March/ April 2020 BoxScore: Ahead of the Curve by AICC, The Independent Packaging Association

A PUBLICATION OF AICC, THE INDEPENDENT PACKAGING ASSOCIATION

March/April 2020 Volume 24, No. 2

AHEAD OF THE CURVE

As consumer expectations evolve and technology advances, boxmakers must be on the front lines of innovation

ALSO INSIDE Eat, Drink, Grow Stepping Up and Standing Out

TABLE OF CONTENTS March/April 2020 • Volume 24, No. 2

COLUMNS

AHEAD OF THE CURVE 38 FEATURES

AHEAD OF THE CURVE As consumer expectations evolve and technology advances, boxmakers must be on the front lines of innovation

EAT, DRINK, GROW

Exploring opportunities in food and beverage packaging

STEPPING UP AND STANDING OUT South of the U.S. border, Mexican boxmakers are seeing results—with some help from their Association

BoxScore is published bimonthly by AICC, The Independent Packaging Association, PO Box 25708, Alexandria, VA 22313, USA. Rates for reprints and permissions of articles printed are available upon request. The statements and opinions expressed herein are those of the individual authors and do not necessarily represent the views of AICC. The publisher reserves the right to accept or reject any editorial or advertising matter at its discretion. The publisher is not responsible for claims made by advertisers. POSTMASTER: Send change of address to BoxScore, AICC, PO Box 25708, Alexandria, VA 22313, USA. ©2020 AICC. All rights reserved.

CHAIRMAN’S MESSAGE

SCORING BOXES

LEGISLATIVE REPORT

ASK RALPH

ASK TOM

SELLING TODAY

TACKLING TRENDS

ANDRAGOGY

LEADERSHIP

DESIGN SPACE

THE ASSOCIATE ADVANTAGE

WHAT THE TECH?

STRENGTH IN NUMBERS

THE FINAL SCORE

DEPARTMENTS

WELCOME, NEW & RETURNING MEMBERS

AICC INNOVATION

MEMBER PROFILE

ICPF UPDATE

Visit www.aiccboxscore.org for Member News and even more great columns. Scan the QR code to check them out! BOXSCORE www.aiccbox.org

OFFICERS Chairman: Jay Carman, StandFast Packaging Group, Carol Stream, Illinois First Vice Chairman: Gene Marino, Rusken Packaging Inc., Cullman, Alabama Vice Chairmen: Jana Harris, Harris Packaging/American Carton, Haltom City, Texas Matt Davis, Packaging Express, Colorado Springs, Colorado Gary Brewer, Package Crafters, High Point, North Carolina Immediate Past Chairman: Joseph M. Palmeri, Jamestown Container Cos., Macedonia, Ohio Chairman, Past Chairmen’s Council: Al Hoodwin, Michigan City Paper Box, Michigan City, Indiana President: Michael D’Angelo, AICC Headquarters, Alexandria, Virginia Secretary/General Counsel: David P. Goch, Webster, Chamberlain & Bean, Washington, DC Counsel Emeritus: Paul H. Vishny, Esq., Chicago, Illinois AICC Canada Director: Rene Annis DIRECTORS West: David DeLine, DeLine Box Co., Denver, Colorado Southwest: Eric Elgin, Oklahoma Interpack, Muscogee, Oklahoma Southeast: Ben DeSollar, Sumter Packaging Corp., Sumter, South Carolina Midwest: Casey Shaw, Batavia Container Inc., Batavia, Illinois Great Lakes: Mike Schaefer,Tavens Packaging & Display, Bedford Heights, Ohio Northeast: Stuart Fenkel, McLean Packaging, Pennsauken, NJ AICC Canada: Terri-Lynn Levesque, Royal Containers Ltd., Brampton, Ontario, Canada AICC México: Pedro Aguirre Martinez, Tecnología de Cartón, Querétaro, México OVERSEAS DIRECTOR Kim Nelson, Royal Containers Ltd., Brampton, Ontario, Canada

DIRECTORS AT LARGE Finn MacDonald, Independent II, Louisville, Kentucky Guy Ockerlund, OxBox, Addison, Illinois Kevin Ausburn, SMC Packaging Group, Springfield, Missouri Nelva Walz, Elegant Packaging, Cicero, Illinois EMERGING LEADER DELEGATES Daniel Brettschneider, CST Systems, Kennesaw, Georgia Cassi Malone, Corrugated Supplies Co., LLC, Chicago, Illinois ASSOCIATE MEMBER DIRECTORS Chairman: Pat Szany, American Corrugated Machine Corp., Indian Trail, North Carolina Vice Chairman: Joseph Morelli, Huston Patterson Printers, Decatur, Illinois Secretary: Greg Jones, Sun Automation, Glen Arm, Maryland Associate Board Director: Tim Connell, A.G. Stacker Inc., Weyers Cave, Virginia Immediate Past Chairman, Associate Members: David Burgess, JB Machinery, Weston, Connecticut ADVISORS TO THE CHAIRMAN Greg Tucker, Bay Cities, Pico Rivera, California Jerry Frisch, Wasatch Container, North Salt Lake, Utah Pat Szany, American Corrugated Machine Corp., Indian Trail, North Carolina PUBLICATION STAFF Publisher: Michael D'Angelo, mdangelo@aiccbox.org Editor: Virginia Humphrey, vhumphrey@aiccbox.org

SUBMIT EDITORIAL IDEAS, NEWS & LETTERS TO: BoxScore@theYGSgroup.com CONTRIBUTORS Maria Frustaci, Director of Administration and Director of Latin America Cindy Huber, Director of Conventions & Meetings Chelsea May, Education and Training Manager Laura Mihalick, Senior Meeting Manager Patrick Moore, Member Relations Coordinator Taryn Pyle, Director of Training, Education & Professional Development Alyce Ryan, Marketing Manager Steve Young, Ambassador-at-Large Richard M. Flaherty, President, ICPF ADVERTISING Information: Virginia Humphrey, vhumphrey@aiccbox.org Opportunities: Taryn Pyle 703-535-1391 • tpyle@aiccbox.org AICC PO Box 25708 Alexandria, VA 22313 Phone 703-836-2422 Toll-free 877-836-2422 Fax 703-836-2795 www.aiccbox.org

EDITORIAL/DESIGN SERVICES The YGS Group • www.theYGSgroup.com Vice President: Serena L. Spiezio Content & Copy Director: Craig Lauer Managing Editor: Jessica Price Senior Managing Editor: Sam Hoffmeister Copy Editor: Steve Kennedy Art Director: Kurt Halvorsen Account Manager: Robin Lownsbery

ABOUT AICC PROVIDING BOXMAKERS WITH THE KNOWLEDGE NEEDED TO THRIVE IN THE PAPER PACKAGING INDUSTRY SINCE 1974 We are a growing membership association that serves independent corrugated, folding carton, and rigid box manufacturers and suppliers with education and information in print, in person, and online. AICC membership is for the full company and employees at all locations have access to member benefits. AICC offers free online education to all members to help the individual maximize their potential and the member company maximize its profit.

WHEN YOU INVEST AND ENGAGE, AICC DELIVERS SUCCESS.

Chairman’s Message

Helping You Build Your Dynasty

t’s strange how, as I write these words, the college football season ended less than a week ago, and the college basketball regular season will be complete by the time you read this. That means that we are already well into the second half of AICC’s fiscal year. AICC operates on a Destination Model and has successfully done so for the last several years. The board of directors defines what success looks like for AICC by identifying high-level goals and initiatives. AICC’s standing committees and staff take the board’s vision and create an action plan in the form of the Destination Model. In January, AICC convened its Winter Board Meeting. This is the opportunity for your board of directors to evaluate the year-to-date progress of the current Destination Model and to make changes if necessary. Additionally, the board outlines the vision for the 2021 Destination Model, which will commence in July. As of the end of calendar year 2019, AICC is in great shape financially and in terms of programs. We have a few areas of challenge that are receiving focus for improvement, and we will share results with you as plans take hold. We also completed the outline of the vision for the 2021 Destination Model. There are some really exciting things on the horizon for this industry, and the work done at the meeting is going to put you and AICC out in front of them. As such, AICC will continue to be an indispensable partner in the success of its members. It has been truly gratifying for me to work with the board for the past several years. The knowledge and passion have always been high. Working with your peers on shaping the direction of the Association is a wonderful experience. The ideas, the camaraderie, and the respect in the room are really something to behold. These are men and women taking time away from their businesses to work for you! They do a great job. Some of their good work shows up in the growth rate of AICC general member companies, which has outperformed the overall industry for several years. Some companies, like some of the perennially successful college football and basketball teams, are built in such a way that they win year in and year out. AICC makes you a dynasty.

Jay Carman President, StandFast Packaging Group Chairman, AICC

BOXSCORE www.aiccbox.org

Scoring Boxes

A Look at Recent Retail Sales Trends BY DICK STORAT

BOXSCORE March/April 2020

U.S. Retail & Food Service Sales ($ Billions)

$540

4.0%

$530

3.5%

$520

3.0%

$510 $500

2.5%

$490

2.0%

$480

1.5%

$470 1.0%

$460

0.5%

$450 $440

Jan

Feb

2017

Mar

Apr

2018

May

Jun

2019

Jul

Aug

Sep

Oct

Percent Change Year to Date

Nov

Dec

0.0%

Source: U.S. Census Bureau

U.S. Grocery & Restaurant Retail Sales Growth 12.0%

8.0% 6.0% 4.0% 2.0%

Restaurants

'19 ar ch M ay Ju ly Se pt. No v. M

No v.

pt.

Grocery Stores

ar c

No v. '18 n.

pt.

ay M

ar c

'17

0.0% n.

Percent Change Year Over Year

10.0%

n expanding economy is what keeps America growing, and that growth is best measured by the increase of the nationâ&#x20AC;&#x2122;s gross domestic product (GDP). In January, the U.S. economy completed its 127th consecutive month of growth since the deep recession, from which recovery began in July 2009 and now extends its record as the longest economic expansion. Corrugated boxes made by independent corrugated converters contribute to that growth by protecting products from damage during shipment and storage and by providing point-ofsale promotion, to name just two vital jobs that corrugated boxes perform for U.S. consumers and those who produce the products consumers use every day. Since some 70% of U.S. economic growth and almost all goods used by consumers are supplied from retail outlets, a look at important trends in the retail sector should be helpful to independent corrugated producers. U.S. retail and food service sales amounted to slightly more than $6 trillion in 2018. About half of that total was spent in four sectors of special importance to the U.S. corrugated industry: grocery store sales; sales in the general stores category, which include big-box stores and department stores; restaurant, eatery, and tavern sales; and nonstore retail sales, a category dominated by e-commerce spending. Total U.S. retail and food service sales grew by 3.4% through the first 11 months of 2019, as shown in the top chart at right, following 4.6% and 4.8% increases in 2017 and 2018, respectively. This favorable overall growth rate has provided support for

Source: U.S. Census Bureau

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corrugated demand since before 2017. However, the performance of each of the previously mentioned four sectors has differed in ways that are important to understand. Through November 2019, retail sales at grocery stores and at food service establishments each accounted for similar shares of total retail and food service sales (12.5% for grocery stores and 12.4% for restaurant sales). Since 2017, consumersâ&#x20AC;&#x2122; preferences for getting their nourishment has been growing more rapidly at eateries than from

grocery store purchases for off-premises consumption. Even though grocery stores and food manufacturers have been adding specialty foods and mealready options to increase sales, grocery store purchases have been growing consistently more slowly than spending at food service establishments as well as more slowly than overall retail sales, rising by only 2.9% through the first 11 months of 2019 and by 4.2% and 4.0% in 2017 and 2018, respectively. Over the same period, spending at restaurants and other eateries has grown

U.S. General Store & Nonstore Retail Sales 18.0%

16.0%

14.0%

Percent Change Year Over Year

12.0%

10.0%

8.0%

6.0%

4.0%

2.0%

0.0%

'17 M ar ch M ay Ju ly Se pt. No Ja v. n. '18 M ar ch M ay Ju ly Se pt. No Ja v. n. '19 M ar ch M ay Ju ly Se pt. No v.

-2.0%

Nonstore Retailers

BOXSCORE March/April 2020

Grocery Stores

Source: Census Bureau

by 4.3% in 2019 and by 5.9% and 6.3% in 2017 and 2018, respectivelyâ&#x20AC;&#x201D;all faster rates than overall retail sales growth. The bottom chart on page 4 depicts the consistently greater yearover-year growth rates for restaurants compared to grocery store sales. Comparing trends for sales in general and department stores with nonstore retailersâ&#x20AC;&#x2122; sales shows just how rapidly consumers are altering their preferences away from in-store shopping to online shopping. In 2019, shoppers spent more at nonstore retailers than they did at general stores; 12.5% of retail and food service sales were made by nonstore retailers, while spending at general stores amounted to 11.5% of total spending. Spending at general stores and department stores greatly lagged behind overall retail sales, having advanced by only 1.3% in 2019 and by 1.5% and 3.1% in 2017 and 2018, respectively. On the other hand, sales by nonstore retailers increased by 12.5% last year and by 12.5% and 9.4% in 2017 and 2018, respectively. As this rapid growth in e-commerce continues at double-digit rates, it will become the predominant retail sales channel. The chart at left depicts this widely disparate growth as year-over-year rates. Retail sales data are released around the middle of each month by the U.S. Census Bureau. Preliminary data can be accessed at www.census.gov/economic-indicators. This data is updated over the following two months, as additional inputs are gathered by the Census Bureau. Dick Storat is president of Richard Storat & Associates. He can be reached at 610-282-6033 or storatre@aol.com.

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Legislative Report

2020 Elections: Our Economic System on the Ballot BY ERIC ELGIN

ust after January 1, I read a speech given by Jay Timmons, president and CEO of the National Association of Manufacturers. In this speech, given to members of the Council of Manufacturing Associations, of which AICC is a member, Timmons lauded the legislative advances made by the manufacturing sector in 2019, a year fraught more with high political drama than forward progress. He cited, in particular, the passage of the United States-Mexico-Canada Agreement, a trade deal with China, and lesser-known developments such as rule changes at the Environmental Protection Agency and the repeal of certain taxes on health care and medical devices. In a year in which no one expected anything positive to be accomplished in Congress, Timmons said 2019 was “not a bad year.” As 2020 ushered in the start of a new decade, the impeachment of President Donald Trump and what appeared to be an imminent conflict in the Middle East fostered even greater political angst. Then, as the year progressed, even these issues faded into the background as we now have arrived at the height of the 2020 election cycle. Here is where Timmons expresses his greatest concern: In the 2020 elections, he said, “our very economic system could be on the ballot.” I share Timmons’ concern. My company is located in a decidedly red state, so I bring a certain political perspective. Regardless of your persuasion, however, are we not as business owners shocked by the casual acceptance of a potentially socialistic form of government and economic system? Certain candidates talking about free college, free health care,

BOXSCORE March/April 2020

and income inequality, aided and abetted by a compliant media, have given some gullible, uneducated voters serious doubts about the benefits of our free enterprise economy. To me, this is why the stakes in the 2020 elections are so high. What is the answer? Again, I take a page from the Timmons speech, in which he calls on all manufacturers “to engage the men and women in our industries in the political process.” Understanding that no employer can tell employees how to vote, an employer can certainly instruct employees on government policies that matter so they have the ability to hold candidates—regardless of political party—accountable. Here at Oklahoma Interpak, we have taken steps to invite local politicians in to speak to employees about how local issues can affect our business. Even something as mundane as a sewer line—which I’m trying to get installed out to our plant— can have consequences on our company’s success: Either I’ll pay the $300,000 to have it done, or we can influence the city to do it because our business park has grown up from former farmland. Plus, several other businesses could now benefit from the sewer line. So I’ve asked a local city councilman who’s running for mayor to come in and speak to our employees about it—he’s looking for votes—and getting our folks engaged in this way could save us $300,000 of expense that I believe the city should rightly take on. I see a parallel with our upcoming national elections. It’s our job as business owners to encourage our employees to vote and engage in the political process, but to do so from an informed and

educated perspective, regardless of their political affiliation. I hope you will join me in this cause. For information on manufacturing policy positions, go to www.nam.org/issues. Eric Elgin is owner of Oklahoma Interpak and chairman of AICC’s Government Affairs Subcommittee. He can be reached at 918-687-1681 or eric@okinterpak.com.

