BoardConverting Serving the North American Corrugated and Folding Carton Industries for 39 years October 23, 2023 VOL. 39, NO. 43
Forecast 2024: Navigating A Tricky Economic Terrain BY PHILLIP M. PERRY
IP Seeking Tax Incentives To Improve Plant In Indiana Memphis, Tennessee based International Pa- per is seeking tax incentives to make improve- ments to its plant in the city of Crawfordsville, Indiana, the local news has reported. The Crawfordsville facility manufacturers corrugated packaging for various industries including chemicals, pharmaceuticals, food, beverage, and e-commerce. The tax abate- ment of an undisclosed amount would go towards the purchase of new equipment that the company says would boost production. An IP spokeswoman said that the Craw- fordsville plant is an important part of their business and that they are excited to make improvements that will have a positive impact on the community. The investment will help retain 160 jobs though no new jobs are ex- pected to be created. Crawfordsville Mayor Todd Barton said that IP has a long history of success in the community and employment of local workers. IP employs approximately 39,000 workers globally serving customers in North America, Latin America, North Africa, and Europe. Net sales were $21.2 billion in 2022. For more information, visit International- Paper.com .
Fasten your seat belts and enjoy the ride. Like airline travelers bracing for expected turbulence, business owners are preparing for a tricky operating environment in 2024. On the upside, the economy will con- tinue to grow, although at a slower pace. Consumers and businesses are both feeling fairly optimistic, unemployment remains low, capital investments are plugging along at a healthy pace, and the all-important housing market is burgeoning.
Throwing cold water on the good times, though, is a significant downer that no one can control: Higher interest rates established by the Federal Reserve to control inflation are putting a damper on busi- ness activity. Economists are taking note by lowering expectations for the next 12 months. “We expect real GDP to grow 1.4 percent in 2024,” said Bernard Yaros, Jr., Assistant Director and Economist at Moody’s Analytics (econ- omy.com). That’s slower than the 2.1 percent increase expected when 2023 numbers are finally tallied, and below the 2.0 percent-3.0 percent considered emblematic of normal business growth. (Gross Domestic Product, the total value of the nation’s goods and services, is the most commonly accepted measurement of economic growth. “Real” GDP adjusts for inflation.) Slowing commercial activity will affect the bottom line. Moody’s An- alytics expects a decline of 4.5 percent in corporate profits for 2023 CONTINUED ON PAGE 24
WHAT’S INSIDE
6 x x 8 x x 12 x x 26 x x Chicago TAPPI Hosting Corrugated Boot Camp 10 Join The Waiting List For AICC AI Xperience 14 Mike Butler Of Domtar Joins AICC Associate Member Board 16 NAM Reports Record Manufacturing Employment
EVERYTHING CORRUGATED UNDER
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Machinery and Handling for the Corrugated Board Industry
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.
More box makers, brokers and end users are relying on the containerboard pricing in Board Converting News to negotiate their contracts than ever before. See the current prices every week right here on Page 3. The Price is Right!
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
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.
Len Prazych at 518-366-9017 lprazych@nvpublications.com
42# Kraft Liner 26#
Semi-Chem Medium
East West
$9 2 0.00 $ 96 5.00
$9 1 0.00 $9 4 5.00
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AICC To Sponsor Digital Packaging Summit In Ponte Vedra Beach, FL AICC, The Independent Packaging Association, an- nounced it will be a sponsoring partner in the 9th annual Digital Packaging Summit which will host 100 to 110 execu- tives at the Ponte Vedra Inn & Club in Ponte Vedra Beach, Florida on November 13-15. Qualified executives attend the event at no cost (includes travel, hotel and meals, op- tional golf, ensuring a cost-effective experience). The event, organized by Packaging Impressions Mag- azine/NAPCO Media/Printing United Alliance, is an invita- tion-only, hosted event designed for senior managers and business executives. The summit has helped numerous corrugated, label, flexible packaging, and folding carton converters acquire the information they need to assess digital technology options and trends in the market. Some of the topics to be covered include: State of the Industry, Trends and New Developments; How are brand owners/packaging buyers utilizing the capabilities of dig- ital; Brand Owner Panel: Mastering the Art of Package Printing Partnerships; Looking back and forward at rapid innovation in the digital package printing & converting business; and Deep Dives on Corrugated, Folding Car- tons, Label Printing, & Flexible Packaging. For more information, visit www.digitalpackagingsum- mit.com .
