37 minute read
MIDYEAR CONVERTERS ROUNDTABLE
setup, I tell them, ‘Great! Get the next one, too!’”
Hugo Hernandez, a 16-year employee, is plant supervisor. “I’m personally proud of him,” says Brewer. “He came here as a temp making $6.75 an hour; he knew nothing about the box business.”
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Hernandez adds, “I started on the hot melt machine. I know how to run every machine now.” Hernandez is an evangelist, of sorts, for the corrugated industry, encouraging new hires in the dynamics of the box business. “I tell everybody out there we have a job for a long time. Not just one week, one month, a year. If you run a machine, you’re going to have a job for a long time.”
It was 13 years ago when Mike Roach, designer, came on board at Package Crafters. “He used to work with me at Carolina Container,” Brewer explains. “He ran a Langston Saturn III flexo folder gluer and holds several production records on it.” Roach, being modest, acknowledges only two he can remember: 32 setups in one eight-hour shift and 1.4 million square feet.
Why did Roach join Brewer at Package Crafters? “Gary needed a designer, and I needed to keep a job,” he says. When asked about his role in the “hustle” philosophy engrained in the company, Roach says, “I don’t like making a customer wait. I’m just like everybody else here: Try to get [the customer] the best answer as quickly as possible.”
Challenges and Future Path
Talking to Brewer and his team, one senses a commonly held understanding, not only of the challenges facing the industry but of the vision for the company going forward. “Most obvious is the labor challenge,” says Brewer. “Look, we’re a ‘get-er-done’ kind of company, right? The customer’s due date is what drives our ship. And it works backward from there. If someone doesn’t want to come to work, if someone walks off the job, whatever it might be, everybody else has to fill the void.”
Adds Bragan, “The industry’s booming right now. Everyone’s busy, and no one can get any workers.”
Extended lead times on materials are also dogging the corrugated industry, and this affects any company’s ability to deliver on time. Deal says, “I think the challenge for us from the sales team point of view will be managing the customer’s expectations for delivery. That’s a fancy way of saying we have extended lead times due to materials and the amount of work we have to get through the plant. Everybody’s banged right now.”
Potter agrees, offering the example of triple wall and other packaging materials purchased from outside vendors. “The customer was accustomed to placing the order and receiving product in two weeks. That two-week period turned into, like, 26 weeks!”
Deal says another challenge for the corrugated industry is the need for increasing technical knowledge on the part of its sales professionals. He believes Package Crafters and Creative Packaging are a step ahead of the crowd on this point. “We built our sales team on technically based people: former customer service from other companies or former designers. I have two salespeople who came out of the tooling side of the business, and our main designer here, Mike Roach, was an award-winning flexo operator in his former position.”
Brewer sees the future of Package Crafters and Creative Packaging growing first, internally by dint of their service and capabilities, and second, geographically. “I would like in my career to make one more acquisition,” he says. “Somewhere in the Southeast. It would help me to increase my footprint—make a service triangle.”
Talking about the kind of company he may have in his sights, Brewer says, “Somebody size-wise that is roughly my size; I’m not looking to swallow someone bigger than me. It has to be something manageable, somebody that does what I do because that’s what I know. I think I have enough bandwidth left.”
A successful AICC member, Brewer serves on the Association’s board of directors and last year was tapped for its executive committee. In 2025, he’ll assume the chairmanship of the board of directors. Looking back on his decision to join, he says, “Chuck Fienning [former CEO of Sumter Packaging in Sumter, South Carolina] talked me into it. I always knew about AICC, but I felt like I was too small to join. And I look back on that and realize it was a total mistake.” He cites the AICCsponsored CEO Advisory Groups as “the best single thing I’ve done in AICC.”
“There are issues you have or want to address, and you can’t have that conversation inside the four walls of this building, nor would I want to,” Brewer says. In a CEO Advisory Group, he adds, “you can put it in front of your peers and get tons of advice.”
Our discussion with Brewer brought out many memories for him, memories likely shared by many AICC-member owners and operators. “I literally sold everything. My wife, Ginny, was the only income. You talk about some sleepless nights. I look back on it and say, ‘If it were easy to be an entrepreneur, everybody would do it.’” Yet he also credits his original team, giving them their due as well. “I was smart enough to know that I didn’t have every card in the deck. Without my father, it wouldn’t have gotten started, and without that original team of six people, it wouldn’t have gotten started.”
