Strength in Numbers
A Time for Reflection and Reevaluation BY MITCH KLINGHER
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or some sectors of our economy, the pandemic has been a total disaster, but the corrugated and other paper-conversion businesses have been booming of late. Shipments are up 5% year over year, and paper has become extremely tight for the first time in many years. There has already been one price increase, and from what I hear, another one is looming in the not-too-distant future. While I could make the argument that, since mill operating rates are still on the low side and North America is still exporting a tremendous amount of paper at seemingly little or no profit levels, the “shortage” is somewhat artificial and should be short in duration, I will leave that one for another day. The bottom line right now seems to be that the public is being forced to stay at home, and they are ordering more and more things via internet and
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BOXSCORE March/April 2021
telephone. Things that by and large need to be shipped in paper-based shipping containers, which has caused just about everyone in the paper-conversion business to be extremely busy. This dynamic has caused large integrated producers to send numerous orders to independent producers and larger independent producers to send numerous orders to smaller independent producers. Almost everyone is busy and must wait for paper and sheets, so on-time delivery percentages are decreasing, and many converters are running out of machine hours to sell, without running overtime or building additional shifts. No one knows if this is a temporary situation or if these trends will continue. So, the operative question is what to do with all of this newfound success that is testing everyone’s productive
capabilities. Is this just a passing fad, or is it the new normal? Is this a time to take on risk by buying new equipment, hiring new employees, looking for acquisitions, or entering new lines of business? Or should you hunker down, put some money in your pocket, and wait to see what happens? The answer to these questions is probably one that would require a team of social scientists—economists, sociologists, psychologists, and maybe a Ouija board—and the answer is likely to be slightly different for every one of you. What I see in my travels is that two of the most prevalent traits of the most profitable converters are a focus on speed and a focus on quality. Speed makes you competitive, and quality helps you maintain customers. Everyone can make a pretty square box with reasonably good printing, even