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The value of lasting over time.
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Chicago TAPPI To Host Corrugated Boot Camp On November 7 The Chicago TAPPI Local Section has announced its an- nual Board Meeting and first-ever Corrugated Boot Camp on November 7, 2024 at the Oak Brook Marriott in Oak Brook, Illinois. The Boot Camp is four, 45-minute workshops designed for individuals that are new to the corrugated industry, in- cluding new machine operators and printers with minimal experience, as well as individuals who need a refresher on some of today’s equipment. Each session will be repeated four times, allowing attendees to rotate through the ses- sions and interact with the presenters. The workshops will take place from 1:00 p.m. to 5:00 p.m. directly following the Chicago TAPPI annual Board
Meeting (10:00 a.m. to noon). Each of the four workshops (Corrugating Rolls/Splicers, Starch and Bonding/Print Plates and Ink Control/Cutting Dies and Anvil Care) focus- es on a specific part of production. Visit tappi.org/chicag- otappi for topics covered in each session. A tabletop exhibit and reception is also planned from 5:00 p.m. to 6:00 p.m., followed by dinner and a “Trouble- shooting Session and Q&A” presentation with the work- shop hosts from 6:00 p.m. to 7:00 p.m. Registration is $25 to attend the Boot Camp and an ad- ditional $75 to attend the dinner and troubleshooting ses- sion. Those who attend both the workshops and evening program will be entered to win the TVs used during the workshop presentations. Exhibitor registration is $150. Tabletop exhibits and sponsorship opportunities are also available through the registration portal.
For more information about the Boot Camp or to register, visit tappi.org/chicag- otappi . Contact Scott Burless, sburless@ standfastgroup.com or (224) 325-9293 with additional questions. Comment Period For OT Rule Ends November 7 AICC, The Independent Packaging Associ- ation, has announced that the US Depart- ment of Labor has denied its requests to extend the comment period for the pro- posed changes to the overtime pay rule. As a result, comments must be submitted by November 7. AICC expects to circulate the Partner- ship to Protect Workplace Opportunity (PPWO) comments for sign-ons by October 30. Contact Josh Ulman, Ulman Public Pol- icy at josh@ulmanpolicy.com if you have any survey results or data you can share that might be helpful to include in AICC’s comments. Also, if you have not sent a sur- vey to your members yet, but would like to do so, email Ulman to request a model survey. The grassroots portal at protectingop- portunity.org allows you to send model comments directly to DOL as well as a model letter to your Senators and Repre- sentative in Congress. PPWO drafted a model grassroots alert for you to send to your members encour- aging them to use the grassroots portal at protectingopportunity.org. The alert edu- cates members about the issue with the proposed rule and directs them to the por- tal to submit their comments and letters.
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Fibre Box Association 2024 Statistical Bulletin Now Available The Fibre Box Association’s (FBA) “2024 Statistical Bulle- tin” is now available on the FBA store at 2024 Statistical Bulletin – Fibre Box Association. All orders must be ordered and paid for online. Your purchase will only be processed once you’ve read and acknowledged that you have reviewed and accepted the terms and conditions. Your purchase receipt will also contain a link to the Terms and Conditions. The bulletin is a summary of U.S. corrugated industry monthly shipments (actual and average week) and con- tainerboard (consumption and inventory), reported on a quarterly basis. Purchase also includes access to the 2023 Industry Annual Report, and the Corrugated Plant Directory in the January and July bulletins. Due to copyright issues, the report may not be for- warded to any person other than the intended user. Ad- ditional copies must be purchased by each individual. Reports are prohibited. The report costs $4,000 but is free to FBA members at fibrebox.myshopify.com. For more information, call (847) 364-9617 or email pla- cy@fibrebox.org.