What started at Package Crafters in 2002—a third-day delivery promise— continues to serve the company and its customers well. “It’s all about the hustle,” says Brewer. “It’s all about the hustle.”
Steve Young is AICC’s ambassador-at-large. He can be reached at 202-297-0583 or syoung@aiccbox.org.
Jack Fiterman
Vice President, Business Development
LIBERTY DIVERSIFIED INTERNATIONAL
Al Hoodwin
CEO
MICHIGAN CITY PAPER BOX CO.
Ian Bernstein
President TRENTON CORRUGATED PRODUCTS
HARRIS PACKAGING CORP./AMERICAN CARTON CO.
Jana Harris
President Jenise Cox
Chief Financial Officer
The past year-plus has tested the boxmaking world, only to prove that this essential industry can break through any challenges it’s faced with—and see lasting success. In this first-ever BoxScore roundtable discussion, several independent leaders talk about the state of business over that time and how, today, they’re aiming to overcome new challenges and setting up their companies to sustain momentum. Moderated by AICC President Michael D’Angelo, this conversation was recorded live on May 19 and transcribed exclusively for BoxScore readers. Matt Bivens
Sales Manager
Michael Drummond
President PACKRITE
Managing Pandemic Restrictions
Michael D’Angelo: We know that the pandemic has affected all of our operations for the past year, and all of you have had to make changes by the nature of your business, the nature of your customers’ business, and the nature of all of the constraints that came from being in a society that’s in a pandemic. We’ll start with you, Al, if you don’t mind. Given the latest CDC guidance concerning the fully vaccinated and masks, is Michigan City Paper Box requiring your vaccinated manufacturing employees to continue to wear masks? Al Hoodwin: That’s a very interesting question, Mike, and it was interesting to see the guidance provided by [the Fibre Box Association]. For the immediate future, we’re going to continue to require masks in our production and office environments. We’re looking forward to some healthy discussions with AICC. I’m hoping that you’re working on a webinar real quick for us to discuss with each other and share ideas, how we’re going to implement this in our workplace. And I know by working together with fellow members, we’ll come up with a good policy. But for now, masks stay on.
D’Angelo: We’ll work on a webinar. We’re waiting for the OSHA update that apparently has been sitting on someone’s desk across the river from AICC in Washington, D.C., but we want to basically keep our powder dry until we at least have some idea what OSHA’s doing. And that’s one of the reasons why we’re asking the question, because a lot of members without the OSHA guides are pretty much wanting to know what everybody else is doing. So, Ian, how about up your way? What are you requiring your folks to do? Ian Bernstein: We don’t have much option. The great state of New Jersey continues to require masks and is not giving us any date at which they won’t require masks. As far as our plant, we started early—my wife has been busy making [vaccination] appointments for anybody that would take one. So, I think we’re about somewhere between 85% and 90% vaccinated in the plant. So, you know, we’re feeling pretty good. People would love to be able to take their masks off, but the state still requires us to wear them.
D’Angelo: So, if we move over to the great state of Texas and Jenise and Jana, what’s the story down there? Jenise Cox: Well, Gov. [Greg] Abbott lifted the statewide mask mandates and opened up all businesses to 100% capacity, effective March 10. We announced June 1 as the date to lift our mask requirements shortly after the governor’s March announcement. We chose to wait a couple of months to ensure that the changes at the state level did not result in another spike. Since the COVID-19 statistics have trended downward in our area since March 10, we are sticking with our decision to end Harris Packaging and American Carton mask requirements on June 1.
D’Angelo: So your folks will be able to wear them if they choose to or not wear them if they choose to—is that what that means? Cox: Right.
D’Angelo: How about up in Minnesota, Jack? Jack Fiterman: What we decided to do and what we’ve done all along on this, Mike, is we followed CDC guidelines by state. So, all the states that have removed the mask mandates, like in Minnesota, we’ve done that as well in our plants. I think it’s been very well received. For the plants that do have unions, we have to work with the unions to talk to them about that before we do that. But for the most part, the states that allow us to make it optional, like those of you that are talking about it, we’re doing the same thing. But I’ll tell you, the state of California, I think it’s going to be a while before they remove the mask mandate there. So, that’s going to be a big deal.