New & Returning Members

Welcome, New & Returning Members! SPRAYING SYSTEMS CO. BRIAN MORAN System Engineer 200 W. North Ave. Glendale Heights, IL 60139 Phone: 630-665-5000 www.spray.com

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Electricity Procurement

Sustainability

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BOXSCORE March/April 2020

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Ask Ralph

Expected Values for Containerboards Updated BY RALPH YOUNG

n the last issue of BoxScore, we published news of a new greenfield recycled mill, with a sidebar noting the increased production and use of low basis weights or grammages. Included in the updated chart on the next page are some of these grades. In 2009, AICC conducted research with several members to determine different corrugators’ abilities to maximize the strength of the containerboards they were combining into corrugated boxes when measured by the edge crush test (ECT). What we discovered then followed early findings that corrugators differed by 25%–40% in their ability to efficiently convert the cross-direction ring crush of short column test strength properties of linerboard and medium into ECT. Corrugators today are more likely to have reduced that wide variation through better engineering and process controls and through more consistent containerboards. Modern converting equipment has also become gentler on the integrity of the corrugated structure, reducing the crush of the combined board and therefore lessening the reduction in the ECT value of the sheet. The findings were published in a 2009 BoxScore article. Contact me if you want a copy. To keep you somewhat current, we have updated the one-page spreadsheet that lists the strength levels in several grades of linerboard and medium. This testing is conducted on a semiannual basis through the American Forest and Paper Association (AF&PA). There is no breakout between kraft and recycled. Not all mills report. As AICC members, you have access to some information, and we can share the

BOXSCORE March/April 2020

highlights with you. This chart is also tempered by various mill specification sheets that we are able to access on the internet. What you will find in the chart is a wide range of strength values within each substance or basis weight. Some of these variations can be more than 40%. So if you are still buying a grade by basis weight, that’s fine for Mullen boxes, but if you are into ECT and box compression, it is better to think along the lines of cost and strength. Important characteristics of medium that can impact obtainment of ECT strength are MD tensile, MD tear, and hot coefficient of friction as they relate to runnability. Attributes of linerboard that can impact the achievement of the maximum ECT strength are burst, coefficient of friction, slide angle, moisture, MD/CD

tensile, MD/CD tear, soft caliper, density, and porosity. The chart contains some values from the 2017 study only, because they were not available in 2009, so also check with your suppliers. New to this sheet is the inclusion of 18#, 21#, and 23# linerboards that were taken from other sources, because the AF&PA does not report on these grades yet. Ralph Young is the principal of Alternative Paper Solutions and is AICC’s technical advisor. Contact Ralph directly about technical issues that impact our industry at askralph@aiccbox.org.

Ask Ralph 2017 Expected Value Ranges of Containerboard and Combined Board – U.S. and Import LINERBOARD

SUBSTANCE

CALIPER

CDRC

CD SCT

MULLEN

GRADE

RANGE

#/MSF

mils

#/lin

kN/m

11.2

26–29

6.7–8.4

36–49

10.5–16.6

63–86

26 HP–A*

31 HP–B*

28–32

7.4–10.0

53–61

14.1–18.9

75–81

23–35

8.7–10.7

60–71

15.6–22.5

74–104

34–38

8.7–11.4

33 HP–C* 35 HP–D*

62–69

16.5

69–82

17.0–24.3

71–100 93–125

41–43

10.2–12.6

81–100

19.3–25.4

45 HP–E*

42–48

11.0–13.9

90–110

21.9–28.4

90–116

52–55 HP–F*

54–58

13.6–16.4

115–130

29.4–34.8

107–151

67–69

16.8–20.4

136–149

30.9–38.4

136–162

74 HP–G*

69–75

18.1–21.7

166–185

39–43

147–163

88–91

22.5–26.1

175–184

39.1–47.8

161–193

SUBSTANCE

CALIPER

CDRC

CD SCT

CONCORA

CFC

RANGE

#/MSF

mils

#/lin

kN/m NA

MEDIUM (FLUTING)) GRADE

6.0–7.2

18–21

29–35

20/21

6.5–7.0

20–32

37–53

22–24

6.6–10.4

28–36

9.9–14.4

42–59

49–63

25–27

6.6–11.1

31–42

10.9–15.9

43–71

52–80

26 HP–R*

12.8–14.0

39–55

50–75

30 HP–S*

48–60

13.7–16.8

31–34

9.0–13.3

46–69

15.6–20.7

57–80

70–97

33 HP

33–41

8.8–13.8

60–82

52–85

12.1–13

50–75

56–80

85–92 NR

36 HP–T*

69–73

17.7–19.7

39–41

12.5–15–6

73–78

19.8–27.3

70–82

45/47

POWERFLUTE

IMPORTED

UNK

109

UNK

105

131

*Denotes new grades that were not delineated in 2009

Source: AF&PA Containerboard Continuous Baseline Study and Mill Spec Sheets

BOXSCORE www.aiccbox.org

Ask Tom

Employee Handbook Essentials BY TOM WEBER

very year, I advise my clients— whether they have a company of two or 200 employees—that they must review and update their handbooks and policies. There are some basic policies that every small business needs to have in writing. And, while there are no laws requiring a written handbook, federal and state employment laws do change, so it is good business practice to have one. Your employee handbook could become very important in the event of a legal issue regarding employment practices. Putting company rules in writing also helps set employee expectations and reduces the chance of any misunderstandings. Formal personnel policies also protect your business in the event of an employee dispute. Potential new employees truly appreciate a company being buttoned up in this area and appreciate seeing the handbook during the recruiting process in an open and honest framework. It sets the stage for successful onboarding. An employee handbook is basically an assembling of your company’s policies and protocols, as well as your employees’ legal rights and obligations. It doesn’t have to be complicated, but it should include these five basics: 1. Include attendance and time-off policies, including paid or unpaid company holidays, as well as termination and employment status, such as contractual or at will. 2. Include medical, family, and bereavement time off, and whether these are paid or not. 3. Add items related to working hours, breaks, overtime, and any related payroll details. Use state

BOXSCORE March/April 2020

definitions of exempt and nonexempt employee classifications, as well as details on your pay period, payday, overtime-authorization rules, and any meal or rest break guidelines for hourly employees. 4. Explain how payroll deductions and time off are handled, which may differ for exempt and nonexempt. 5. Include rules of conduct, which can include dress code and customer interaction, as well as conduct in the workplace. To cover you, if there is something not specifically in your policy, include a clarifying phrase such as “and any other management rules.” Below are several other key elements to include in your employee handbook, as most of them are important, above and beyond the top five basic items, to help define more specific company policies: • Include policy information related to electronic devices and employees’ use of both their own and company-owned devices. This should cover computers, laptops, tablets, and cellphones. Include security rules, usage rules, procedures, etc. • A social media policy should include what is and is not allowed, such as posting on social media, what information is considered confidential, brand guidelines, sharing rules, etc. • If you have employees who work remotely, have a policy clearly stating guidelines and working arrangements, limitations, expectations, and who is eligible to work remotely.

• Having a drug and alcohol policy is essential for any business today. Clearly state that you have a drugfree workplace that prohibits the possession, sale, and use of any illegal drugs or alcohol in the workplace or on the job. Include any drug testing parameters you may perform, including random or otherwise. Medical or recreational marijuana is legal in many states, so you may want to include a clause that addresses this issue. Also include any consequences for violating the policy. • It is a good idea to protect your data and company information by having a confidentiality policy. This should cover products, data, systems, communications, testing, etc. • No matter the size of your business, you must have a weapons policy. As a business owner, you are legally obligated to protect your employees from workplace violence. Be specific. You can include everything from verbal threats to weapons when defining what is allowed. You may not, however, be able to ban

Ask Tom

weapons from being in locked cars in parking lots. • You have an obligation to protect your employees from workplace harassment and discrimination. This includes discrimination based on race, color, national origin, gender, sexual orientation, gender identity, or age. Clearly define the types of actions that are considered discrimination or harassment (including sexual harassment) and what your policies for infractions are. Include specific provisions for how to report behavior that violates your policies and a statement that ensures reporting such behavior is protected. • The Americans with Disabilities Act (ADA) requires companies with 15 or more employees to provide certain accommodations for workers with

disabilities to allow them to perform their jobs. Make sure your company policy defines disabilities and states your intent to comply with all applicable laws under the ADA. Spell out how requests for accommodations should be made, including what information you require (such as any medical records) and to whom requests should be submitted. • Have a crisis plan that includes severe weather, natural disasters, or other potential crises. Include communication instructions and identify who is in charge in the event of a crisis. • Be specific and always state any consequences for employee attitude, behavior, and attendance infractions. • Make sure all employees receive original—and updated—company

policies for total compliance and legal protection. • Have employees sign an acknowledgment stating they received the policies, have read them, and understand the content. • Keep a copy of the signed acknowledgment in the personnel file or with a date-and-time stamp on an electronic acknowledgment. If this seems overwhelming to you, consult with us, your AICC team, to assist with your 2020 handbook review. Tom Weber is president of WeberSource LLC and is AICC’s folding carton and rigid box technical advisor. Contact Tom directly at asktom@aiccbox.org.

BOXSCORE www.aiccbox.org

Selling Today

Using LinkedIn to Feed Your Sales Pipeline BY TODD M. ZIELINSKI AND LISA BENSON

f you are not using LinkedIn for social selling, you might be missing out on some big opportunities. LinkedIn provides B2B companies with an opportunity to not only share content and network, but also, if used strategically, to achieve top-of-funnel sales goals. According to the Content Marketing Institute’s report B2B Content Marketing 2020: Benchmarks, Budgets, and Trends— North America, 95% of B2B marketers reported using LinkedIn to share their company’s content organically, and 76% have paid posts on LinkedIn. However, sharing content, while part of a good social selling strategy, is not enough to bring in high-quality leads. Successful social selling combines both inbound and outbound marketing strategies. According to LinkedIn, there are 90 million senior-level influencers and 63 million decision-makers on LinkedIn. When wrapped around a holistic process, it becomes a valuable tool to identify potential buyers as well as educate and convert them. Below are five tips to help you better utilize LinkedIn to secure qualified leads successfully. Create Your Company Page for Maximum Exposure Your company page should showcase your offerings specific to the markets you are targeting. Let prospects know that you understand their pains, and tell them how you can solve their problems better, cheaper, faster, or however your company differentiates itself from your competition. Craft your message for search engines. Optimizing your company profile will ensure it turns up not only in LinkedIn

BOXSCORE March/April 2020

searches but also on Google and other engine searches. Use keywords and phrases that prospects might use when searching for your solutions. Post regularly from your company page to stay top of mind with your followers. Use a calendar or social media management tool to schedule regular posts. Content should be mostly educational or informative. Case studies are great because they demonstrate your relevance to the market. Use your content as a way to create dialogue that naturally promotes your value proposition without it coming off as a sales pitch. You want your company to be seen as a leader in

the industry. People just want to know what is in it for them. Keep in mind the visual impact of your posts. Use engaging images or videos to help your posts stand out in followers’ feeds. You can expand your reach by using hashtags and mentions. Ask employees to share your posts. Ask executives and subject-matter experts in your company who share your content to create their own content that your company can share in return. Optimize Your Personal Profile One of the first things LinkedIn users do when viewing content is click

Selling Today

through to the poster’s profile to learn about them. Additionally, people who may have come across you somewhere else may land on your profile from a Google search. If a prospect visits your page, is it representing you effectively? Keep your profile current, and ensure that you specifically mention accomplishments associated with the markets or industries you are targeting. Share relevant content. Once your profile is current, start increasing your contacts. Connect with customers, past customers, networking contacts, business associates, colleagues, and so on. When you meet with a prospect or any contact that is meaningful to your target market, get into the habit of connecting with them on LinkedIn. For best results, include a personal message with the request. Many people won’t respond to LinkedIn’s default connection request. Join Industry Groups Join industry groups that are of interest to your buyers, where you can have meaningful dialogue. Posting to industry groups allows you to reach thousands of people instantly. Avoid posting anything that sounds like a sales pitch. This could get you kicked out. The key is to influence the conversation to demonstrate your expertise, share insight, and build valuable connections. Build Connections Use your connections to meet new people. It is a quick way to get a warm introduction. Look at whom your connections are connected to, and if there are any people you think are good prospects, ask your connection how they know this person and whether they can provide an introduction. If you don’t get a response from your connection and you still want to connect with their contact, you can upgrade to InMail, which allows you to directly

BOXSCORE March/April 2020

contact another LinkedIn user that you are not connected to. If you do reach out without an introduction, make sure you have permission from your contact before dropping their name; if they didn’t have a good relationship, it could do more harm than good. According to LinkedIn, InMail has a 300% higher response rate than regular email, so you are more likely to get a response. To increase your chances of connecting with a contact, you can use Active Status to know when your connections are active. A green dot next to their profile photo means they are currently on LinkedIn, while a hollowed-out green circle means they are not on currently but have push notifications enabled to notify them when they receive a message. Consider LinkedIn Sales Navigator to Turbocharge Your Process LinkedIn Sales Navigator is a more powerful paid subscription geared toward sales professionals. LinkedIn says it “features a powerful set of search capabilities, improved visibility into extended networks, and personalized algorithms to help you reach the right decision-maker.” This makes finding, tracking, and building relationships through the LinkedIn platform even easier. Although it offers many useful features, one important feature is called Lead Builder, which allows you to build a list of potential contacts filtered by keyword, company, location, title, industry, and more. You can also save individual contacts and organizations, creating a customized news feed of your leads and providing up-to-date posts, job changes, etc. in the Sales Navigator news feed. By using tags, you can group them together in a way that makes sense for your company (e.g., by industry).

The Sales Spotlight feature highlights prospects that are most likely to engage with you. Sales Spotlight segments prospects in your search that fit into selected categories (changed jobs in the last 90 days, share experiences with you, follow your company or commented on your company posts, posted or shared content in the last 30 days, mentioned in the news in the last 30 days). You can use this function to find low-hanging fruit. Use the TeamLink Connections filter, available with Team and Enterprise plans, to find prospects that meet your criteria and share a common first- or second-degree connection. Reaching out to your connection for a warm introduction can help you to connect without using your InMail message quota. Consistency Is Key Whether you choose to use all, some, or none of these tips, the true key to creating a steady flow of leads into your sales funnel is consistency. Create a process that you execute daily, weekly, monthly—whatever brings in the flow you need. Make social selling part of your sales strategy. Many companies have a social media calendar for scheduling posts, but you should also consider scheduling time for prospecting as well. With a solid sales process executed consistently, your sales pipeline growth will soar. Todd M. Zielinski is managing director and CEO at Athena SWC LLC. He can be reached at 716-250-5547 or tzielinski@athenaswc.com.

