generation of taxes we are about to get hit over the head with. Well, not so fast. In the Peoples Republic of California (one of the nuttiest countries on the planet) our industry was determined immune from these new taxes on single serve packages. This is a great thing for our industry and guess what? Consumers will pay more for environmental- ly friendly products made with environmentally friendly products like the wonderful, corrugated box we all seem to love. “I remember when I was first selling boxes, I would sit in the corner of parties because I didn’t want anyone to find out that I sold boxes. I even changed my business card to Packaging Consultant. Now, I am super proud to be part of the most sustainable industries in the world. Boxes are now sexy! We need to sing this from the highest mountain tops and promote the living hell out of this because first it is true and second what an opportunity. This is finally one of the best times to be in our industry because we rock! We have the best vehicle to motor products through lo- gistics, sell on shelves at retail and online, plus the party is on the inside with our unboxing experience. What a great thing we have going on right now and for the many years to come! “I also see some great strides being made in utilizing new technology in our industry. Things like LLMs and au- tomation with robotics along with the new digital plant and industry 4.0 will be super helpful for our industry as we still are all trying to find skilled people to help our companies to grow and go where no one has gone before. If you are not investing in these areas, you will be toast. “Here is a very hot tip, when industry 4.0 takes root in 3-5 years or sooner, those that are not on this wave of the now (not the future) will have nobody buying from them. 4.0 companies will only buy from 4.0 companies in the very near future and we had better get of our backsides and get with the program. Not only can we not find people Converter Outlook: Part I (CONT’D FROM PAGE 26)
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