D’Angelo: How many states does LDI have facilities in? Fiterman: I think we’re in 11 or 12.
D’Angelo: So, you’ve got kind of a “soup to nuts” arrangement, I guess. Fiterman: Yes. All we’re doing is following CDC guidelines, but if the state is still mandating it, then we’re complying with it.
D’Angelo: Michael, when we had our Southeast summit down in North Carolina, we had to wear masks in accordance with state policy. I don’t know if there’s been any updates or movement since then. But what are you going to do down at Packrite? Michael Drummond: Well, the state took off the mandate as of last Friday. So, as of last Friday, it was done. State took it off, we took it off. We’re following the guidelines the governor’s setting for us, which is a CDC guideline. So, some people are still wearing them— they feel comfortable doing that, and, you know, God bless them, that’s their choice. But as far as requiring anything, we are not.
D’Angelo: The interesting thing will be whether the OSHA commentary about masks will in any way, shape, or form mirror the CDC guidelines or chart their own course. Any comments relative to that from anyone? Hoodwin: I guess, Mike, I’m just a little concerned just because right now, the OSHA guidelines I think clearly state you’re supposed to treat vaccinated and unvaccinated workers the same, yet I’m hearing during this call, many people are removing the mask mandate. So, in a sense, you’re in conflict with OSHA regulations that regulate your work floor. So, that’s what I find troublesome on my part, but it seems others on this call aren’t as concerned as I am with the conflict.
—Jack Fiterman, vice president, business development, Liberty Diversified International
Fiterman: I’ve never been asked to show my vax card. Everyone talks that game, but in order for that to actually happen, you’re going to have to have companies start asking people to show their vax card. And I haven’t seen that once, whether it’s a restaurant, whether it’s a grocery store, whether it’s a company, a customer—I’ve never seen that once. They ask, “Have you been vaccinated?” Drummond: That would violate—we can’t ask health questions. Whatever that mandate is, if you do that, you violated their rights.
D’Angelo: It’s actually a step further on that because my understanding is, because the vaccinations are approved under an emergency order, neither the United States government nor an individual employer can actually require someone to get a vaccine. I would think it follows along the lines of what Jack’s saying, that if you’re not required to get a vaccine, you’re probably not required to state whether you’ve gotten one, or you have to produce your vaccination card or anything else. It kind of all follows under that emergency order. Although I don’t know the specifics of the order. Drummond: Well, you know, like I said, the problem is, you’ve got HIPAA, and to ask somebody about their vaccine violates the HIPAA laws. So, what’s worse? Hoodwin: It’s interesting, Michael, if you get ahold of the FBA update sent out [May 18], that was one of the questions asked specifically, and I guess the law firm that FBA was working with to put together these guidelines gave a lot of reasons why they say it isn’t a HIPAA violation. So, again, it’s a lot of differences of opinion on it.
Working Remotely and the Search for Labor
D’Angelo: How about on the office side? Obviously, your manufacturing workers can’t work remotely during the pandemic, because you can’t produce boxes out of your home, but I know many boxmakers have had some of their office staff either working entirely remotely or coming in the office on, let’s call it “shifted” days, where like teams are coming in with like functions or things like that. Is there a future for remote work in your business, Jack? Fiterman: I’m not sure we’re going to have a choice. As manufacturers, I think all of us are in a war to try to find people; we have to meet people to some extent where they’re at. We have to figure out how we can do some of these things and make it flexible for them. So, whether or not we want to do this, I really think that that is going to be one of the ways to be an employer of choice, to figure out how we put the technology in and the systems in to allow people to cycle in and out and not have to be physically at the office. And I think, also, how do you monitor that? How do you put metrics in? How do you evaluate employees? Just a lot of
things that go into that. I know there’s definitely going to be businesses that are just going to be set up for that. They’re going to be talking about, “How do you run that way?” I mean, let’s face it. At some point, I think all of us had a little of that going on during COVID, and I think the people I talked to, businesses, ran pretty well. We still invoiced, we still shipped boxes, and we still took calls. So, it’s just going to be a different world coming out of this. If you’re a law firm or you’re an accounting firm, nobody’s moving back to the big cities right now—I’ll tell you that much. Everybody’s staying home, and they’re reevaluating, “Do I really need to go spend $30,000 a month on a big office tower in one of the big cities that we’re in?” So, I think a lot of this stuff is going to change for sure. It already has.