Lisa Benson is senior marketing content consultant at Athena SWC LLC. She can be reached at lbenson@athenaswc.com.

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Tackling Trends

Packaging Concierge BY JOHN CLARK

round the world, in some of our larger cities and finer hotels, exists a group of professionals whose sole job is to astound and amaze their guests. Their job is to do the impossible on a regular basis and to do it with a flair, creativity, and competence that most mortals cannot marshal. When asked to perform the impossible, they think abstractly, employ nonlinear sequencing, and occasionally venture outside the bounds of normal convention to solve problems. More and more hospitality companies are creating new positions to manage the customer experience and build customer satisfaction and loyalty. In the hotel industry, this person is known as the concierge, from the Latin word for “to serve.” In the packaging world, these people are known as your design and production teams, from the American phrase “to solve the problem, stay within budget, and make magic happen—quickly.” The Art of Listening Much like a great concierge, great designers and product managers must have the ability to really listen and understand the stated and unstated expectations of the client. This skill is a critical first step to exceeding customer expectations. The design team has to listen intently for what is said and, just as importantly, what is not said to build the best possible solution. Details matter. In the ever-shrinking timespan between concept and delivery, modifications to materials, structure, shape, graphics, and manufacturing requirements have to be constantly adjusted and tested to ensure that what your client is expecting is what your

BOXSCORE March/April 2020

client receives. Color is increasingly important in conveying a specific emotional response to a package design, and with the advent of digital printing, the customization can be geared to microdemographic groups, compounding manufacturing and distribution issues that the industry never had to deal with before. Culture of Detail Easy-open or tear-tape designs have to work every single time to ensure that nothing interferes with the overall value proposition. Packaging targeting specific demographic and geographic markets complicates manufacturing and distribution. The way the package opens and how the contents are organized are critical to the overall experience. Where components are located creates an overall esthetic that cannot be overstated. Nothing should look hurried or out of place. There should be exactly the number of components to do the job. No more. No less. No detail is insignificant. Colors need to be the exact shade to convey the proper message. The success or failure of a microdemographic campaign may well succeed or fail based solely on getting the exact shade of a national symbol correct. Enhancing the Experience In your personal life, why do you go to the stores, restaurants, and shops that you visit? There may be many reasons, but when you break it down to the basics, you go there because you feel you receive value and quality for your hardearned money. You also look for vendors that stand behind their product. Seeing how quickly

a vendor handles a problem tells you more about the company’s commitment to your satisfaction than just about anything else. Your customers look for that very same value proposition when deciding to do business with you. Everything you do to make the client’s experience more enjoyable, easier to transact, and predictable all works to the clients' benefit—yours as well. The concierge mindset is challenging to master. It requires constant attention to the market, trends, competition, and your customers, machinery and a vigilant attention to detail. It forces you to be ever aware of the little differences that separate very good from exceptional. When your practice becomes habit, you can do wonderous things. John Clark is director of analytics at Amtech Software. He can be reached at jclark@ amtechsoftware.com.

Andragogy

1 Part, 7 Packages BY DIANA WHITAKER

or three years here at The Packaging School, we have been running the AutoPack Summit (APS), a one-day conference for stakeholders to discuss the innovations and challenges in automotive packaging. In that time, we’ve learned a few things about how packaging relates to the automotive industry—more than we even thought possible. Corrugated boxes have a huge presence on the supply chain in the automotive industry. Consider that every small part that makes up a vehicle, on average, lives in seven packages throughout its lifespan, and each vehicle is made up of about 30,000 parts. This comes to about 70,000 boxes for one vehicle, if we’re conservative. This has such a big impact that Pratt, a prominent corrugated manufacturer, created a specific automotive subset of their business. Corrugated boxes are some of the most frequently used packages in the automotive industry—for good reason. They are inexpensive to produce, easy to source, and lightweight, which brings down distribution costs. But because suppliers at each step of this process do not have the same packaging standards, these packages are discarded, and parts can be repackaged multiple times. This is becoming even more of an issue as online sales for aftermarket parts continue to grow. Online retailers of automotive parts (yes, including Amazon) must also have an understanding of the complex supply chain in order to deliver products in good condition and in accordance with manufacturer standards. One of our goals at The Packaging School and at APS is to start a

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conversation around creating a shared packaging standard that suppliers and OEMs use throughout the supply chain. Imagine the efficiencies to be had if we embraced standardization. One of the biggest takeaways from APS is how much more there is to cover than we can possibly get to in one day, and after repeated requests for continuing conversations on this topic, we started exploring ways to permanently archive the expert presentations given at the event and distribute them in the form of online education. As we continue to raise awareness of the importance of packaging to the automotive industry, The Packaging School is working to provide accessible education on this specific topic to all stakeholders. In early March, we will roll out the Automotive Packaging Certificate, a program which is independent of AICC's free online education, the first

comprehensive online program on this subject. We’ve worked with subjectmatter experts from all areas of the supply chain to cover this extensive subject, including BMW, PakFab, Orbis, Senator International, IPS Packaging, and Zerust VCI. The goal for this certificate is that this accessible online education helps bring about a more efficient supply chain for automotive. For more information or to register for this program, you can visit www. packagingschool.com/automotive. Diana Whitaker is the strategic projects lead at The Packaging School in Greenville, S.C. She can be reached at diana@ packagingschool.com.

Leadership

Exploring the Amazon (Packaging Lab) BY SCOTT ELLIS, ED.D.

n the wake of AICC’s recent E-Commerce Xperience event, readers may be interested in the lessons learned by one of AICC’s leadership advisory groups at Amazon’s packaging laboratory. This group visited the customer packaging experience lab (CPEX) near Seattle in November. Our mentor and tour guide, appropriately named Josh Samples, was refreshingly candid and informative. A synopsis of the lessons learned by the 12 packaging professionals will follow a brief aside about Great-Grandma's ham to acknowledge that brilliant innovators make choices with unintended consequences. What does Great-Grandma’s ham have in common with an Amazon fulfillment center? First, her recipes were the stuff of legend and were followed to the letter. Why she cut off both ends of the ham was a mystery, but the ham was delicious, so each generation complied. Then 7-year-old Kate asked her mother why this was important, only to be interrupted by ancient Aunt Clara, who announced, “Her pan was too short, dear!” Families and companies have many such unquestioned rules. One such rule at Amazon determines a $1.99-perunit charge for packages that are over 14"x 8"x18" or 20 pounds that require a shipper. These are determined to be unsortable due to the size of their yellow bins, chosen as a standard in all Amazon fulfillment centers. Amazon has two labs: the materials lab and the packaging lab. The materials lab focuses on determining and approving the best materials to be used in its packaging (tape, foam, corrugate, plastic fill, etc.). The packaging lab focuses on determining the best way to ship a product (sizing, protection, etc.).

BOXSCORE March/April 2020

Both labs were started three years ago, and prior to that, Amazon more or less relied on its vendors for any innovation. Amazon is going to be more specific as to what they want and are going to audit their requirements. An explanation of these requirements is available at www.about amazon.com/sustainability/packaging. Another resource is the Amazon Packaging Support and Supplier Network (APASS). CPEX gathers copious customer experience data, including damage, on-box advertising, surprise and delight, and waste. Amazon has made a commitment to reduce the carbon footprint for 50% of its shipments to zero by 2030. They aspire to have 100% of shipments have zero carbon footprint by 2040. They would like to use more 100% recyclable flexible packages, but 90% are still corrugated. Current efforts are focused on optimizing the oversized boxes, as they cause the most pain right now. When asked if they foresee integration of packaging manufacture into their company, Samples was certain that they would not. He cited their recent focus on integration of freight and last-mile delivery into the model gig economy—a system smilar to the Uber model. He said that it was much more difficult than was anticipated. During our visit, we saw evidence of the company’s expanded on-box advertising, which adds use of the outer shipper as a billboard in addition to their surprise-and-delight projects that include something to do with the box, such as cutouts for kids to color. Inside print remains important, but they see the outside as more beneficial. In large part, the standard-size shippers are converted by integrated suppliers. Opportunity for independent suppliers will be discussed below.

Amazon’s goals for their corrugated suppliers begin with reducing the weight of packaging. They are also concerned about volume. In general, they seem to believe that boxes are overengineered. This is likely due to the shipping methods in play, in that packages are oriented for fit rather than strength. The main opportunity recognized during the visit was the chance for independent converters to assist their customers in attaining a sizable cost savings. The initiative penalizes those who ship with Amazon when their package is not qualified to ship in its own container (SIOC). Converters can reengineer packaging to achieve SIOC status as verified by an ISTA-6 test. More than 95% of this testing is done by thirdparty labs. Labs can be certified for testing via the APASS network. Armed with these resources, converters may join the leadership advisory group being equipped to serve our customers in adapting to the e-commerce rules. Independents have a place in the Amazon e-commerce jungle. Scott Ellis, Ed.D., provides the brutal facts with a kind and actionable delivery when a leader, a team, or a company needs an objective, data-based assessment of the current state of operations and culture. Training, coaching, and resources develop the ability to eliminate obstacles and sustain more effective and profitable results. Working Well exists to get you unstuck and accelerate effective work. He can be reached at 425-985-8508 or scott@workingwell.bz

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Design Space

Sales: The Key to Good Design BY JEFFREY DOWNS

’m sure your place of business is no different than mine, in the fact that it is almost a sport to bust the chops of the sales staff for no other reason than that they are in sales. As an office pastime, this ranks right up there with table tennis, but there is absolutely no question a quality sales team is vital to good design. Quality design doesn’t just happen accidentally. It takes work and input from multiple departments, the largest being sales. One of the first ways sales directly affects a project is by educating a customer about packaging, displays, capabilities, limitations, and the logistics of it all. This foundation will serve as the basis for many of the customer’s future decisions. Equipping the sales staff with tools to aid and standardize the education of the customer is an excellent idea, and if all goes to plan, the customer, sales, and design soon will all be speaking the same language. Projects that start on a foundation of confusion and miscommunication are tricky to get back on track. Extra effort here pays dividends. I don’t think Sherlock Holmes would have made a good salesman. However, his eye for detail and, maybe more importantly, his ability to distill down those details into a coherent story would have made him excellent at writing design briefs. These briefs are the first and sometimes the only way designers learn about the projects they work on. All the pertinent information needs to be there, but the brief should not be overly constraining. Designers are at their best when they have a clearly defined problem to solve and the freedom to explore multiple solutions. It is easy to see how directly these briefs will affect the design and project outcome.

BOXSCORE March/April 2020

After a common language is developed and the design brief is penned, it is time for sales to sell. Above anything else, I want the concept of design to be sold. Some customers will get it or have already discovered the benefits of allowing for and planning around the time it takes to thoughtfully develop packaging and display solutions. Where the challenge lies for sales is to convince the customer who wanted a quote 15 minutes ago that all parties would be best served by allowing the time needed for development. If no time can be secured, the process becomes a scramble, and design takes a back seat to deadlines. Successful or not, at the close of the initial contact with the client, sales should have a clear set of deliverables and a timeline agreed upon with the customer. Any ambiguity here will lead to rushed designs and unhappy customers. Great ideas and designs don’t always sell themselves. Sometimes the value of a design is hard to see on paper, and it takes—well, it takes a sales professional to do what they do best. The qualities of a good design that cannot be captured on a spreadsheet can easily be overlooked by the customer, but often it is in these subtle design decisions where the added value can be found.

I, like many designers, do my best to keep my personal feelings out of my designs; we are always taught to never fall in love with our own work. It's a matter of self-preservation —harsh critiques of things you have created can feel like a gut punch. But the fact is that the best designers I know are extremely competitive and all have a healthy ego. The long and short of it is, I want my design out there, and at the end of the day, that would not be possible without our sales team. So yes, a quality sales staff is key to developing good designs and getting those designs to market. And their role continues long after designers have moved on to the next project. It is on the sales team to gather invaluable feedback from all the stakeholders and to pass that along to the team so the next designs can be even better than the last. Good sales is hard work. Jeffrey Downs is structural design lead at Bennett Packaging of Kansas City.

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INNOVATION Training Resources

Free AICC Courses to Develop Your Workforce

fter you have gone through the time, effort, and expense to find the right employee, you want to keep that person for as long as you can. To get them off to a strong start, you need to properly onboard all new employees. You know how to give them the explanation about what your company is, what you stand for, where you came from, and where you are going, but what about the training and resources they have available to them? AICC offers The Internal Staff Development Guide, as a free online course. This guide is a tool for onboarding and ongoing professional development. The course provides human resources and key training people with resources to help effectively train new employees and make sure an employee understands the requirements and expectations of the company. Since the information at times can be company-specific, the user downloads the documents and works to

complete the information as it relates to the company and the company’s rules and expectations. Questions such as who to contact for quotes, dock times, and quality issues are all key components within every manufacturing company. This course helps both the company and its employees establish guidelines (if not already developed) and reaffirm current rules and processes for effective work performance. Learn more at www.aiccbox. org/packagingschool. The Welcome on Board Guide is a tool, template, and starting point for developing a company-specific process in training new employees. This guide is divided into four main sections— Onboarding and Orientation, Process of Implementation, Roles and Process Owners, and Phases and Key Activities— and includes sample checklists, communication plans, manager tools, and a resource guide for employees. These documents are provided in both hard

copy and electronic format to allow you to incorporate company-specific wording. Learn more at www.aiccbox.org/store. One more resource available to all AICC members is the professional staff at AICC. Taryn Pyle, director of education and training, can help you set up a training plan for your new employees based on your needs. Contact her at tpyle@aiccbox.org or 703-535-1391. And make sure you contact AICC at info@ aiccbox.org with your employee’s name, title, email, and address to help you get your new employee signed up to access the free online education they can use to grow and better serve your plant!

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AICC Innovation

Professional Development

Roots and Wings BY CONNOR KENNEDY

hether as an individual or an entire company, a common denominator for success is the strong development and cognizance of both. In any business, but especially a family business, it is important to recognize the tradition, dedication, and diligence that drove the company’s initial success. It is also vital that the growth of the organization stems from the vision of innovation, progression, and adaptation to the ever-changing world. Given the current pace of change, the intensity of competition, and the increasing expectations of consumers, future business leaders should recognize that sustainable growth must be supported by the nurture of its roots with a consistent vision of the organization’s direction. In business, it is important to nurture our relationships with competitors, vendors, and of course, customers. But the investment of time in the relationships within our own organization—the roots— is perhaps the most significant investment we can make toward developing our wings of future success. When is the best time to plant a tree? Twenty years ago. When is the second-best time to plant a tree? Today. When I started in the business at age 16, I worked in the plant running some of our equipment, doing hand-labor, and of course, cleaning. Over the next few years during summer and holiday breaks, I continued in production learning more about the equipment and even spending some time in our shipping department until I graduated from the University of Tennessee with a degree in business and supply chain management. I began my official tenure with the company at age

BOXSCORE March/April 2020

22 in a sales role (now comically referred to by my mentors as my “bloody-nose experiment”) to use the knowledge and experience from my time in production and shipping out in the real world. That “bloody nose” made me realize pretty quickly that I didn’t know much. So, I then spent even more time with our production team, more time in our shipping department, and time in design and customer service so that I could truly understand and appreciate the tradition, dedication, and diligence of every department’s key members. As is the case in many successive businesses in our industry, the opportunity

to move a company forward often coincides with the challenge of supplanting the key members who helped get them to where they are today. In organizations facing such challenges, developing a plan to adapt to changes requires a clear and consistent vision for the company’s future and its members, which is shaped by the investment of time within the organization. Although the execution of that plan is unique to each organization, it all goes back to the common denominator of success. The following points are key to developing professional—and personal—success, relative to the roots-and-wings philosophy.