Box Shipments ( U.S. Corrugated Product Shipments) Industry Shipments In Billions of Square Feet Month June 2023
Year
Actual
Percent Change Avg Week Percent Change
2023 2022
33.006 34.817
-5.2
7.501 7.913
-5.2
Industry Total
Year-to Date
June 2023
Year
Actual
Percent Change Avg Week Percent Change
2023 2022
189.149 206.082
-8.2
7.447 8.113
-8.2
Industry Total
Containerboard Consumption (Thousands of Tons)
Year
Month
Percent Change Year-to-Date Percent Change
2023 2022
2.7037 2.8541
-5.3
15.5017 16.9061
-8.3
Container Board Inventory - Corrugator Plants (Thousands of Tons)
Corrugator Plants Only
Date
Percent Change Weeks of Supply
Percent Change
June May
2.2422 2.3221
-3.4
3.6 3.9
-7.7
Shipping Days
Year
Month
Year-to-Date
2023 2022
22 22
127 127
SOURCE: Fibre Box Association
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AICC Announces AI Xperience In Chicago, Illinois
Learn From Experts & Innovators Gain invaluable insights from industry leaders, vision- aries, and AI experts who are transforming the packaging manufacturing landscape. Be at the forefront of the latest advancements, strate- gies, and breakthroughs that AI can enable. Explore AI Applications Discover how AI can more. Hear real-life success stories and explore practical applications what can drive efficiency, cost savings, and product innovation in your organization. To join the waiting list, visit aiccxperience.com . Book your room at the Hyatt Rosemont at hyatt.com using the group code: G-AI24. The Hyatt Rosemont is located at 6350 N. River Road just walking distance from the Rivers Casino which offers world-class gaming, dining options, and live performance venues. Golf courses close to the Rosemont hotel include White Pines, Indian Boundary, Lake Park Golf Course & Marina and other scenic facilities. Also five minutes away are the Fashion Outlets of Chi- cago which offers a wide selection of designer stores, vi- sual art installations, and artisan restaurants. reshape packaging de- sign, quality control, sup- ply chain optimization, in- telligent automation, and
AICC, The Independent Packaging Association, announc- es the AI Xperience event has been set for May 14-16, 2024 in Chicago, Illinois, and encourages its members to join the waiting list for this thought-provoking event.
Embrace The Power Of AI Are you ready to revolutionize the way you create and manufacture packaging for your customer’s products? The AI Xperience is dedicated to exploring the potential of arti- ficial intelligence in the packaging manufacturing industry.
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ISRI Launches New Fiber Recycling Readiness Tool To Help Increase Recycling In The US ISRI, the Voice of the Recycled Materials Industry, has launched a new tool to help recycle more packaging in the United States. The new Fiber Recycling Readiness Tool is a research-based online resource developed by ISRI that assesses the compatibility of typical con- sumer fiber-based packaging used every day with the U.S. residential re- cycling system. As one of the most widely recycled materials in the world, fiber-based packaging recycling recovers fiber used to manufacture other paper prod- ucts while producing jobs and protecting the environment.
“Retail shelves across the country are filled with a growing number of fiber-based packaging like paper, paperboard, and corrugated boxes. IS- RI’s new tool will provide brands, packaging developers and other stake- holders with clear guidance on whether their packaging will successfully pass through the current recycling infrastructure,” said ISRI President Rob- in Wiener. “This tool is a great advancement for the recycled materials industry.” The tool is based on industry expert knowledge, including a compre- hensive ISRI-commissioned Moore & Associates study on the current Material Recovery Facility (MRF) and paper mill infrastructure across the United States. Currently, many brands test their packages’ recyclability by running tests at MRFs and universities specializing in fiber recycling. This tool represents a major advancement in that it captures the package de- sign, processing and end use in one resource. “This is an exciting time for the fiber industry. This Tool can help brands use Design for Recycling principles for creating fiber-based packaging that can flow through the current recycling infrastructure. This can decrease contamination at the MRF and increase the quality of the bale being sent to the consuming mills,” said Leonard Zeid, Chair of the ISRI Fiber Recy- cling Readiness Tool and also Executive VP Brokerage and Marketing at Midland Davis Corp. “I want to thank our ISRI members and staff and the ISRI Brands Leader- ship Council that participated in creating this valuable recycling resource.” The online resource automatically scores each criterion and shares a simple, color-coded result will determine whether the packaging meets the criteria (green), has challenges that require modifications (yellow), or does not meet the criteria (red). The tool also provides individualized feed- back on design choices that could improve the package’s recyclability. For more information, visit isrifibertool.org .