D’Angelo: Jana, Jenise, Matt, any concerns if you’ve got remote workers going into the future and maintaining culture? Culture’s such an important criterion in an independent business and in a family business. What are the challenges that will come with remote work and maintaining culture from your point of view? Jana Harris: We spent a lot of money on redoing offices, so they’d better come back. (Laughter)
D’Angelo: So, you’re modifying your offices for the returning workforce to feel it’s a safer environment, where there’s a little bit more separation and other safety protocols taken into consideration? Harris: No, we just needed to do it. With COVID, we’re moving our corporate office to our other location, our warehouse. And we kind of learned during COVID that we could actually do that and not all be in the same building together. So, that was an eye-opener for us, but pretty much all of our people are back. We’ve got a couple that work from home maybe a day or two, but
pretty much everyone’s back. And I do prefer it that way. I mean, we do have quite a family culture, and it’s different when you’re just doing it from home, you know? So, I think it’s better for us to have everybody together.
D’Angelo: But you’ll also have some flexibility for the workforce, kind of along the lines of what Jack’s saying. Harris: I think so. I think, you know, if there’s a need for a body that knows what they’re doing and they want to stay at home, we can consider that now, whereas we wouldn’t have before COVID.
D’Angelo: How about you, Michael? Your offices, the building’s fairly new, the office is really modern. I’ve been there a couple of times; it’s a nice layout. What are your thoughts? Drummond: When this thing first kicked off, the first thing I did was ban my salespeople from coming back into the office. They essentially got stuck at home. Nobody’d see them, and I wouldn’t let them come into work. So, the salespeople, they were off-site for at least six months. The second thing I did is rotated the office staff, split it into three groups, so I didn’t have exposure. So, they were working a minimum of two days a week off-site and probably could have taken most of the staff, had we gotten some of the systems we’re working on right now up and running. We’re working on upgrading our EFI to go paperless. And if we’d had that paperless, I think everybody could have worked remotely with customer service and accounting. But with manufacturing itself, obviously, we would need people. We did a lot of things on our plant level to make sure people were comfortable. One of the things I got out of the AICC Spring Meeting was putting Saran Wrap over all the controls, and when you got through with it, you took your Saran Wrap with you. We implemented that and ran with that for almost nine months. And then we had a cleaning schedule, and we had people constantly cleaning the office. We can somewhat on the office side work remotely, but not completely.
D’Angelo: Ian, how about you and your operation? Bernstein: We’re just a small sheet plant, with not that many people in the office. They’re pretty spread out. So, we set up the ability to be remote, but we never actually went remote and never had anybody working remotely. The only thing I could add really is, we’ve definitely seen some people in interviews who are looking for remote work and don’t want to be in the office. We’ve been discussing it more from that perspective going forward.
D’Angelo: So, are you going to find a way to accommodate them? Bernstein: We may have to, but we’re still discussing. We’d rather not—we
Machinery and Handling for the Corrugated Board Industry
think from a cultural perspective, it’s important to be in the office and be together because, again, there aren’t that many of us, but we may be forced to by the market.
D’Angelo: Al, from my knowledge of everybody on the call, I’d say you’re the technological guru. So, the use of remote systems and whatnot—where do you see it? Hoodwin: You know, we’re a small plant, too, and I think culturally, like Ian and Jana said, we feel it’s important for everyone to be together. But of course, we’re accommodating mostly office workers with any sort of school or child care situations. That has been most of the time where people have had to do remote work. I think, like Jack, if we were looking for a particular individual and they desired remote work, we would kind of see, are the skills they would bring to the table worth enough for them not to actually be at the table? But I’d say right now, we would be encouraging people to be in the office.