Recognize Your Roots • Be cognizant of the core competencies and competitive advantages that drove the initial success of your organization. • Use your own inexperience not as a disadvantage but as an opportunity to learn from those before you. Let them guide you through their own experiences to help mentor and coach those whom you choose for the next generation behind them. I think many would be surprised by their appreciation of the care and attention that you have planned to solidify their legacy within the organization. • Walk a mile in their shoes. Experiencing the trials and tribulations of the people who helped build the organization is vital to create a clear vision for the future ahead. So when you have to make those tough decisions, the people potentially affected by them know that even for a short time, you lived and breathed it. And if you don’t have the opportunity to walk in their shoes, ask them about their journey. • When the roots are deep, there is no reason to fear the wind. Every organization deals with adversity. Develop Your Wings • Using the experiences of others before you is vital, but the only way to truly learn is to do. You are going to make mistakes, and if you don’t, you’re not working hard enough! Your greatest glory will not be in never falling but in rising every time you fall. And as a leader, it’s important for others to see that. • You can’t talk your way out of what you behave your way into. Talking a good game is great, but leading by example is the only way to get the best out of your people. • Change for change’s sake can be more damaging to your efforts toward creating an engaged and inspired workforce than no change at all. Have purpose in what you are doing and how you are doing it. Connor Kennedy is project manager for Southern Carton Co. and an AICC Emerging Leader He can be reached at ckennedy@ southerncarton.com.

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Member Profile

Boxes Inc. and Mid America Display BY STEVE YOUNG

COMPANIES: Boxes Inc., Mid America Display ESTABLISHED: 1977, 2005 JOINED AICC: 1977 Photos courtesy of Boxes Inc. and Mid America Display.

PHONE: 314-781-2600, 314-781-7771 WEBSITE: boxesinc.com, midamericadisplay.com LOCATIONS: Bridgeton, Mo., Bentonville, Ark. President and CEO: Michael Patton At an open house in December, Eric Benardin, vice president of operations for Boxes Inc. and Mid America Display, conducts a facility tour.

ichael Patton enters the cavernous design and graphic arts studio at Boxes Inc. and Mid America Display and says, “Here is a place where young people want to come to work.” Patton is president and CEO of the companies, both headquartered in the St. Louis, Mo., suburb of Bridgeton, and judging by the number of youthful faces collaborating in the space on customers’ structural and graphic design requirements, he’s clearly right. The company recently moved into a new 530,000-square-foot manufacturing plant and assembly and pack-out facility, where it produces its signature packaging, display, and signage solutions for major brands and retailers across the country.

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“We are one of the top independent manufacturing facilities in this country,” Patton says. “We continue to install the latest innovative technologies to boost efficiency and respond to customer requirements regarding innovation, cost, quality, critical delivery dates, and our assistance in maximizing their ROI.” From the Start: Core Principles Boxes Inc. was founded during what many consider the “golden age” of the North American corrugated business, that time in the late 1960s and ’70s when the containerboard mill system was seeing a wave of vertical integration. It was a time that saw the birth of many new independently owned and operated

corrugated sheet plants, as company mergers spun off talented and ambitious entrepreneurial thinkers who said, “I can do this better.” “I was one of the principal founders of Boxes Inc.,” Patton says. “Along with my partners, Lynn Carroll and the late Gene Wicks, we started the company in December of 1977 to continue our business beliefs and approaches serving our customers who required smaller quantities but higher service.” Patton explained that the three partners had been senior managers at another St. Louis-based company that decided to replace the management team. “We were out, and the three of us decided, ‘We can do this better.’”

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Patton alongside a print sample from the Nozomi C18000 one-pass digital printer. The sample, printed on kraft, shows the printer’s capability to print white.

Patton says that, to his partners and him in the newly formed company, “better” meant: instilling a “customer-first focus”; “doing the best you can by your people”; and “reinvesting in the company, continuing to get the tools necessary to serve customer requirements.” Reflecting on those early principles, Patton says little has changed. “The need for this culture has only magnified over the years,” he says. “These remain our guiding principles.” A Brown-Box Market Sees POP Growth Situated at the confluence of the Mississippi and Missouri Rivers, St. Louis has been a principal commercial center since the early days of the republic. Trade, transportation, and an influx of Irish, German, and African American migrants in the late 1800s enabled the growth of an industrial economy that produced agricultural commodities, manufactured goods, clothing, and food

BOXSCORE March/April 2020

and beverage products. Its location and commercial importance made St. Louis the jumping-off point for America’s early westward push, earning it the moniker “Gateway City.” As manufacturing grew, so did the packaging business, first in burlap bags and wooden crates, then in the early 1900s, the first corrugated paperboard. Today, while the manufacturing core of the city is a shadow of its former hulk, the St. Louis metropolitan area is still a good market for industrial brown-box packaging. In recent years, however, the St. Louis retail packaging market has grown as the city is home to consumer packaged goods producers that require high-impact point-of-purchase (POP) displays and retail signage. This growth has been augmented, too, by recent gains in e-commerce and online sales with marketing and promotion efforts directed by advertising and creative agencies. In the early 2000s, seeing the potential for growth in the display and signage business, Boxes Inc. formed Mid America Display, a wholly owned subsidiary. “We always did display and signage from our earliest days, but our customer base was only in the local area,” Patton explains. “In 2005, Boxes Inc. recognized an opportunity to form Mid America Display as a subsidiary focused on custom product displays and signage, national in scope.” This growth in the retail sector prompted a move to establish a presence in Bentonville, Ark., home to Walmart. “In 2011, Mid America Display expanded its presence into Bentonville, continuing our long history of trusted service to retail giants such as Walmart, Sam’s Club, and the vendor community.” Investment in Equipment, Technology Take even a casual walk through the plant at Boxes Inc. and Mid America Display, and you’ll see state-of-the-art technology at every turn. Each machine, each piece of equipment, every pre-feeder, stacker,

and conveyor validates the company’s principle of reinvesting in the capacity to serve the customer’s need. In addition to two rotary die cutters—a Langston 66"x114" and Giant 66"x113"—Boxes Inc. in November 2018 added a Young Shin 210S high-speed 82"x60" flatbed. Four flexo folder-gluers dominate the north end of the manufacturing floor: a Bobst 618 four-color with dual die-cut section, 26"x73"; a Bobst 8.20 four-color, also with dual die-cut, 32"x85"; a Bobst 1636 five-color with die-cut section, 66"x147"; and a Langston 86"x194" one-color with die-cut section. Rounding out the main converting lines are an Automatän 81"x65" and Nutech 81"x66" laminators and a Bobst EXPERTFOLD specialty folder-gluer. The newest technology investments, however, are two EFI Nozomi C18000 single-pass inkjet digital printers and an EFI VUTEk super-wide-format printer. These high-speed printers are complemented by two Zünd D3 digital cutters with BHS150 automatic board-handling system. The company’s first Nozomi was installed in September 2018 and the second in December 2019; the VUTEk printer was installed in April 2019, replacing a previous multipass printer used primarily for low-volume orders and sample making. Boxes Inc. and Mid America Display are the first companies in the world to operate two Nozomi C18000 printers in a single production facility. The new Nozomi C18000 printer operates at speeds up to 246 linear feet per minute—the equivalent of up to 10,000 35"x35" sheets per hour, two-up. Both of the company’s Nozomi C18000 printers have six-color (CMYK, orange, and violet) plus white configuration for expanded-gamut imaging with matte, satin, or glossy finishes. Additionally, the company’s VUTEk printer is an 80-inchwide LED inkjet solution that prints

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than 200 customers, suppliers, and industry colleagues toured the company’s design center and manufacturing floor, seeing these latest additions to its already diverse capacity. Patton’s reinvestment energy is seemingly limitless: “We will continue to invest in the leading equipment and technologies to support our sustainability efforts as well as our customers’ needs,” he says. “This year, we are also adding Nulogy software for increased efficiencies, real-time visibility, and agility in latestage customization.” E-Commerce ‘Xcellence’ Boxes Inc. and Mid America Display’s high-speed production capacities, especially in the digital space, have opened up new opportunities to serve a broader customer base selling in the e-commerce market. And they’re doing this by means of its new e-commerce divisions, Xceed and Xceed PRO. As Patton explains, “Xceed and Xceed PRO are our newest divisions, which offer both predetermined styles as well as completely custom designs through an outward-facing, easyto-use and -order platform.” With the rise of e-commerce, the corrugated industry’s customer base has delivered the companies a broad challenge: “Give us high-graphic printing, inside and outside, in small quantities we can order on demand and whose designs Boxes Inc. and Mid America Display are the only companies to have two EFI Nozomi C18000 we can change on a whim,” Patton says. printers under one roof. “Oh, and we need it tomorrow.” It’s this demand, Patton says, that his eight colors plus white at speeds up to 22 new fast-turnaround, shorter-run work e-commerce platform serves: “Xceed sheets per hour in production mode. coming in with our e-commerce division.” provides simple and custom solutions for Commenting on the company’s bold Patton believes digital printing is the packaging, beverage containers, and POP digital investment timeline, Patton says, future of the corrugated and paperboard displays, allowing customers to design “We feel the EFI Nozomi is the leading packaging industries, saying the second their own packaging product without technology in this space; that’s why Nozomi C18000 adds “a great deal of dig- sacrificing quality, speed, or customer we chose to stay with EFI for a second ital capacity to our offering” and allows support, while Xceed PRO is targeted printer. Not only will this second Nozomi Boxes Inc. and Mid America Display to to assist professionals that do not have help us maintain our prime position as a better meet what he calls “the growing manufacturing capabilities—for example, leading packaging and display provider, demand across all market segments.” At national brands, advertising agencies, or but it will also be a primary resource for an open house held in December, more in-store marketing brokerage groups.” An overhead view of the Boxes Inc. and Mid America Display manufacturing floor shows Bobst 8.20 and 1636 flexo folder-gluers with Alliance Machinery pre-feeders.

BOXSCORE March/April 2020

Member Profile “Attracting talent is truly enhanced by our deployment of these innovative cultural strategies. It’s the excitement of working with leading-edge technologies versus the old hot box shop we all grew up with.” — Michael Patton, president and CEO, Boxes Inc.

The Key Players Are Key In all our discussions with Patton, he came back to one thing: Boxes Inc. and Mid America Display would not be successful were it not for the talented team of people who are the key players in the company. “Our operational strategies, external communication, and business development tactics require input from all key players,” he says. “With the knowledge and expertise each member brings to the team, roles frequently grow or cross over in the process of meeting our customers’ expectations.” In addition to Patton, the key players are Executive Vice President John Jones; Vice Presidents Eric Benardin and Jason Mueller; Controller Shirley Delahanty;

Chief Information Officer Tim Korte; a new leadership style is necessary to HR Director Cara Sullivan; Marketing attract and retain younger workers, sayand Communications Manager Brittney ing, “Retaining a motivated employee Beermann; Regional Manager Chris is a mixture of the way they are treated, Watson; and Workflow Solutions trained, and given opportunities to Architect Matt Whitener. Of his entire advance. They must be respected and team, Patton says, “I am very proud to nurtured today.” also see even among the rank and file a In giving some closing thoughts, coming together here in our new location.” Patton credits AICC for playing a Patton believes the company’s next role in the company’s current success. generation of talent will come directly “Through AICC events, directories, and out of its forward-thinking strategy. publications, we’ve been able to connect “Attracting talent is truly enhanced by with industry vendors and like comour deployment of these innovative panies, gaining insights and forming cultural strategies,” he says. “It’s the partnerships which have helped us get to excitement of working with leading-edge where we are today.” technologies versus the old hot box And of the future? Like all entreshop we all grew up with.” He adds that preneurs in the corrugated business, Patton projects a firm optimism in the industry’s prospects, tinged with a dose of reality. “We have concerns for the slowing global economy and U.S. manufacturing sector, but I was reminded by a very positive fact on the radio the other day. In financial history, our down times are 15% while our up times are 85%.” For Boxes Inc. and Mid America Display—a company reinvesting for the next generation—the times are certainly up. Steve Young is AICC’s ambassador at large. He can be reached at 703-535-1381 or syoung@ aiccbox.org.

Cierra Patton, manager of Xceed customer service, operates the Zünd D3 digital cutter.

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AHEAD OF THE CURVE

BOXSCORE March/April 2020

T As consumer expectations evolve and technology advances, boxmakers must be on the front lines of innovation By Lin Grensing-Pophal

he packaging industry has come a long way from ancient times, when natural materials such as leaves, bark, or animal skins were used to hold and transport food and other materials. “The earliest recorded use of paper as a packaging material dates back to 1035, when a Persian traveler visiting the markets of Cairo noted that vegetables, spices, and hardware were wrapped in paper for the customers after they were sold,” according to an Adtec blog post. Over the years and continuing into the 21st century, retailers and businesses of all kinds have continued to explore innovations in packaging, generally buoyed by two key drivers: the desire to stand out in an increasingly competitive marketing environment and growing consumer concern about environmental issues. Here we take a look at some trends in packaging that are offering both new opportunities and new challenges.

White Ink Miriam Brafman is founder and CEO of Packlane, a custom packaging firm based in San Francisco. The 2019 holiday season drove demand for white ink, a trend that Brafman expects to continue into the new year. As Packlane’s website proclaims: White ink is back, and it’s here to stay. They offer a few examples to visually illustrate this trend. “White on kraft is pretty popular and gives a more upscale feel to an otherwise brown box,” she says. Retailers are increasingly giving consideration to both the look and the feel of their packaging, whether that packaging sits on store shelves or is shipped directly to consumers.

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The Package as an Experience Specialty boxes are another trend Brafman points to: “things like holiday-themed boxes for promotional purposes to really create some novelty around a product, promotion, or campaign,” she says. A topic Brafman spoke on during AICC's E-Commerce Xperience. While, traditionally, brands with products sold through brick-and-mortar locations tended to worry more about the look and feel of their packaging than mail-order brands, that is changing. There are brands that are known for going “above and beyond to invest in appearance when it comes to e-commerce deliveries,” says Brafman. Apple is one notable and widely known example. Apple outlined its packaging strategy in a white paper, Apple’s Paper and Packaging Strategy, with a focus on sourcing, sustainability, and aesthetics. E-commerce is driving this trend to a large degree. According to Business 2 Community, e-commerce represents about 10% of retail sales and is growing about 15% a year. That’s creating a lot of visual competition and driving a desire among retailers to stand out—not only on sales shelves but also in customer mailboxes or on doorsteps. “It really depends on what sort of brand you’re building,” Brafman says. “With e-commerce, brands are trying to really stand out when they’re involved in custom packaging.” It’s not a requirement, as it is in retail, she says, where standout packaging is “table stakes.” Apple’s packaging is designed to provide a sensory experience, says Alessandra Ruggeri in a Swedbrand Group post. “Packing can indeed be just as important as the item it contains,” she writes. It’s a concept that is catching on. Even brands that are not specifically mail-order are finding that consumers

BOXSCORE March/April 2020

are increasingly shopping online. They’re beginning to care more about what happens when the box arrives in the mail. So much so that the concept of unboxing continues to take hold—the act of receiving and unpackaging whatever was ordered. In fact, unboxing has become something of a cultural phenomenon, with more than 1.6 million YouTube videos showing people unboxing their products, according to Printing Industries of America. Inside-the-Box Printing Another trend that is catching on: inside-the-box printing. In some cases, retailers are taking an inside-only approach to printing to offer privacy for consumers. In other cases, insidethe-box printing is used to add to, or augment, the outside of the box in creative ways. Packlane can print inside a corrugated box of any style, including mailers, shippers, and tuck tops. For mailer boxes they offer a free online box-designing tool for those who like to take the do-it-yourself approach. It’s yet another way to not only stand out, but also to delight customers and increase the odds of catching their attention and making a memorable impression.