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Domtar Packaging Business Leader Joins AICC Associate Member Board AICC, The Independent Packaging Association, recently elected Mike Butler to a four-year term on its Associate Member Board. Butler, who serves as Senior Director, Fi- ber Sourcing fo Domtar's packaging business, will contrib- ute to the organization’s advocacy in the industry.
He works closely with internal and external partners to ensure the optimal quality, quantity and cost of fiber sup- ply, as well as the development and retention of a loyal and diverse customer base. Butler brings nearly 30 years of experience in the con- tainerboard industry to his role on the board. With a strong background in strategy, supply chain management and procurement, this packaging business leader is passionate about transforming fiber into useful and sustainable prod- ucts that meet customers’ needs. “It’s a great honor to be selected to serve on the AICC’s Associate Member Board,” he says. “I look forward to working with my fellow members to advocate for the independent corrugated converters’ suc- cess.” Butler began his career in the industry in 1998 as the vice president of sales and marketing for Smurfit Stone Containerboard Corporation (now WestRock) and has held roles of increasing responsibility since. His contacts in the packaging business make him an ideal fit to support AICC’s rich history of supporting inde- pendent corrugated converters. “We all play an important role in AICC,” Butler says. “As a new board member, it is critical that we, as suppli- ers, understand what independent corrugated converters need from us to make them successful. The logic is simple: If you’re successful, then we’re successful!” For more information, visit domtar.com.
AICC represents and protects the business interests of its members in the independent sector of the corru- gated, folding carton and rigid box industries. The organization will celebrate its
Mike Butler
50th year in 2024, during which Butler and his fellow offi- cers will highlight independent converters’ entrepreneur- ship and agility. “There are no overnight success stories in the box busi- ness,” says incoming AICC board chair Matt Davis. “It takes years of hard work, and we are going to cele- brate our members and their accomplishments at our 50th anniversary of the AICC in 2024.” Butler leads Domtar packaging’s sales and fiber sourc- ing efforts for the Kingsport Mill, Domtar's first container- board facility, which will produce about 600,000 tons of 100 percent recycled kraft liner and medium annually.
We’ve got our customers covered… …with our fiberglass backed, boltless, full double-wide blankets and an extensive inventory of corrugated parts needed by virtually every box plant in the country. The innovator of the original fiberglass-backed knuckle locking anvil cover, Stafford is the industry’s go-to source for everything corrugated. TM
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NAM Report: Manufacturing Employment Exceeds 13 Million The National Association of Manufacturers has released its Monday Economic report indicating that manufactur- ing employment exceeds 13 million for the first time since 2008. Manufacturing employment rose by 17,000 in Septem- ber, extending the gain of 11,000 in August and the fast- est monthly increase since October 2022. Manufactur- ing growth has been more sluggish this year, adding just 37,000 workers through the first three quarters of 2023. More importantly, there were 13,011,000 manufacturing workers in September, the most since November 2008. As such, total manufacturing employment has remained resilient despite a challenging economic environment in the sector. Nonfarm payroll employment rose by a strong 336,000 in September, with the U.S. economy adding 2,339,000 workers year to date. The unemployment rate was un- changed at 3.8 percent in September, and the labor force participation rate remained 62.8 percent. Meanwhile, there were 616,000 manufacturing job openings in August, with postings remaining well above pre-pandemic levels despite cooling over the past year. In the larger economy, there were 9,610,000 job openings in CONTINUED ON PAGE 18
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eight months of 2023, factory orders excluding transpor- tation have increased 1.0 per cent, with activity trending higher over the summer months. Likewise, new orders for core capital goods — a proxy for capital spending in the U.S. economy — rose 0.9 per cent to a record $73.95 billion in August, with 0.4 percent growth year-over-year and 1.3 percent growth year to date. Private manufacturing construction rose 1.2 percent to $197.95 billion in August. This was just shy of the record high in May, which was $199.73 billion. Private construction in the sector has trended sharply higher since bottoming out at $72.71 billion in September 2000. Over the past 12 months, activity has risen a whopping 65.9 percent. The U.S. trade deficit decreased to $58.30 billion in August, the lowest since June 2020, with goods exports rising and goods imports declining. In addition, the ser- vice-sector trade surplus rose to $26.17 billion, the highest since March 2018. Earlier this month, there was a lot of focus on inflation- ary trends, with updates on consumer and producer pric- es. Financial markets have been keenly following these data. Yields on 10-year Treasury bills rose to rates not seen since 2007, and 30-year fixed-rate mortgages were at the highest rates since 2000 last week. In many ways, the bond market is doing the job of the Federal Reserve. As such, the next Federal Open Market Committee meeting, which is Oct. 31-Nov. 1, will need to digest divergent trends in the economy.
