Vertical Integration (CONT’D FROM PAGE 16)
The Perfect Combo Get Peak Performance From Your Equipment with Matched Component Sets
integrated companies. These paper manufacturers sell a variety of related paper products, such as building and construction materials, flexible and corrugated packaging products, tissue, toilet and paper towels, paper bags, rig- id plastic packaging, folding cartons, etc. In other words, horizontal integration means the merging of different busi- nesses and products owned by same owners. Questions: • As costly complex digital technology for the paper in- dustry is accelerating, will the mills purchase it or out- source or grow with M&A adaptation? • In customizing AI systems of communication and anal- ysis, are mills setting up bureaucratic employees for failure? Will their unions resist these changes? • Will each of the integrated subsidiaries (or indepen- dent by controlled plants) with their various cultures have important shared values? • When the need for debt or equity financing arrives, will integrated organizations do more outsourcing as tech company role models Amazon or Google? Consid- er the automobile industry. They keep shedding their inefficient vertical integration. Their average “made in the U.S.A.” car parts is less than 50 percent. Why? It’s outsourced much of vertical integration. Of all the types of integration of businesses, such as paper mills, private equity companies, venture capital firms (VC) big tech conglomerates, etc., vertical integration is today the most difficult structure to maintain in extract- ing high values. The paper industry was a suitable integra- tion example before the mini mills using OCC. Main Integration Obstacles: 1. Capital intense to operate and achieve a high ROI. 2. Fast changing technology, such as AI, robots, ma- chine learning, analytics, etc. 3. Growth of niche markets, reducing long-run com- modity orders for mills, more complex variable is value added orders requiring more than low prices. 4. Savvy global competitors with low-cost production and trading resulting in consolidation of markets. Yet, the foundation of trade is mutual gain. 5. Increase in costly government regulations that were based on the concept of “natural monopoly.” Of course, vertical integration is an important competi- tion differentiation factor as mill operations are more con- cerned with capacity utilization than consistent “On Time with Quality, no Excuses,” (the CalBox motto). Besides, in- tegrated mills sell or subsidize their converting plants and competitors by trading or transferring containerboard rolls Integration strategies based on high fixed, low margin cost structure support a mill’s capabilities with specializa- tion to gain market share. But big mill integration has been a mixed blessing. New markets often come with dead nos- using artificial prices. Integration Analysis
Nothing’s more rewarding than a couple made for each other.
That’s why the engineers at ARC International have focused their skills and talents on crafting perfect matches between the components that must work in tandem on your flexo folder gluers and die-cutters: • Anilox Rollers and Ink Chambers • Anilox and Wiper Rollers • Feed and Pull Rollers • Glue and Meter Rollers You can achieve the press speeds and print quality you need to fill your most demanding orders by pairing your team with The ARChitects of Flexo . Contact ARC today to learn how these engineered matches of flexo folder gluer and die-cutter components (new or reconditioned) can help you achieve a more perfect union of production and profits.
The ARChitects of Flexo
SINCE 1984
ARCInternational.com 800-526-4569
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April 8, 2024
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