Sustainability: An Environmental Focus Consumers are increasingly concerned about environmental issues, and they expect the companies they shop with to share those concerns, according to Nielsen research. In fact, Nielsen says, “A whopping 81% of global respondents feel strongly that companies should help improve the environment. This passion for corporate social responsibility is shared across gender lines and generations. Millennials, Gen Z, and Gen X are the most supportive, but their older counterparts aren’t far behind.” Packaging manufacturers are taking note, but the issue isn’t readily addressed, says Greg Tucker, chairman and CEO of Bay Cities Packaging & Design in Los Angeles. “With the explosion of online purchases, we are seeing more and more corrugated boxes stacking up everywhere,” he says. “Our traditional supply chain for old boxes was a very functional system that would pick up the used box at a retail establishment and send it to a paper mill to be converted back into a box again. Our little fascination with shopping online has disrupted this closed-loop system and is presenting a bit of a problem everywhere.” Tucker notes that only about 35% of boxes are recycled by consumers receiving packages at their homes. “In my

SALES CHANNEL TOOLKIT The Paper & Packaging Board has developed a Sales Channel Toolkit filled with free sales enablement resources that AICC members can access. Infographics, case studies, articles, and more are available to you to share with your customers about unboxing, the perception of paper, e-commerce, and other topics that highlight the value of paper and board and are critical to your customers’ success. Using facts, statistics, and realworld applications that are laid out in an easy-to-understand manner, these tools will help you lead your customers and prospects to making the best packaging decisions. To access these free resources, visit paperandpackaging.org and reqeust a login for the Sales Channel Toolkit.

mind, every box should read, ‘Recycle This Box’ in very large, bold, big letters,” he says. While some retailers are seeking alternative solutions, those solutions present their own problems, Tucker says, pointing to Amazon as an example. “Amazon, the largest of all online sites in America, has moved to utilizing more plastic for its packaging solutions,” he says. “Sure, the plastic envelopes and plastic air cushions are lighter and take up less space, but just where does all this stuff go?” Only 15% of all plastics are reclaimed, Tucker says, meaning that 85% of every plastic piece goes to a landfill. This is an area of high concern for many consumers and companies, and it is likely to continue to be a concern. Unfortunately, says Brafman, it’s an area where a gap exists in the market. “People are more and more frequently really trying to figure out how to be sustainable while also using packaging, and they’re actively looking for a lot of solutions that don’t necessarily exist yet,” she says. In addition to concerns about growing mounds of cardboard, Brafman acknowledges that “we all own a section of the market where the inks are really kind of toxic and not sustainable— they’re all petroleum-based.” Where will the next decade take us in terms of innovation in point-ofpurchase and point-of-sale displays? It’s anybody’s guess, but as technology continues to evolve, the odds are good that innovation will continue as retailers seek new and more engaging ways to connect and compel consumers to action. Lin Grensing-Pophal is a Wisconsin-based freelance writer and a frequent BoxScore contributor.

A LOOK AT TRENDS IN DISPLAYS A Harvard Business Review article, “Better Marketing at the Point of Purchase,” offers some examples of innovative point-of-purchase (POP) displays, such as a computerized display linked to a videodisc player offering the opportunity for consumers to interact by responding to a series of questions that lead to recommendations about the type of computer to best suit the customer’s needs. There’s likely not much that is startling about that except for this: The article was published in 1983. We’ve come a long way since then, as retailers continue to look for new ways to capture the attention and interest of consumers to spur purchasing decisions.

POP AND POS POP and point-of-sale (POS) displays might be thought of as “packages for packages”—in-store displays designed to attract attention and create interest. For the sake of clarity, here’s an explanation on the difference between POP and POS from Bay Cities’ website: “POS stands for ‘point-of-sale’ and refers to the stands that are by the cashier where the actual transaction occurs when the customer buys the product. POP displays usually take up floor space within the retailer and most of the time resemble shelves. POP is typically larger, while POS can be found sitting next to checkout stations.” Bay Cities has won several awards for its displays. While corrugated construction has long been a mainstay for POP and POS displays, other materials also used are polystyrene, foam board, acrylic, wood, and more.

GROWING DEMAND Today’s displays have moved beyond static boxes or floor stands to incorporate movement, sound, and increasingly sophisticated technology to stand out and delight customers. The industry is seeing an uptick in both demand and innovation. According to a Global POP Displays Market report, the market is predicted to expand at a compound annual growth rate of 5.9% from 2018 to 2026. “Product interaction before the purchase remains the overriding factor driving sales through physical retail [stores],” the report says. “[POP] displays are one of the major platforms that draw consumers’ attention and convey product benefits, thereby ensuring product interaction and influencing the pulse purchase.” Displays are also becoming increasingly innovated by advances in both construction and technology, such as augmented and virtual reality to enhance the consumer experience in new ways. And it surely won’t be long before some unheard-of technology graces retail floors and influences the way we buy— and impacts the way boxmakers deliver the experience.

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BOXSCORE March/April 2020

EAT, DRINK, GROW

Exploring opportunities in food and beverage packaging By Robert Bittner

oxmakers are poised for growth over the next five to 10 years, according to two recent industry studies. One of the primary drivers for that growth will be food and beverage packaging. “The growth in [the] global corrugated packaging and containerboard market is [attributed] to various factors such as ... [an] expanding food and beverage market,” notes a study by Koncept Analytics, titled Global Corrugated Packaging & Containerboard Market Report: Insights, Trends & Forecast (2019–2023). Notably, North America was singled out for contributing the largest share of that growth, “due to rising domestic product and growing demand for packed food and beverages.” Specifically, the study points out, “The market is expected to experience key developments like higher demand from the processed food market and fit-to-product characteristic of the corrugated box.” Additionally, research firm Frost & Sullivan suggests that, globally, food and beverage packaging is expected to reach $368 billion by 2030. While that total represents all forms of packaging materials, boxmakers—creators of recyclable, sustainable containers—will have a clear edge as their clientele continue to source environmentally responsible products. Making the most of these opportunities means tapping into a diverse range of growing markets. Tapping Into Trends For Rob Callif, president and chief operations officer at BCM Inks, four main trends have been driving the company’s growing food and beverage business: e-commerce, the growth of microproducers, increasing interest in a variety of healthier options, and the impact of personalization. “Since convenience is of high importance to consumers, e-commerce will continue to grow, with companies like Blue Apron delivering food and beverages to a consumer’s door,” Callif says. “When it comes to new or growing markets, the craft beer business definitely has been a boom.” However, Callif notes, it isn’t just about beer. “Microproducers not only include microbreweries, which will continue to grow, but also microdistilleries, because consumers want localized gin, vodka, etc.” While healthy food and beverage options have been around for decades, Callif is still seeing expansion in this area as more and more companies respond to shifting consumer tastes. “There have been more health-food products and more diversity within food and beverage options,” he says. And when it comes to the recent popularity of personalization, he points to the impact of Coca-Cola’s promotions, which involve printing people’s names and university names on its cans. “We’re only going to see a greater demand for personalization moving forward.” Sumter Packaging has also addressed the expanding needs of niche distilleries. Matt Whitlock, a packaging design engineer for the company, says, “Over the last year or two, the spirit business seems to be bringing in a lot of regional companies, mom-and-pop distilleries that are making their own vodkas and other flavored spirits. We’ve always handled spirits businesses, but now we’re getting more smaller companies.” Niche distilleries are joining a range of regional customers served by Sumter Packaging. “Regionally, we’ve also got a couple of big honey customers in the area. Other specialty foods include jams, popcorn in various flavors,

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“A lot of people are getting away from single-use plastics and other nonsustainable materials, looking for solutions that replace materials that can’t be recycled.” — Matt Whitlock, packaging design engineer, Sumter Packaging and energy drinks,” Whitlock says. While these markets may not reflect national trends, they highlight the unique opportunities that come with being a regional corrugated boxmaker. Exploring Your Own Niches Like most segments of the marketplace, when it comes to food and beverage, no one company’s experience can speak for all. For example, while localized beer and spirits have been a boon for some, they have had little impact on the kind of display work typically handled by Peachtree Packaging. “Craft beer hasn’t really been significant for us,” notes Paul Terry, Peachtree Packaging’s display division manager. “I think a lot of microbreweries are still too small in size to best utilize what we offer,” which can include displays featuring lighting, electronics, sound, and motion. Although some permanent displays feature wood, acrylic, and wire, Terry says the company prefers to focus on corrugated. “We do get custom orders for limited-release specialty beverages, but those probably fall more into the category of a marketing piece for an event rather than a display,” adds Pete Galbiati, Peachtree’s director of marketing. “Ninety-nine percent of the time, the distributors for these products don’t have a big enough retail footprint to roll out a display or packaging solution. But there are definitely a lot more of them in the marketplace. We get a lot of inquiries from people, but most of them are just testing the waters. “When I think of growing markets for us,” Galbiati continues, “one of the most significant recently has been shelfready packaging for the bakery side of the business.”

BOXSCORE March/April 2020

That doesn’t mean the company is ignoring the beverage side of food and beverage. The focus just happens to be on serving larger distributors rather than niche or local producers. “We do a lot with boxed wines from some of the bigger groups,” Galbiati says. “Just in the last year, we have seen a trend for boxed spirits [and] liquor. We have also done a lot of dual promotions on the beverage side, cross-promotional beverage displays featuring multiple products from the same distributor [or] manufacturer. They’ll feature a beer and spirit or a spirit and a mixer on the same display.” One of Peachtree Packaging’s most innovative beverage displays won the company an AICC Independent Package Design award in 2019 for the best use of corrugated replacing other substrates. The display, shaped like a large vertical coffin, was produced for Black Box Wines. Given the weight and shape requirements of the product, other companies might have taken a different approach. But Peachtree’s commitment to corrugated paid off. That commitment has inspired a number of innovative market solutions for growing the company’s food and beverage business.

with corrugated, being environmentally conscious in the materials we use, and producing displays that are recyclable. “We really wouldn’t be able to do all of those things if we didn’t have a good design and engineering team,” he adds. “They make it possible for us to provide unique solutions. “People sometimes come to us and know exactly what they want us to make. But other times, we have the opportunity to change how things are typically being done,” Galbiati says. “With our design lab and what we can do from a sampling standpoint, we can make physical displays or products that highlight new approaches that can exceed the client’s expectations and stand out in the marketplace.”

Innovating Opportunities Creative thinking can lead to previously untapped—and even unknown—segments of the food and beverage market. “Most recently, we’ve been doing more in the agricultural space,” Galbiati says. “Over the past year, we’ve developed some patent-pending designs in fruit baskets that allow some of the big growers who sell food directly from where it’s grown to have something brandable and recyclable. Getting Creative This was generated from a need we saw in “Part of the reason the Black Box wine the marketplace. display was so popular was the fact that we “When it comes to packing fruit, there gave the client a different way to display 24 wasn’t really a solution for peaches, boxes of wine,” Galbiati says. “They started apples,” he explains. “Basically, they had out wanting a permanent wood display, plain wicker baskets. But the on-site sales and we showed them we could build it out industry for some of these growers is huge. of corrugated instead and still hold their So we created corrugated, branded bas300 pounds of product. Our unique design, kets that can even tie into [the growers’] combined with high-impact graphics, social media.” really stood out in the marketplace. And Peachtree’s design team considered it highlighted some of our key strengths— every element of the proposed box, from our ability to come up with innovative its overall strength to the height of the ways of replacing different substrates handle, and even its breathability once

— Rob Callif, president and chief operations officer, BCM Inks filled. “Brandability and storage were also important features that were value-add from the traditional solution,” Galbiati says. “When people pick peaches off their farms, they now have a branded basket that has capacity and strength and can be stored and stacked.” The company’s willingness to address customers’ needs in innovative ways was driven, in part, by the ever-increasing desire on the part of customers for products that are both recyclable and sustainable. Frost & Sullivan noted in the 2019 study titled Global $368 Billion Food and Beverage Packaging Market, Forecast to 2030 that “packaging is important for end users and suppliers alike. As consumers are increasingly becoming environmentally conscious, concerns around plastic pollution, specifically, are growing. Viral videos and images of plastic waste affecting marine life and polluting the Mariana Trench have made combating plastic pollution the topmost priority for consumers.” “A lot of people are getting away from single-use plastics and other nonsustainable materials,” Whitlock points out, “looking for solutions that replace materials that can’t be recycled. That’s challenged us to develop other solutions. For example, a customer had a display that

BOXSCORE March/April 2020

Photo courtesy of AICC.

“Food and beverage companies do not want to have two of the same display on a shelf and have one look different from the other; Coke red needs to be Coke red.”

Peachtree Packaging's coffin design for Black Box wines was one of the clear standouts at AICC's 2019 Independent Package Design Competition.

held energy drinks, but it used plastic clips to help support the shelves. We collaborated with the customer to eliminate the plastic while still handling the bottle weight. Demand for products like that is only going to continue. Single-use plastic use is being looked at hard. I think there’s still opportunity for innovation.” Branding for Success Regardless of the market segment, branding is key. And one of the essentials of effective branding is the use of inks and other elements that deliver high quality. “If the package is bright, accurate, and consistent, it’s a powerful way to differentiate products and help establish identity in the marketplace,” Callif says. A number of qualities make an ink the right ink for a particular food and beverage application. “First,” Callif says, “the inks need to be environmentally correct. Sustainability is important to food and beverage companies, which goes beyond just the recyclability of the box. “Second, most inks are designed for indirect food contact—99% of corrugated is for indirect food contact—so they do not have to be approved by the FDA. But if an ink or varnish is touching the food, then an FDA-approved ink or varnish is required. “Third, color accuracy is extremely important across the print runs. Food and beverage companies do not want to have

two of the same display on a shelf and have one look different from the other; Coke red needs to be Coke red. “Fourth, some companies require a barrier-type function to their box or display, which can mean alcohol resistance, rub resistance, or water resistance.” Finally, Callif says, “A lot of printers and their vendors, such as ink companies, are getting audited for traceability purposes, so you need to make sure you have good manufacturing processes in place. In order to help out with traceability, at BCM we have bar codes on all of our products that go to printers so they can trace the batch being used on a print job.” Growing Your Reach With the right balance of elements in place, boxmakers will be well equipped to make the most of whatever food and beverage opportunities arise through previously untapped local markets or larger market trends that bring new customers and inspire new solutions. “The good news about food and beverage is that people always need to eat and drink,” Callif says. “I’m definitely optimistic about the future for food and beverage packaging.” Robert Bittner is a Michigan-based freelance journalist and a frequent BoxScore contributor.