D’Angelo: Jack used a very telltale phrase in his commentary there. When he talked about being “the employer of choice,” it kind of indicates who’s got the power right now in terms of getting a position, in terms of how difficult it is in the labor markets for manufacturers these days. Jana, Jenise, Matt, what are the challenges that you’ve got down there in terms of filling open positions, be it in the office or on the plant floor? Matt Bivens: I think they’re some of the same challenges everybody else is experiencing. There’s a labor shortage with the extra unemployment benefit that’s going on in the country right now. It isn’t helping. We’ve significantly raised hourly wages over the last nine months to incentivize people to come to work. We’ve given them hazard pay for the last year, basically, to incentivize them to come to work. We relaxed some of our less critical policies that we’ve had in place for years. As far as absenteeism, tardiness, we’ve paid employees to stay home when they weren’t feeling well, even before the government stimulus program came out. So, we are being more flexible than we’ve ever been with our employees in an attempt to try to keep the ones we have and lure new talent in the building.
D’Angelo: I know 21 states are going to, I think as early as June 1—maybe it’s even earlier, some of them—are going to turn down the enhanced federal benefit for unemployment. Bivens: Texas is turning it down June 26.
D’Angelo: Hopefully, that’ll at least bring people back into the labor market that might not otherwise be there, because then they’re just getting the state benefits. Ian, New Jersey is not a state that’s on that list right now as far as I know, although it changes seemingly daily. Are you finding a challenge in terms of competing with enhanced government benefits?
—Michael Drummond, president, Packrite
Bernstein: Yep. It’s almost virtually impossible to find people. And you spend a lot of time being ghosted, with people setting up interviews and not showing up, or you set up an interview for two days later, and they take another job before they even come in for the interview. We’ve been trying to work closely with our community college locally, because they’re getting government grants, and trying to see if we could do some workstudy things. And we’ve also gone heavy on two temp agencies we work with. We’re probably running more temporary hours in the plant right now than we are permanent employee hours. So, that’s how we’ve made up the difference. But that’s probably the biggest challenge that we have at this point.
D’Angelo: The temporary workers that you’re getting, are they showing any desire to be permanent workers? Do they like the work and therefore want to stay, or is it the temporary lifestyle was working for them maybe even before the pandemic? Bernstein: They’ve gotta get somewhere between 800 and 1,000 hours, so we definitely have a few that have expressed interest, but it is fairly transient. So, we put an operator together with two temps, and they make their way through the day. We’ll probably have a better sense of that maybe in the fall. We’re hoping that some of them will stay, some of the better ones.
D’Angelo: Michael, how are you seeing things in North Carolina? Drummond: What labor? [Laughter.] The temp agencies are out of temporary employees. We call them and they say, “We don’t have anybody that is even applying” to send to you. So, I think it’s going to shut down a bunch of temporary agencies. They’re just not going to have them. We’ve been lucky. We’ve been able to hold on to most of our people, but I’ve got a strong need for machine operators. I mean, I think everybody’s in the same
boat. I’m automating even more of my lines—in-line stretch wrappers, in-line banders—as much as I can put in-line, I’m putting in-line so that I don’t need as many people. I’m automating as fast and as hard as I can.
D’Angelo: Thank you. Al? Hoodwin: We’re in a small town, 35,000 people, and we’ve found it extremely difficult to compete with the federal program. I’m happy that our governor is going to stop providing the federal assistance June 19. As of June 1, he signed an executive order that in order to get unemployment in Indiana, you’re going to at least have to show you’re looking for a job, which, you know, you would think that would be how it would always work, but, surprisingly, no. In the meantime, what we’re trying to do is make sure our employees understand what they’re really making, because our business has a lot of benefits in terms of holidays, health insurance. So, we’re spending a lot of time detailing the value of those benefits so they don’t think, “I’m only making X an hour”; they realize that their health insurance alone adds $2.71 an hour to really what they’re making, in order to keep the core set of employees in the plant, which we’ve been able to do. But otherwise, we’ve been about 15 people short since August of 2020, when things started to pick up, and we, just through churn, have never been able to permanently fill those 15 positions. Drummond: I’m 20 down.