August. For every 1.5 job openings in the economy, there was essentially just one unemployed worker. While manufacturers continued to remain challenged overall, with activity contracting for the 11th straight month, there were also encouraging signs of stabilization in the latest ISM Manufacturing Purchasing Managers’ Index. The headline index rose for the third consecutive month from 47.6 in August to 49.0 in September, the highest reading since August 2022.
After dropping by 2.1 percent in July, new orders for manufactured goods rebounded somewhat, increasing 1.2 percent in August. Excluding transportation equipment, new factory orders jumped 1.4 percent, expanding for the third straight month to a new record high. Through the first
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International PaperBox Invests In Koenig & Bauer Rapida Press Salt Lake City, Utah based International PaperBox CEO Wade Holbrook announced the firm’s new Koenig & Bauer Rapida 106 seven-color UV press to his customer base, demonstrating his commitment to create the highest qual- ity, most vivid and eye-catching packages. “Since our new Koenig & Bauer press was installed, it has been operating at an astounding level,” says Holbrook, who owns the 50-employee Utah business along with his wife, Kay. “Our customers have a much higher standard for quality than what was accepted five years ago. As a business, you have to invest in equipment with the latest most impactful cutting-edge technology that provides the best quality and speed. Otherwise, customers will turn to
From left, Jim Johnson, prepress/CAD manager; Lee Burning- ham, prepress technician; Brian Carter-Smith, prepress tech- nician; Jeff Hauser, first pressman; Ben Zaring, production manager; Chris Anderson, first pressman; Kay Holbrook, CFO; and Wade Holbrook, owner.
another printer who will. We’re proud to showcase our new Koenig & Bauer press equipped with a variety of unique automat- ed features that make our customer’s print vision a reality.” With the firm’s customer base that seek unique and difficult jobs often with vibrant colors and intricate details that incorporate printing, folding, and gluing applications, International PaperBox relies on the speed and efficiency of the new press as well as its new digital quality control features such as the Koenig & Bauer QualiTronic PDF- Check. This system inspects each sheet, compares it to a PDF, and alerts press op- erators to the differences. Holbrook says this vital new feature is saving them time and money. To maintain and expedite its color con- trol process, the firm relies on the Rapida’s automatic QualiTronic ColorControl sys- tem. Its camera system takes automatic measurements of every single sheet after the coating unit and then adjusts color every tenth sheet, which ensures consis- tent color throughout the entire run. Press operators are delighted with the ability to control color inline and in real time. Hol- brook said it has improved the firm’s color consistency immensely. For customers who seek specialty coat- ing applications and stand-out packages, International PaperBox trusts its Koenig & Bauer VariDRY UV system. The firm uses UV in all of its inks, says Holbrook, and has made a positive impact on the firm’s cus- tomers. “Since the installation of the new press, CONTINUED ON PAGE 22
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Koenig & Bauer Celmacch’s expertise with converters have enabled us to develop machines for you with the highest technological standards in the industry. This supports maximum reliability, quality and flexibility. Our range of products meet different investment strategies and productivity requirements, ranging from entry-level models to machines that are equipped with the highest levels of automation, sophistication and the highest throughput.