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BOXSCORE March/April 2020

STEPPING UP AND STANDING OUT South of the U.S. border, Mexican boxmakers are seeing results—with some help from their Association By Geoff Williams

f you own an independent corrugated or folding carton manufacturer in Mexico, your TV is probably tuned in to FOROtv, a popular cable news channel. But you also are likely carefully watching international channels, such as CNN, Fox News, and maybe the BBC. Because whatever’s going on globally will probably affect your business. Of course, that’s the way of the world. We’re all interconnected more than ever.

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There’s a lot in the news that is affecting boxmakers around the world. E-commerce continues to explode and pay off for the corrugated packaging market. Any time there’s a story in the news about climate change, that’s another argument for corrugated protective packages instead of polymer-based alternatives. And of course, for years, the highly anticipated United States-Mexico-Canada Agreement (USMCA) was debated and discussed in Washington, D.C., and finally signed, making occasional headlines throughout that process. So, how is it going for boxmakers in Mexico, particularly, where AICC continues to grow its member presence? Washington Box Humberto Treviño is the commercial director of Washington Box. The company is located in Monterrey, the industrial capital of Mexico, in the state of Nuevo León. THE EARLY DAYS

Treviño started his company in 1998. It was originally called Super Cajas y Empaques Industriales and had modest beginnings—rudimentary equipment and a couple of wooden tables. Treviño figures his company started off with about US$700 worth of startup capital. But Treviño persevered, and as he kept getting orders and began doing more and more business in the United States, often traveling to various cities around the country to meet clients, he decided to change his company’s name to the more Americanized moniker of

BOXSCORE March/April 2020

Washington Box, though people often refer to it as Wabox. Today, the company is thriving and has 70 employees. In 2017, after seven years working at fast-moving transnational consumer goods companies, Treviño’s son, Patricio, joined the company to strengthen the organization and, as the second generation joins the business, to lead it into the next steps in the growth plan that soon will be announced publicly. Patricio started off running the company’s finances and is now Wabox’s operations manager. AICC PL AYING A ROLE

A couple of years after starting his company, Treviño learned about AICC and started attending meetings, seminars, and classes. It was, according to Treviño, the jet fuel his company needed, helping him network and get access to information that only a corrugated company president could love. “They asked me to be a part of a task force to help form an association with Mexico,” Treviño says. Treviño started recruiting other people in the industry to see if they’d want to come to an AICC México conference. “People thought it was a crazy idea,” he says. “In those days, the old guys always told us it wasn’t possible to sit at the same table in the same room with Mexican competitors. They were thinking that these people weren’t competitors but enemies. That was the advice we were hearing.” So Treviño didn’t expect much from that first meeting—and was stunned

when twice as many people as expected arrived. “It was nice to have more people,” Treviño says. “But it forced us to quickly find another factory to visit and to find a bigger place for the meeting, more food, more notebooks, another bus—double everything.” Still, he made it work, and people kept coming to conferences and meetings. Treviño hopes AICC has helped his fellow boxmakers, and he says he

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knows it helped him. “If I weren’t part of AICC, my company may have not survived the very first three or four years,” he says. “Most of the knowledge I have came from AICC, through friends, visiting factories, and of course, the meetings, seminars, everything. All the knowledge we share among box plant owners.” In fact, Treviño says of his chosen industry, “The boxmaking industry is like one big family. There’s always somebody open to helping you. If you want to find a solution to a problem you’ve never encountered, you can usually find somebody who has been in that situation before. Boxmakers are very open in the exchange of ideas.” That’s helped Treviño’s company and the industry immeasurably, he says. ON THE HORIZON

Treviño feels good about his company’s future—and the Mexican box industry in northern Mexico. He says that the perception in southern Mexico is often another story. “In 2019, Mexico’s GDP contracted for the first time since 2009’s world recession; there’s this perception that in the southern states the economy is stagnant or contracting,” he says. In northern Mexico, where there are more factories and companies like his, “business is booming. Unlike the country’s, the state’s GDP grew, and the labor demand perspective is to double next year.”

BOXSCORE March/April 2020

“ We were just a company that sold corrugated boxes, so we wanted to be different. We wanted to create something new for our customers, something that was outstanding in the market.” — Sergio Menchaca Flores, general director, Eko Empaques de Cartón Treviño feels that the newly signed USMCA will help the Mexican box industry, mostly because, as he puts it, “the ‘new NAFTA’ is going to give peace of mind to big investors.” But whatever happens, Treviño feels that the Mexican box industry is healthy, even if the economy in Mexico is not. “I see things going well for the region, even with the political squalls that we have had.” And as for Washington Box, he says, “We’re pretty busy, and at the end of the day, our growth is showing that we’re going in the right direction.” Eko Empaques de Cartón, S.A. de C.V Sergio Menchaca Flores is the general director of Eko Empaques de Cartón, S.A. de C.V. In English, that translates to Eko Packaging. The company is located in the city of Cortazar, in the state of Guanajuato. Menchaca is the CEO. His brother, Andrés, is his partner, the CFO.

BEGINNINGS

Menchaca’s father, Sergio Menchaca Garcialonso, founded Eko Packaging in 1994. The company did quite well from the start, although it was battered a bit by the Great Recession, which officially lasted from 2007 to 2009. Once the economy began to rebound, in 2013, Sergio Sr., a serial entrepreneur, decided, now that his children were older, to see whether his sons were interested in taking over one of his businesses. Sergio Sr., in the meantime, would focus on running Poliempaques Flexibles with his daughter, Monica. Poliempaques Flexibles is a polyethylenemanufacturing company that produces mainly bags for fresh produce, such as lettuce, carrots, broccoli, and onions. It was founded around 1970, started by Sergio Sr.’s father, Ignacio Menchaca. According to Sergio Jr., his grandfather started the business around 1970 with a small machine in his house, with a loan from the machine manufacturer.

“ If you want to find a solution to a problem you’ve never encountered, you can usually find somebody who has been in that situation before. Boxmakers are very open in the exchange of ideas.”

the company, it was making US$200,000 a year in annual revenue and employed 12 people. In 2019, the company’s annual revenue was US$3.8 million, and projections for 2020 are US$5.7 million. Eko Packaging now employs 100 people. During that time, Sergio Jr. says, Eko Packaging wasn’t the only thing improving—the entire boxmaking — Humberto Treviño, commercial director, Washington Box industry in Mexico was upping its game. “Our competition started to professionalize,” he says. “They started to deliver a “My father as a kid, along with my Many of the changes came from better service to their customers.” grandmother Martha, made and sold listening more carefully to the customer, So Sergio Jr. made sure that Eko small bags for the local markets,” he according to Sergio Jr. Packaging wasn’t just improving and says. “They started small, and they grew “We were just a company that sold professionalizing but also training its their business over the years, becoming corrugated boxes, so we wanted to employees and getting certifications. He an important manufacturing business in be different. We wanted to create says that the company also started to the region. something new for our customers, recognize that with some innovation and So entrepreneurship runs in the famsomething that was outstanding in adjusting how they had been manufacily. (In fact, before 2013, Poliempaques the market,” Sergio Jr. says. He began turing, Eko could save their customers Flexibles was being run by Sergio’s Aunt asking his customers and prospects money, not only in cardboard savings but Carmen.) But back to Eko Packaging. what their main issues were with the also in logistics. For instance, Eko found “In the beginning,” Sergio Jr. says, industry—with the hope that Eko a way for one of their automotive cus“my father wasn’t confident that I would could solve them. tomers to fit almost double the amount get good results. He was making all of “That became a very important of parts into the same box, putting in 30 the decisions in the company—despite moment in the company,” Sergio parts instead of 16. When they were able the fact that I was in charge.” Jr. says. to do that, Sergio Jr. says, “we saved the Sergio Sr. had good reason to be Eko Packaging slowly but surely client US$200,000 a year in cardboard somewhat concerned. Sergio Jr. was began attracting more customers, and but US$2 million in logistics.” only 26. Andrés was only 23. Sergio Jr., while it began hiring more people, it After all, if you have fewer cardboard nevertheless, asked his father to start let go of some of the employees who boxes to transport, you have fewer stepping back. “I will listen to your weren’t interested in the new firm’s new trucks and man-hours that go into advice, but the decisions are going to be corporate culture. moving those cardboard boxes. on me,” he told his father. Sergio Sr. respected that request— SEEING SUCCESS TODAY THE AICC EXPERIENCE and Sergio Jr. and his brother started But Sergio Jr. and Andrés knew what they As Sergio Jr. and Andrés have taken making a lot of changes to the company. were doing. In 2013, when they took over their company to the next level, AICC

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has been a helpful tool in the arsenal, according to Sergio Jr. “We’ve been members for about five years,” he says. “It has been a great experience to create connections and network.” Many of his competitors, Sergio Jr. says, he now considers friends. That hasn’t made any company weaker, he adds. His company and competitors are all benefiting from sharing their industry knowledge. And Sergio Jr. says that he has picked up a lot of industry knowledge through AICC. “The content that we see at the annual meetings, the conference, the seminars—those events create a lot of value for us,” he says. LOOKING AHEAD

As for the future, Sergio Jr. thinks it looks potentially bright, even with Mexico’s economic problems. The Mexican economy stagnated in 2019, and the International Monetary Fund cut its

BOXSCORE March/April 2020

growth forecasts for 2020 and 2021. It believes that Mexico’s GDP will grow only 1% this year instead of a recent 1.3% prediction, and that instead of 1.9% growth in 2021, it’ll likely be 1.6%. “We are not worried,” Sergio Jr. says, adding that Eko is busy trying to strengthen the company, so it can be resistant to any downturns in the economy. “We are looking for a possible recession in the country. So the economic overview is not the best. But I like to think in a worst-case scenario, because if we do that, we can create strategies to avoid the impact on us.” And so, Sergio Jr. says, he is growing his sales department and making sure they’re getting good training. In other areas of the company, however, he is reducing costs and spending, where it makes sense. “If we do that, I believe we’ll be even more competitive in any possible recession and that we’ll be one of the leaders in our part of the industry,” he says.

And how does Sergio Jr. feel about the USMCA? He seems, well, sort of enthusiastic. He doesn’t appear to think it will bring untold riches to the Mexican boxmaking industry, but he doesn’t think the USMCA will hurt it. “Some processes that were made 100% here in Mexico will have to be passed to the United States or Canada to be finished,” Sergio Jr. says, sounding slightly concerned or frustrated. And then he brightens: “But on the other hand, that process having to be made somewhere else might mean that they have to use more cardboard because they have to do more shipping. So it might be a good thing for the cardboard industry.” Geoff Williams is a journalist and writer based in Loveland, Ohio. He can be reached at boxscore@ theYGSgroup.com.

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FORTALECERSE Y DESTACAR

En la frontera sur de los Estados Unidos, los productores de cajas en México están viendo resultados—con algo de ayuda de su asociación.

i eres dueño de una fábrica de manufactura de cartón corrugado o cartón plegado en México, es posible que tu televisor reciba FOROtv, un popular canal de noticias por cable, pero también es posible que estés viendo con atención canales internacionales, tales como CNN, Fox News e incluso la BBC ya que, lo que ocurra globalmente, muy posiblemente afecta a tu negocio. Por supuesto. Así es como funciona este mundo. Estamos más interconectados que nunca. Hay muchas cosas que están pasando en las noticias que afectan a los

BOXSCORE March/April 2020

productores de cajas de cartón alrededor del mundo. El comercio electrónico (E-commerce) continúa creciendo exponencialmente y es redituable para el mercado de empacado de corrugados siempre que hay una historia en las noticias acerca del cambio climático, otro argumento en favor de los paquetes protectores de corrugado, en lugar de las alternativas basadas en polímeros. Y, por supuesto, se ha debatido durante años en Washington, DC el tan anticipado acuerdo de libre comercio entre los Estados Unidos, México y Canadá (T-MEC, o USMCA) el cual ha sido

firmado finalmente, lo cual ha ocupado las primeras planas varias veces a lo largo de todo este proceso. Por todo lo anterior, ¿cómo les va a los productores de cajas de corrugados en México, particularmente cuando AICC continúa incrementado la presencia de sus miembros? Washington Box Humberto Treviño es el Director Comercial de Washington Box. La compañía está localizada en Monterrey, la capital industrial de México, en el estado de Nuevo León.

LOS COMIENZOS

Treviño comenzó su compañía 1998. Originalmente se llamaba Super Cajas y Empaques Industriales y tuvo un inicio modesto: equipo rudimentario y un par de mesas de trabajo. Treviño estima que su empresa comenzó con un capital semilla de aproximadamente US$700. Sin embargo, Treviño perseveró y continuó obteniendo pedidos y haciendo más y más negocio con los Estados Unidos, viajando frecuentemente a varias ciudades alrededor de este país para conocer clientes, por lo que decidió cambiar el nombre de su compañía por un nombre más americanizado: Washington Box, aunque la gente se refiere a su negocio como “Wabox”. Hoy en día, la compañía está floreciendo y cuenta ya con 70 empleados. Actualmente compran piezas de equipamiento nuevas y se enfocan en el crecimiento de las capacidades técnicas de su equipo y herramientas. En el 2017, después de trabajar durante siete años para compañías transnacionales de productos de consumo, Patricio, el hijo de Treviño, se unió a la compañía para fortalecerla. Ahora, la segunda generación se suma al negocio para liderarla en sus siguientes pasos dentro de su plan de crecimiento, mismos que pronto serán anunciados públicamente. Patricio comenzó manejando las finanzas de la compañía y ahora es el Gerente de Operaciones de Wabox. EL ROL QUE JUEGA AICC

Un par de años después de comenzar la compañía, Treviño escuchó acerca de AICC y comenzó a asistir a sus reuniones, seminarios y clases. Esto fue, de acuerdo con Treviño, el combustible que su empresa requería para ayudarlo a conectarse y obtener acceso a información que solamente el presidente de una empresa de cartón apreciaría. “Me preguntaron si quería yo ser parte de un equipo para formar una asociación en México,” comentó Treviño.

Treviño comenzó a reclutar a otras perÉl comentó que esto ha ayudado sonas de la industria para ver si estaban tremendamente no solo a la compañía de interesados en asistir a una conferencia Treviño, sino a la industria entera. de AICC México. “La gente pensó que era una idea muy extraña,” dijo. “En EN EL HORIZONTE aquellos días, la gente de la vieja guardia Treviño se siente bien respecto al futuro nos decía que no era possible sentarse a de su compañía, así como al de la la misma mesa y en el mismo cuarto con industria mexicana de cajas en el norte competidores mexicanos. Ellos pensaban de México. Él dice, sin embargo, que que estas personas no eran competidores, la perspectiva en el sur de México es sino enemigos. Ese era el tipo de cosas otra historia. que estábamos escuchando.” “En el 2019, el Producto Interno Bruto Por todo esto, Treviño no esperó (PIB) de México se contrajo por primera mucho como resultado de aquella privez desde la recesión económica del mera reunión, y se quedó maravillado 2009. “Existe la percepción de que, en cuando vio llegar a más del doble de las los estados del sur del país, la economía personas que estaba esperando. “Fue está estancada o se está contrayendo,” muy bueno tener más gente,” comentó comentó. En el norte de México, en Treviño. “Pero eso nos forzó a encontrar donde existen más empresas y fábricas rápidamente otra fábrica para visitar y como esta, “los negocios están en auge. encontrar un sitio más grande para la En contraste con el resto del país, el PIB reunión, más comida, más cuadernos estatal creció y la perspectiva es que la para notas, otro autobús… el doble demanda por mano de obra se duplicará de todo.” el próximo año.” A fin de cuentas, logró hacer que todo Treviño siente que el nuevo acuerdo saliera bien y la gente continuó asistiendo “T-MEC”, o “USMCA” ayudará a la a conferencias y reuniones. Treviño industria mexicana de cajas de cartón espera que AICC haya ayudado a sus principalmente porque, como él mismo colegas productores de cajas, y él dice lo dice, “el nuevo NAFTA” les brindará que él sabe que esto les ayudó. “Si yo no un sentido de seguridad a fuera parte de AICC, mi compañía tal los inversionistas.” vez no hubiera sobrevivido los primeros Pase lo que pase, Treviño siente que tres o cuatro años,” dijo. “Muchos de los la industria de cajas en México es saludconocimientos que tengo provienen de able, aunque la economía de México AICC por medio de amigos, de visitas a no lo sea. “Yo veo bien las cosas para la fábricas y, por supuesto, de las reuniones, región, aún con los problemas políticos seminarios, de todo. De todos los que hemos tenido.” Y, en cuanto a conocimientos que compartimos entre los Washington Box, comenta: “Tenemos dueños de plantas de fabricación de cajas.” mucho trabajo y, al final del día, nuestro De hecho, Treviño comenta respecto crecimiento está demostrando que a su industria: “La industria de las cajas vamos en la dirección adecuada.” es como una gran familia. Siempre hay alguien dispuesto a ayudarte. Si quieres Eko Empaques de Cartón, S.A. de C.V encontrar la solución a un problema al Sergio Menchaca Flores es el Director que nunca te habías enfrentado, normalGeneral de Eko Empaques de Cartón, mente puedes encontrar a alguien quien S.A. de C.V. En inglés, esto se traduce ya ha estado en esa situación anteriorcomo “Eko Packaging”. mente. Los productores de cajas somos La compañía se localiza en la ciudad muy abiertos para compartir ideas.” de Cortázar, en el estado de Guanajuato.

BOXSCORE www.aiccbox.org

“ Si quieres encontrar la solución a un problema al que nunca te habías enfrentado, normalmente puedes encontrar a alguien quien ya ha estado en esa situación anteriormente. Los productores de cajas somos muy abiertos para compartir ideas.” — Humberto Treviño, director comercial, Washington Box Menchaca es el CEO. Su hermano, Andrés, es su socio y CFO. COMIENZOS

El padre de Menchaca, Sergio Menchaca Garcialonso, fundó Eko Packaging en 1994. A la compañía le fue bien desde el comienzo, aunque resultó golpeada por la gran recesión, que duró oficialmente del 2007 al 2009. Una vez que la economía comenzó a repuntar en el 2013, Sergio Sr., un emprendedor múltiple, decidió averiguar si, ahora que sus hijos eran ya mayores, les interesaría hacerse cargo de su negocio. Sergio Sr., mientras tanto, se enfocaría en manejar Poliempaques Flexibles junto con su hija, Mónica. Poliempaques Flexibles es una compañía de manufactura de polietileno que produce principalmente bolsas para verduras frescas tales como lechuga, zanahoria, brócoli y cebolla. Fue fundada alrededor de 1970 por el padre de Sergio Sr., Ignacio Menchaca. De acuerdo con Sergio Jr., su abuelo comenzó este negocio alrededor de 1970 con una pequeña máquina en su propia casa, con un préstamo del mismo productor de la máquina. “De pequeño, mi padre, junto con mi abuela Martha, fabricaban y vendían pequeñas bolsas para los mercados locales,” dijo. “Comenzaron muy pequeños y crecieron su negocio con los años, convirtiéndose en importantes fabricantes de la región”. Ser emprendedor es algo que corre por la familia. (De hecho, antes del 2013,

BOXSCORE March/April 2020

Poliempaques Flexibles era manejado por la tía de Sergio, Carmen.). Pero regresemos a Eko Packaging. “Al principio,” dice Sergio Jr., “mi padre no confiaba que yo diera buenos resultados. Él tomaba todas las decisiones de la compañía, aun cuando yo estaba a cargo.” Sergio Sr. tenía razón de preocuparse. Sergio Jr. solamente contaba con 26 años. Andrés solamente tenía 23. Sergio Jr., sin embargo, le pidió a su padre que le soltara las riendas. “Yo seguiré tu consejo, pero las decisiones las tomaré yo,” le dijo a su padre. Sergio Sr. respetó esa solicitud y Sergio Jr. y su hermano comenzaron a hacer muchos cambios en la compañía. Muchos de estos cambios consistieron en escuchar más cuidadosamente al cliente, de acuerdo con Sergio Jr. “Éramos solamente una empresa que vendía cajas de cartón, pero queríamos ser diferentes. Queríamos crear algo nuevo para nuestros clientes, algo que sobresaliera en el mercado,” dice Sergio Jr. Él comenzó a preguntarle a sus clientes y prospectos cuáles eran los principales problemas de la industria, con la esperanza de que la empresa suya y de su hermano pudiera resolverlos. “Ese se convirtió en un momento muy importante para la empresa,” dijo Sergio Jr. Eko Packaging comenzó a atraer más cliente, despacio pero consistentemente y, si bien comenzaron a contratar más empleados, también les dijeron adiós a

aquellos empleados quienes no estuvieron interesados en la nueva cultura corporativa de la nueva empresa. DISFRUTANDO DEL ÉXITO HOY

Sergio Jr. y Andrés sabían lo que estaban haciendo. En el 2013, cuando tomaron el mando de la compañía, facturó US$200,000 en ingresos anuales y empleaba a12 personas. En el 2019, el ingreso anual fue de US$3.8 millones y la proyección para el 2020 es de US$5.7 millones. Eko Packaging actualmente da empleo a 100 personas. En aquel momento, dice Sergio Jr., Eko Packaging no era lo único que estaba mejorando; la industria de cajas de cartón en su totalidad estaba mejorando. “Nuestra competencia comenzó a profesionalizarse,” comentó. “Comenzaron a brindar un mejor servicio a sus clientes.” Por esta razón, Sergio Jr. se aseguró de que Eko Packaging no solamente mejorara y se profesionalizara, sino que también entrenara y ofreciera certificaciones a sus empleados. Comenta que la compañía también comenzó a reconocer que, con un poco de innovación y ajustes en su manufactura, Eko podría ahorrarles dinero a sus clientes, no solamente en relación a sus cajas de cartón, sino también en logística. Por ejemplo, Eko encontró la manera de que uno de sus clientes automovilísticos acomodara casi el doble de partes en cada caja, colocando así 30 partes, en lugar de16. Cuando lograron eso, dice Sergio Jr., “le

nilox

ahorramos al cliente no solo US$200,000 anuales en cartón, sino US$2 millones en logística”. Después de todo, si tienes menos cajas de cartón que transportar, tienes menos camiones y menos horas-hombre dispuestos para mover esas cajas. L A EXPERIENCIA AICC

A medida que Sergio Jr. y Andrés han llevado a su empresa al siguiente nivel, AICC ha sido una herramienta útil en su arsenal. De acuerdo con Sergio Jr.: “Hemos sido miembros por aproximadamente cuatro años. Ha sido una gran experiencia el crear conexiones y redes de contactos.” A muchos de sus competidores, dice Sergio Jr., ahora los considera sus amigos. Añadió que eso no ha debilitado

a ninguna empresa. Su compañía y sus competidores se están beneficiando de compartir los conocimientos de la industria. Sergio Jr. dice, además, que ha adquirido muchos conocimientos acerca de esta industria por medio de AICC. “El contenido que vemos en las reuniones anuales, las conferencias, los seminarios, esos eventos generan mucho valor para nosotros” comentó. MIRANDO HACIA ADEL ANTE

En cuanto al futuro, Sergio Jr. piensa que se ve prometedor, incluso con todo y los problemas económicos de México. La economía mexicana se estancó en el 2019, y el fondo Monetario Internacional recortó su pronóstico de crecimiento para el 2020 y 2021. Creen que el PIB crecerá

tano solo un 1% este año, en lugar de la predicción del 1.3% y que, en lugar del 1.9% de crecimiento para el 2021, el crecimiento será más probablemente alrededor del 1.6%. “No estamos preocupados,” dice Sergio Jr., añadiendo que Eko está enfocada en seguir robusteciendo la empresa para que pueda resistir los altibajos de la economía. “Estamos previendo una possible recesión en el país, por lo que el panorama económico no es el mejor, pero quiero pensar que, en el peor de los casos, podemos crear estrategias que eviten ese impacto en nosotros.” Además, Sergio Jr. Dice que está creciendo su departamento de ventas y se está asegurando de que tengan buen entrenamiento. En otras áreas de la compañía, sin embargo, está reduciendo

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“ Éramos solamente una empresa que vendía cajas de cartón, pero queríamos ser diferentes. Queríamos crear algo nuevo para nuestros clientes, algo que sobresaliera en el mercado,” — Sergio Menchaca Flores, director general, Eko Empaques de Cartón

costos y gastos, siempre y cuando haga sentido. “Si hacemos esto, yo creo que seremos aún más competitivos ante la eventualidad de una recesión y que seremos unos de los líderes en nuestra parte de la industria,” comentó. ¿Y cómo se siente Sergio Jr. acerca del T-MEC (USMCA)? Tal parece que se siente algo entusiasmado. No parece creer que le traerá riquezas insospechadas

a la industria de cajas de cartón en México, pero no cree que este tratado los vaya a perjudicar. “Algunos procesos que antes se hacían 100% aquí en México, ahora tendrán que pasar a los Estados Unidos o a Canadá para ser finalizados,” dice Sergio Jr., con un dejo de preocupación o frustración, pero luego se alegra: “Pero, por otra parte, este proceso que se deberá hacer

en alguna otra parte podría significar que tengan que usar más cartón, porque tendrán que hacer más envíos, de tal modo que podría ser bueno para la industria del cartón.” Geoff Williams es un reportero y escritor que vive en Loveland, Ohio. Puede ser contactado en boxscore@theYGSgroup. com.

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BOXSCORE March/April 2020

ollowing the passing of Steve Jobs in October 2011, numerous stories about his brilliance, management style, mindset, and, most notably, his stubbornness began flooding the news and internet. His focus on quality was second to none and was illustrated well by one of Google’s executives. Vic Gundotra, Google’s chief of engineering at the time, was attending a religious service on a Sunday morning with his family when an unknown caller began calling his phone over and over. When the service was over, Gundotra checked his voicemail and listened to a frantic message from Jobs. “Vic, can you call me at home? I have something urgent to discuss.” Before Vic even reached his car after the service, he called Jobs back, wondering what could be this important on a Sunday morning. “So Vic, we have an urgent issue, one that I need addressed right away,” Jobs said. “I’ve already assigned someone from my team to help you, and I hope you can fix this tomorrow. I’ve been looking at the Google logo on the iPhone, and I’m not happy with the icon. The second O in Google doesn’t have the right yellow gradient. It’s just wrong, and I’m going to have Greg fix it tomorrow. Is that OK with you?” Quality standards in package printing have advanced tremendously over the past 10 years. The importance of achieving color on press has never been greater to the retailer who is looking for every little edge to stand out on a crowded shelf. At Huston Patterson, this focus on quality has forced us to become a better printer. It isn’t unusual now for us to be asked to stay within a 2 delta E standard for PMS colors. It is common now for people to require samples with the delta E readings clearly marked on them, along with a complete ink density printout. Our

clients are being put under the gun by their customers to achieve perfection in their boxes, so it has become our highest priority to see that the look, and sometimes the feel, is exactly what they want. I wish I could say every sheet that leaves our facility is perfect, is exactly the way the client wants it, but perfection is something we are constantly striving for. Unfortunately, printing, like other forms of manufacturing, isn’t a perfect process. It involves people and machinery, and between the two, there are countless variables that can affect the outcome. That doesn’t stop us from aiming for a perfect print each and every time we start up the presses. Long ago, we recognized the quality movement in packaging printing and will continue to be innovators in the industry in order to exceed our clients’ expectations. Jobs was so concerned about the yellow gradient on one letter of an extremely small icon that he was up early on a Sunday morning worrying about it. His attention to detail, his focus on quality turned Apple into one of the most iconic, influential, and successful companies of all time. His interaction with Gundotra that Sunday morning left a lasting impression on the man, to which I think we can all relate as professionals in the manufacturing industry striving for the highest possible quality standard. “When I think about leadership, passion, and attention to detail, I think back to the call I received from Steve Jobs on a Sunday morning in January,” Gundotra said. “It was a lesson I’ll never forget. CEOs should care about details. Even shades of yellow. On a Sunday.” Joe Morelli is vice president of sales and marketing for Huston Patterson Printers and is vice chairman of AICCs Associate board.

What the Tech?

Don’t Forget to Eat Your Peas BY MICHAEL HARRIS

ou might want to consider stocking up on peas in your kitchen. No, this isn’t an article about how you should diet; this is about what you may be cooking up in your starch kitchen sometime soon. The global demand for pea production is growing as the world continues to move toward bio-based proteins. Pea protein consumption increased 19% between 2016 and 2018. According to an October 2019 article from GlobeNewswire, the pea protein market is estimated to experience a 7.9% compound annual growth rate, from about $90 million in 2018 to $165 million in 2026. Pea proteins show up in yogurt, snack bars, and the new Burger King Impossible Whopper because it is naturally lactose-free and a safe alternative for people with egg and dairy allergies. Additionally, pea-based proteins have superior flavor profiles over other legumes such as soy and

BOXSCORE March/April 2020

can be found as a main ingredient in gluten-free foods. The rising global demand for peas has caught the attention of Cargill, which invested $75 million in October 2019 in a joint venture with Puris, a leader in plant-based protein manufacturing. Ingredion also announced its entrance into the pea protein market through its product Vitessence Pulse 1803 in March 2019. This is in addition to its $140 million investment in a new pea protein facility in South Sioux City, Neb., and a second investment into a joint venture with the Oscar-winning film director James Cameron and spouse Suzy Amis Cameron, along with PIC Investment Group. The new facility is scheduled to launch at the end of the second quarter of 2020, producing pea protein for food and treated pea starch specifically for corrugating. Yellow peas, Lathyrus aphaca to be exact, are one of the few food-based crops about which it is undecided

whether the primary objective is to extract starch or protein from the hull. In the United States and Canada, the protein is the head product, and the starches are considered a byproduct. In Asia, it is the converse; the protein is the byproduct, and the starches are considered the head product for use in noodles. No matter how you split peas, protein production will develop equally with pea starch supplies. This could be a good thing for boxmakers. Right now, limited trials are being run on corrugators to evaluate adhesion tack speeds as well as other unique benefits. The lead application specialist for Ingredion, Roman Skuratowicz, says, “Pea starch offers a lower gel temp (around 140 to 145 degrees) and could have some value-driven solutions in higher-speed corrugators.” Skuratowicz continues: “Switching from pearl starch to pea starch isn’t as simple as it sounds. Adhesive

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What the Tech?

formulations will need to be modified to adjust for the different natural gel temp, as well as the higher stringiness of pea starch pastes to generate consistent viscosities. Also, the higher particle size of pea starch could impact dry flow in conveyance systems.” Rick Bird, operations manager at HarperLove, says, “I can see how pea starch could become a niche product in corrugated-board production, because it gives you the ability to run your corrugator at lower gel points. However, pea starch could build viscosity a little too fast due to the natural variations in pea starch uniformity.” Running at a lower gel point gives the customer an option to increase

BOXSCORE March/April 2020

efficiency in two different ways: (1) ability to run the corrugator faster, or (2) lowering the pressure on the steam system to conserve energy. Either way, when considering a switch over to pea starch, it is important to partner with a supplier who can understand technical formula adjustments for your specific production needs. Ingredion also disclosed that with controlled treatment of their pea starch, they have been able to generate wet strength in corrugating adhesives without needing ketone/aldehyde-based resins, and this treatment also improves the viscosity consistency and dry flow properties that have hampered native pea starch.