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we have several new projects inhouse,” says Holbrook. “We’ll be able to efficiently produce them all due to the new press’s capabilities. It has been a game changer for us.” Young Shin USA Announces Corporate Organization Changes Following 15 years of successful leadership at Schaum- burg, Illinois based Young Shin USA, Kyong Taik Lee, President of Young Shin Industries of South Korea, has announced the retirement of Phillip Mack, Vice President. Mack will maintain an advisory position with Young Shin USA until December 31, facilitating the transition of the firm to new leadership. Lee has appointed Young Shin USA’s Vice President of Technical Services, Ed Cowgill, as Vice President to suc- ceed Mack in the overall operation of the firm. International PaperBox Invests (CONT’D FROM PAGE 20)
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Phillip Mack
Ed Cowgill
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“We have an enormous sales momentum and a highly experienced service team that will form the foundation of our future growth and expansion,” Cowgill said. “With the expanded role of industry-veteran, Mark Caffary as Vice President of Sales, we will be actively pursuing new and existing sales opportunities for the corrugated and folding carton markets.” “Throughout Phil’s tenure with Young Shin USA, he has made significant contributions in directing our continued success and expansion into the U.S. and North American markets,” said Lee. “Since the establishment of the Young Shin organiza- tion in North America in 2008, he developed a trademark of excellence in sales opportunities and operational ex- pertise. He was integral in our firm’s long-term strategy, operations, and visibility within the corrugated and folding carton industries.” “I have been fortunate to have established and led Young Shin USA’s growth and expansion in the market- place throughout the past 15 years. We have leveraged our sales opportunities and introduced a comprehensive, premier flatbed die cutter line to the market. Our repre- sentation of German-based Stock Maschinenbau products also augmented Young Shin’s superior die cutter products with Stock’s globally recognized excellence,” Mack said. The transition will include the continuance of the firm’s North American headquarters in Schaumburg, Illinois.
matches between the components that must work in tandem on your exo 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 ll your most demanding orders by pairing your team with The ARChitects of Flexo. Contact ARC today to learn how these engineered matches of exo folder gluer and die-cutter components (new or
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Forecast 2024 (CONT’D FROM PAGE 1)
slowly than previously anticipated because of persistent inflation and ongoing labor market tightness. Cuts of about 25 basis points per quarter are expected over the next few years until the Federal Funds Rate reaches 2.75 percent by the fourth quarter of 2026 and 2.5 percent in 2027. Feeling Good The public mood is a strong driver of the economy. And here the news is good. “Consumer confidence has been trending higher, and I think prospects are good for it to improve next year,” said Scott Hoyt, Senior Director of Consumer Economics for Moody’s Analytics ( economy. com ). “Things should normalize as the economy continues to grow and gas prices stabilize.” One major driver of consumer confidence is a healthy job market. “The unemployment rate has been very low, bouncing around between 3.5 percent and 3.8 percent for some time,” said Hoyt. A slowdown in job growth orches- trated by the Federal Reserve’s interest rate hikes should moderate things. “We think unemployment will trend up- ward a bit, ending 2023 around 3.9 percent and 2024 around 4.2 percent.” (Many economists peg an unemploy- ment rate of 3.5 percent to 4.5 percent as the “sweet spot” that balances the risks of wage escalation and economic recession.) Low unemployment may fuel happy sentiments among citizens, but it presents employers with two practical chal- lenges. The first is the need to raise wages to attract suffi-
and forecasts only a modest recovery of 0.3% in 2024. Battling Inflation Reports from the field confirm the economists’ readings. “Our members are experiencing a business slowdown, due largely to the effect of increasing interest rates,” said Tom Palisin, Executive Director of The Manufacturers' As- sociation, a York, Pennsylvania based regional employers' group with more than 370 member companies (mascpa. org). While businesses understand the need for higher interest rates, they nevertheless hope for early relief. “If inflation does not continue to drop, interest rates will have to be increased further, which will be a big problem,” said Palisin. So are the Federal Reserve’s efforts paying off? There’s some good news here, as well as a sunny fore- cast. Moody’s Analytics expects year-over-year consumer price inflation to average 3.2 percent when 2023 numbers are finally tallied, down from over 6 percent a year ear- lier. Moreover, the number should continue to drop until it reaches the Fed’s target rate of 2 percent late in 2024. (These figures represent the “core personal consumption expenditure deflator (PCED),” which strips out food and energy prices and is the Federal Reserve’s preferred mea- sure of inflation). Indeed, Moody’s Analytics believes the Fed will start to lower interest rates around June of 2024, although more