With this new pea-based starch, corrugators will be able to reduce or eliminate chemical additives and still achieve moisture- and water-resistant adhesive performance—another game changer. Look for this product’s availability in the second quarter of 2020. Michael Harris is president of KPI Incorporated. He can be reached at 317-797-9898 or mharris@kpiincorporated. com.

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Strength in Numbers

M&A: Securing the Best Possible Deal BY MITCH KLINGHER

ver the past 30 or so years, I’ve been involved in a tremendous number of discussions about M&A deals, and I’m sad to report that many of the deals never actually close. The reasons for this generally come down to unreasonable expectations by either the potential buyer or seller or to issues raised by the buyer during due diligence that cause concern. In order for a deal to work, it must be a big win for both buyer and seller, and in order to make this happen, both sides need to understand what is motivating the other. If you look at the economics of an acquisition from the buyer’s perspective, even a deal that is based upon a fairly pedestrian multiple of five times the expected cash flow that it will yield is difficult to finance because the largest portion of the purchase price is usually allocated to an intangible asset (“goodwill”). In the absence of some combination of synergies, economies of scale, or most importantly, integration benefits, there will not be any return on the investment for many years. A buyer needs something to enhance the cash flows that are being acquired above and beyond the cash flow that the target company is generating on its own in order to pay a high price. Sometimes the deal can be enhanced by geography or expertise that the target possesses, but the notion that a target company can be valued at 10 or 12 times cash

BOXSCORE March/April 2020

flow or EBITDA based solely upon its existing business is not rooted in reality. A buyer’s main concerns are its ability to keep the customer base together with continued growth and the ability to effectively manage the acquired business post-acquisition. Other concerns are the future investments required in terms of equipment systems and people, whether the culture of the target will fit in with their operating methodology, and the future commitments the buyer must make to get the deal done, such as longterm leases, employment contracts, and other legal or contractual obligations.

In order to maximize value, a seller must accomplish the following: • Prepare the company operationally, organizationally, and financially as far in advance as possible. • Have a good understanding of the value proposition that they will provide to a potential buyer, and don’t listen to all the noise surrounding this industry about other deals that have closed recently, of which they do not have direct knowledge. • Carefully consider and target the potential buyers who have the strongest strategic need to purchase them.

Strength in Numbers

Preparation is probably the hardest part of this process from an operational, financial, and emotional perspective. Concerns about family, employees, lifestyle, and most importantly, long-term finances can be overwhelming. Most sellers have one chance to get this right, and the implications of making a bad decision can be irreparable and devastating, but very few really prepare themselves properly. Let’s talk about operational and organizational concerns. No one wants to buy a company that doesn’t have a talented and motivated management team in place. Owner-operators that are overly involved in daily management, who control the largest portion of the sales, and who don’t possess the ability to delegate or share decision-making with others can be extremely problematic for a buyer. Once a decision has been made to prepare a company for sale, diversification of all of the key management functions takes on greater urgency. It is often difficult for an entrepreneur to deal with the emotions that go along with this aspect of preparing for a sale, but it can be the most important aspect of attracting the right buyer and securing the best possible deal. Many closely held businesses blur the line between necessary business expenses and personal expenses. Family members are often on the books with no-show jobs or higher compensation levels than are appropriate. Personal-type expenses for cars, entertainment, and other items are run through the business. All of this necessitates significant normalization adjustments or add-backs to the company’s cash flow that is presented to a potential buyer. Similarly, the quality of the financial statements is often low. If you are serious about preparing for sale, then you should obtain audited or reviewed financial statements from reputable CPAs and try to minimize the number and magnitude of normalization adjustments that will be required to cast your business in the best possible light.

BOXSCORE March/April 2020

Capital considerations must be made as early as possible, for a buyer will reduce the price for perceived capital investments that it must make to bring the operation up to standard. It is also important to note that every dollar of debt will reduce the net consideration that the sellers receive. When deals are announced by large publicly traded companies, they generally report to the shareholders that the deal is based upon a fairly low multiple of economic value, something in the four to six range. Yet when the seller looks at the deal, he or she believes that a significantly higher multiple would be gained. How is this possible? The answer lies in the synergies and integration benefits that the deal creates for the buyer. If the buyer can shut down the seller’s plant and move the business to one or more of his existing facilities, millions of dollars of additional cash flow is created for the buyer. The same condition exists if the buyer can shut down one of his own facilities and move the business into the seller’s facility. Industry analysts have reported that paper mill EBITDA, when the paper is consumed domestically, can be in the $250- to $350-per-ton range, so the amount of paper consumed by the seller is often a significant component of the deal. In addition, profits to a corrugated sheet feeder on incremental business can be in the $5- to $10-per-MSF range. If a deal possesses the ability to give a buyer expense reductions, additional mill tonnage, and incremental sheet volume, then the buyer can afford to pay more. Most importantly, when you are valuing your company, you must take into account what the seller’s potential cash flows are from the deal and not just apply a high multiple to your existing cash flow. Understanding the economics of the deal to the seller is crucial to the buyer’s decision-making process. For most closely held businesses, there is a certain finality to selling their

business, and they must be prepared emotionally and have a sound financial plan going forward. The closely held business “piggy bank” will no longer be available, and all expenses must be paid for with after-tax dollars. The net proceeds received for the business must be invested wisely for the long term, and lifestyle choices must be made so that the funds will be preserved. In addition, no longer having a business to run and all that comes with it can leave a former business owner with too much unproductive time on his or her hands. It is critical to plan for these life-altering changes well in advance of the decision to prepare for sale. Targeting the right buyer requires a good knowledge of the industry in which you operate and the players within it. Putting a book together and sending it to every prospective buyer can be extremely destructive to your business. Key employees and local competitors will soon find out about your plans and could cause a lot of trouble. The best approach is usually to target the buyers who have a real strategic need to buy you and who will have the largest potential for synergies and integration benefits. Confining access to your company’s information to a limited group of responsible, strategic buyers at a very high level of management is usually the best approach to maximizing value and minimizing potential problems associated with marketing your company. My best advice for any of you who are considering a sale scenario is to start the process years in advance. Prepare your business operationally and financially, prepare yourself financially and emotionally, and make sure to target the right buyers in order to secure the best possible deal for you and your company. Mitch Klingher is a partner at Klingher Nadler LLP. He can be reached at 201-731-3025 or mitch@ klinghernadler.com.

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International Corrugated Packaging Foundation I N T E R N AT I O N A L

PACKAGING

CORRUGATED

F O U N D AT I O N

Photo courtesy of the North Carolina State University Department of Forest Biomaterials.

A Very Promising New Decade for Recruiting

Over 180 students who are annually enrolled in North Carolina State University’s paper science and engineering program began taking mandatory corrugated packaging and design curricula this past spring and fall. The new curricula was initiated by ICPF’s recent award of a CAD table and Impact design software. The software, installation, and training were donated to ICPF by Arden Software.

s I began writing this column in during the past eight years, ICPF has January, another recruiting season maintained 700 to 1,100 current students for upcoming 2020 college gradin its corrugated packaging career network uates and student interns for the summer who have specifically indicated an interest and fall had already begun. The opportuin a corrugated packaging and displays nities for recruiting new graduates into our career. Annually, there are many more industry has been expanded dramatically students and new graduates interested in over the past 10 years. During this time, securing an entry-level position or student ICPF developed new formal partnerships internship than there are related openings with an additional 20 university partners in the industry. In fact, in reviewing the and used its educational partnerships and hundreds of openings ICPF’s Corporate social media to expand its outreach beyond Partners have posted over the past several packaging engineering and packaging years on ICPF’s Career Portal, there design students to include majors and has been a remarkable average of seven minors in marketing and sales, business, “qualified” applicants for each opening. supply chain management, graphic design, The flip side of the process is that chemical engineering, industrial engineercompanies need to have formal plans ing, mechatronics, mechanical engineering, in place to successfully convert this and related disciplines. ICPF also grew its volume of potential student recruits existing programming to engage approxiand applicants into employees. In this mately 1,000 students annually. As a result, regard, I have seen significant strides that

BOXSCORE March/April 2020

have been taken by some companies in order to compete with CPGs and other industries in recruiting new graduates for the future. For example, numerous firms have started or expanded their student internship programs as a way to identify, evaluate, and most importantly, cultivate future employees. Many firms have centralized their college recruiting process or otherwise streamlined their internal interviewing and recruiting process. Their executives recognize that the old practices of not contacting applicants within several days after they apply, or not conducting interviews and selection on a timely basis, will always result in losing applicants to other firms. For two years in a row, several of these same companies have begun posting openings for upcoming grads on ICPF’s Career Portal as early as August, a full nine months before the graduation

season. In addition to utilizing ICPF’s Career Portal, Résumé Bank, and its other recruiting resources, many companies have begun actively participating in college career fairs. (Visit ICPF’s website calendar at www.careersincorrugated.org for the list of college career fairs.) ICPF’s board of directors, its members, and its Corporate Partners that financially support ICPF’s educational and outreach initiatives, take great pride in the role ICPF has played and continues to play in “generating a stream of increasingly qualified students to enter the corrugated packaging and displays industry.” The following are highlights of some of ICPF’s contributions to this industry effort during the past decade: • Jump-started, created, or expanded 19 corrugated packaging programs at U.S. colleges and universities. • Established and maintained formal partnerships with 27 colleges and universities across the United States. ICPF annually provides speakers, mentors, plant tours, equipment, and software. • Placed over $12.75 million of corrugated CAD tables, presses, and testing equipment at colleges and universities across the U.S. to educate students in the concepts and skills needed for a corrugated packaging career. Millions of more dollars in design software additionally have been provided by ICPF to universities through the generosity of Esko and Arden Software. • Over just the past year, developed, negotiated, and entered into agreements with 10 universities for an additional million dollars of ICPF equipment and financial awards for the upcoming three years. Some of the elements of the new initiatives include creation of three new corrugated packaging design labs, funding for additional corrugated faculty at four universities, introduction of

•

sales and business into packaging courses, launch of corrugated packaging curricula in two paper-science engineering programs, creation of a program to promote corrugated packaging to attract high school students into university packaging programs, introduction of digital printing on two campuses, expansion of a packaging design program to include evaluation and testing of corrugated materials, creation of new packaging degrees and certification programs for undergraduate students, and expansions of existing corrugated testing and packaging design labs. Expanded and enhanced the annual interactive Careers in Corrugated Packaging & Displays Teleconference, which has grown from an average of five schools and 85 student participants to regular annual attendance by over 500 students from 18–20 campuses. ICPF’s Teleconferences in February 2019 and February 2020 each drew a record 20 campuses with over 500 students participating. Launched the Careers in Corrugated Packaging & Displays Social Network that annually has 700–1,100 students and upcoming graduates who have joined to specifically pursue student internships and careers in the corrugated packaging and displays industry. Launched the Careers in Corrugated Student/Executive Dialogue Dinner to enable exceptional students from across the country who have demonstrated a desire to enter the corrugated packaging industry to learn more about the industry and its careers through one-on-one dialogue with corrugated packaging executives. Through ICPF initiatives and resources, enabled the annual recruiting of well over 100 new graduates and students interns into the industry. In

2019, ICPF enabled and assisted in the recruitment of over 130 student interns and new graduates into the industry through ICPF’s Career Portal, Résumé Bank, Teleconference, Student/Executive Dialogue Dinner, Corrugated Packaging & Displays Social Network, campus presentations, and additional initiatives. • Promoted and expanded the use of ICPF’s corrugated curriculum among colleges and universities around the country to support real-world corrugated instruction. The curriculum that was developed by ICPF and Michigan State University was made available to AICC’s education committee to assist in the development and launching of AICC’s Packaging University. ICPF’s corrugated curriculum is accessible from ICPF’s website. • Developed the annual Holiday Weekend in New York into a unique and successful fundraiser. The 2019 New York event this past December broke both the previous year’s fundraising and participation records. The past 12 events have combined for a net revenue of over $1.44 million to support ICPF’s educational initiatives and outreach. • Over the past decade, annually secured an average of $600,000 in new corporate pledges and donations that will support ICPF’s educational initiatives into the future. For more information on available recruiting resources in 2020 and into the new decade, visit www.careesin corrugated.org or email info@icpfbox.org. Richard Flaherty is president of the International Corrugated Packaging Foundation.

BOXSCORE www.aiccbox.org

The Final Score

On Full Display

Michael D’Angelo AICC President

BOXSCORE March/April 2020

Photo courtesy of AICC.

t happens around the same time every year. In mid-December, boxes begin to arrive at AICC’s office in Alexandria, Va. They’re addressed to AICC in general, to staff, or to individuals here in the office. They contain all kinds of goodies, from popcorn to cookies to exotic chocolates. We truly appreciate them and look forward to them. Thank you for thinking of us during a season Gracious gifts and “wow” pieces from AICC members of sharing. are on display in the Association’s conference room. Long after we have eaten our fill of the treats, we marvel at the packaging in which our treats have arrived. Understanding that these care packages we receive have also been sent by our members to their customers as a thankyou for the business done in the past year, they obviously serve as great sales tools. The creativity, the special effects, the augmented reality, and the use of colors in the packaging are indicators of the leadership that the independent printer/converter provides the paper-based packaging industry. We keep a number of boxes on display in AICC’s conference room. We add several new ones to the collection during the holidays. I’ve been involved with the packaging markets for more than 30 years. Like you, I am a drag on the time it takes to get through a supermarket or a club store because I spend an inordinate amount of time looking closely at boxes, bags, pouches, and displays. It’s an occupational fault, according to my wife. Most of your AICC staff are professional association people. Your creativity and your passion, expressed through the packaging that you share with us, have turned them into box geeks as well. We all serve the membership better as a result of this. There is an optimism that comes with each beautifully created box we receive. It’s an optimism that we have seen repeatedly at AICC meetings and in conversations with our members. It’s an optimism backed by the most recent check-in survey of AICC boxmaking members conducted at the end of last year. Two-thirds of the respondents see 2020 as being as good as or better than 2019 in terms of results. Two-thirds plan to acquire equipment, procure software, provide enhancements, or expand their facilities in 2020. It’s an optimism that exists in the face of trade policy headwinds, seemingly calming as these words are written in mid-January. It’s an optimism that exists in the uncertainty that always accompanies an upcoming election. It’s an optimism that exists despite the fierce competition for labor in the manufacturing economy. It’s an optimism that is backed by the gumption of all our member companies. We see it in our daily lives as consumers, and we see it every day on full display in the AICC conference room.

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March/ April 2020 BoxScore: Ahead of the Curve

Articles inside

STRENGTH IN NUMBERS

ICPF UPDATE

THE FINAL SCORE

STEPPING UP AND STANDING OUT

THE ASSOCIATE ADVANTAGE

EAT, DRINK, GROW

WHAT THE TECH?

MEMBER PROFILE

AHEAD OF THE CURVE

AICC INNOVATION

DESIGN SPACE

TACKLING TRENDS

ANDRAGOGY

LEADERSHIP

SELLING TODAY

ASK TOM

CHAIRMAN’S MESSAGE

ASK RALPH

LEGISLATIVE REPORT