CONTINUED ON PAGE 26
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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Forecast 2024 (CONT’D FROM PAGE 24)
ing.com ). “While we still have more job openings than un- employed people, the margin is not as large, and we don’t have all the quiet quitting that we had before.” While employers never like having to raise wages, put- ting a cap on paychecks has taken a back seat to a more urgent concern: keeping valuable talent from jumping ship. “The big question now is not so much who can pay the most for entry-level and skilled jobs, but what can they do to retain these folks within their companies,” said Palisin. “Manufacturing in the US over the last year has continued to hire pretty significantly, and we’re not seeing a lot of lay- offs, so that tells you that companies are hoarding talent.” Employers are fine tooling their operations in the areas of workplace flexibility, benefits, and culture changes. Housing Markets Given the generally upbeat consumer sentiment, pros- pects are good for the housing sector, an important driver of the overall economy. “New home sales are running at the top end of the range set in the decade preceding the pandemic,” said Yaros. “One reason is that a lack of existing inventory is pushing buyers to consider new homes. The construction industry is stepping in to close the gap, and housing starts have exceeded expectations.” The construction of new homes is being fueled by a cold hard fact: There aren’t enough existing homes to meet demand. “The 3.1 months’ supply of existing homes
cient workers. “Wage and salary income growth has been strong, fueled by a tight labor market,” said Hoyt. “We're expecting it to increase just a shade over 5 percent both for 2023 and 2024.” In 2022 the growth was a little over 8 percent. Reinforcing the estimates of the economists, Palisin said his members have had to hike their compensation to remain competitive among themselves and other econom- ic sectors. The group’s entry level hourly wages increased an eye-popping 8% to 10% in both 2022 and 2023, far higher than the historic average of 2.5 percent to 3.0 per- cent. Problem No. 2 is a scarcity of workers. Inability to hire enough people—particularly of the skilled variety—can affect the bottom line. Two problems contributing to a labor shortage are the retirement of baby boomers and a post-pandemic reordering many people are making of their life goals. “Demographic structural changes in the US mean we just don’t have, in many cases, the number of workers needed in manufacturing to meet demand,” said Palisin. “That's not going to change.” The situation has become a bit nuanced as the recent economic deceleration resulted in a hiring slowdown. “The labor market is still tight, but it’s not as bad as it was a couple of years ago,” said Bill Conerly, Principal of his own consulting firm in Lake Oswego, Oregon ( conerlyconsult-
CONTINUED ON PAGE 28
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Forecast 2024 (CONT’D FROM PAGE 26)
any dramatic adjustments to their operations, in marked contrast to their cautious attitude of a year earlier. “While our members have moderated their expecta- tions for the future, they are still feeling slightly positive,” said Palisin. “One reason is that we seem to have avoided the recession that many were predicting.” Moody’s Analyt- ics believes that the nation will avoid a recession in 2024, attributing its forecast of a soft landing to resilience in la- bor markets and consumer confidence. Another driver of optimism is a recent brightening of the supply chain picture. “There has definitely been a shift in the awareness of the risks of doing business in China,” said Palisin. “This has resulted in a reorganizing of supply chains into nations such as Vietnam, Philippines, India, Mexico and the U.S. The jury is still out as to what nations will benefit most.” Indeed, many businesses are taking action on their good feelings. “The commercial sector looks very strong to me,” said Conerly. “Given the current level of interest rates, I’ve been surprised to see the healthy level of capital spending.” Conerly said that manufacturing facilities seem to be the biggest gainers in non-residential construction, with new semiconductor facilities especially benefitting from the CHIPS Act. Suburban office construction has been doing surpris- ingly well, despite vacancy rates in urban centers. So have
remains well below the four to six months of inventory that is considered a balanced housing market,” noted Yaros. Strong demand caused a 10.3 percent increase in the me- dian price for existing homes in 2022, and a 0.6 percent increase in 2023. A correction of 1.1 percent is expected in 2024. For an explanation of the scarcity, look no further than the run-up in mortgage rates. The ultra-low interest rates of existing mortgages amount to a strong financial incen- tive for existing homeowners to stay put. “Current homeowners had refinanced their investments at 3 percent or 4 percent,” noted Conerly. “Replacing what they had with better homes would require walking away from those mortgages to take on new ones at 7 percent. I think we’ll see this trend continue for another year, but I think we'll also see a lot of strength in remodeling, and that will be financed probably with home equity lending or High interest rates, an inflationary environment, and rising worker wages: a trilogy of challenges that in normal times would dampen business confidence. And there are other threats to corporate well-being, such as high energy costs resulting from the Russia-Ukraine war and an appre- ciation in the U.S. dollar that hampers export activity. Despite all this, companies don’t seem to be planning second mortgages.” Business Confidence
CONTINUED ON PAGE 30
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Forecast 2024 (CONT’D FROM PAGE 28)
Board Converting NEWS INTERNET DIRECTORY
suburban neighborhood strip centers, which had been ne- glected for too long because of fears that Amazon would capture all of the retail business. Conerly identifies three forces propping up equipment purchases. The first is the CHIPS Act and the construction of semiconductor facilities. The second is the automation being installed by companies nervous about being able to hire people. And the third is the trend toward reshoring by companies that are trying to shorten their supply chains. Businesses looking to borrow funds to fuel capital in- vestments, though, had best prepare for a tougher nego- tiating environment. “The banking sector is in retrenchment and lenders are becoming more risk averse,” said Anirban Basu, Chairman and CEO of Sage Policy Group (sagepolicy.com). “As a result, developers are having more difficulty lin- ing up financing.” Fueling the concern among financial institutions is a recent spate of loan delinquencies and bankruptcies. Banks are looking at their portfolios and seeing where they can tighten up. Companies holding inexpensive pre-pandemic loans will see an earnings hit when they need to refinance at six or seven percent. Keeping Watch In the opening months of 2024, economists are advis- ing businesses to keep an eye on some key statistics to get an idea of how the year will turn out. Among them: • Inflation. “If progress in core disinflation stalls out, that would likely mean the Fed will keep interest rates at their current level for longer than we are currently as- suming,” said Yaros. • Employment. “Total employment in the country is a good measure of current conditions,” said Conerly. “And any increase in initial claims for unemployment insurance could foreshadow a slowdown.” • The yield curve. “A reversion in which short term inter- est rates exceed long term ones could foreshadow a coming economic slowdown,” said Conerly. Whatever the condition of the tea leaves, businesses in general will encounter a tougher operating environment in 2024, characterized by a need to finesse a tight labor market and reluctant lenders. “In the coming year we will face uncertainty about in- flation and interest rates, shortages of labor, higher ener- gy costs, a slowdown in China’s economy, and recurring threats of a federal government shutdown,” said Palisin. “There are a lot of spinning plates in the air, and some of them may fall and crack.”
ADVANTZWARE www.advantzware.com
Advantzware provides a comprehensive system to address the business management needs of the independent box business, as well as the ERP requirements of full scale pack- aging plants and integrated companies. With modules for estimating, scheduling, production, inventory and account- ing, this scalable system supports companies that produce corrugated boxes, folding cartons, point of purchase dis- plays, assembled partitions, and paperboard products. AIR CONVEYING CORPORATION www.accfilter.com Air Conveying Corporation is a leader in the industry of Pneumatic Conveying Systems and has been in business since 1968. As an equipment manufacturer rather than sim- ply a sales organization, we have complete control over the quality of material and products which make up your pro- posed system. Our equipment is found in printing, folding carton and corrugated plants throughout the world. We've been designing, manufacturing and engineering pneumatic conveying systems since 1984. We partner with our customers to ensure they operate efficiently and guar- antee our systems meet or exceed their specifications. ASDI specializes in full pull-through systems trim separators, and NFPA compliant systems with full electronic controls. AMTECH SOFTWARE www.amtechsoftware.com AIR SYSTEMS DESIGN, INC. www.airsystemsdesign.com Amtech offers the industry’s most innovative and com- prehensive corrugated and packaging ERP, integrated scheduling software, and engineered automation technol- ogy. For over 30 years, Amtech has kept our customers competitive in an ever-changing economy with customer digital storefronts and workflows, business intelligence, automated scheduling for corrugators, converting and shipping, proactive roll stock and inventory management. APEX INTERNATIONAL www.apexinternational.com World’s largest Anilox and Glue & Metering roll manufac- turer, providing the widest selection of corrugated engrav- ings and complementary services. Anilox engraving options available from our North American manufacturing facility include elongated 75°, 60°, 45°, plus Apex’s patented GTT technology. Glue rolls are produced with Hardened Stain- less Steel and a max TIR of 10 µ for Single, Double Facers.
ALBANY INTERNATIONAL www.albint.com
Phillip Perry is an award-winning freelance writer and a regular con- tributor to Board Converting News. His byline has appeared over 3,000 times in the nation's business press. Reach him at https://www.linkedin. com/in/phillipmperry/.
Albany International has a corrugator belt for every appli- cation. Our reputation for durable performance is the trade- mark of the most dependable belts in service today.
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