D’Angelo: You said something interesting in terms of having to be looking for work in order to be eligible to collect. My understanding, too, is if you’re offered a job and it’s within a reasonable pay scale, not something that’s far below a livable wage, that you also are somewhat obligated to take that job in order to continue to collect. You can’t keep turning down jobs and collecting unemployment. Jack, what are you seeing, especially with the fact that your footprint covers a lot of states, some that are probably not participating in the enhanced federal benefits going forward and some that will continue to do so? That presents a bit of a challenge for you from a central point of view, doesn’t it? Fiterman: Yes. I agree with what everyone’s saying. It is virtually impossible to find people. I found this statistic interesting: From 1948 until 2021, the average unemployment rate in this country, for the last 75 years, has been 5.77%, OK? In April 2020, when COVID first hit, we hit 14.8% unemployment in this country. Today, I think we’re sitting around, in April, we’re sitting around 6.1%. I haven’t seen the May numbers yet. So, if you have 6.1% unemployment, and then what everyone’s been talking about on the federal program, everybody that wants to work is working. It’s going to be very, very hard to find employees. And the only other thing I’ll say about this is when my parents were my age or younger, it was prestigious to be a press operator. Now, the generation that’s coming up today, it’s totally changed. I don’t think they want to work in the manufacturing environment that we’re all in. Not to stereotype certain sectors of our employees or our population, but I do think, in general, that’s going to be a major issue going forward. And it’s not like we can just turn on a light and say, “Now, we have these pre-feeders or now we have these machines that are going to run a lot faster.” The machinery people, even if you do it, are out 18 months, many of them are out 18 months for new installations, so this is going to be a major issue, and I don’t think it’s going to get better anytime soon.
D’Angelo: You’re correct—the date and the statistics tell a story. So, if the historical unemployment rate over that time span as you say is 5.7% and we’re hovering at near the historical level, and we’re incentivizing people that may want to work to not work, it’s not necessarily a good combination. AICC sent out a mailing on May 19 to the key contact at every AICC member company with a letter template about the enhanced unemployment benefits. This is something the government affairs committee wanted us to do, so hopefully, AICC members will take up the challenge to get in touch with their local officials and opine about it. At least see if you can get a little bit more participation in terms of folks that are looking for jobs, because as we know, the box business has been quite busy since the pandemic bottomed things out in the spring of 2020.
Busy Boxmakers Amid Tight Supply, Struggling Transport
D’Angelo: Box shipments are up almost 4% in Q1. Things are busy. Jack, what do you attribute that to, and do you see it lasting? And if you see it lasting, how long do you see it lasting? Busy box plants. Fiterman: It was interesting; I had this conversation with a customer yesterday. They said, “Well, if it’s only up 4%, that doesn’t sound like it’s that much.” But if you take 4% and look at the global paper supply, that’s like 1.3 million tons, OK? And if that continues, even if that could just stay, we’re not bringing out anywhere close to that in North America. That is between labor shortages, between business being good, between e-commerce continuing to grow. It’s really been a perfect storm. Even with the new capacity coming on, I don’t see that changing too much unless all the big integrateds stop exporting paper, which could happen. I don’t know if we’re going to talk about this later, but I think freight is going to be a continued problem. Rail is just not dependable, and so people are trying to truck more, and there’s a shortage of trucks, and now with oil. There’s a lot to be excited about, but it doesn’t come without its challenges right now, for sure.
D’Angelo: Prior to the COVID, the 10-year average growth for the corrugated industry was 1.3% annually, so you’re seeing four times that. If RISI’s numbers for the second-quarter speculation are right at 7%, it’s going to be roughly seven times that. You’re right; it creates the perfect storm for labor, and it creates the perfect storm for paper, transportation services, and the like. Ian, what can you do to weather the storm when nobody knows how long that storm’s going to last? You got any thoughts? Bernstein: I think just going back to what you were just talking about, I look at e-commerce, and you’ve had a step change, obviously. But if you look at the percentage of retail sales that are online and getting delivered in a package in the United States and compare it to where they are in China, we’re still at a fraction, like, maybe a third, of the percentage of sales that get done online relative to the overall sales that get done online in China. So, at least from where I sit, between e-commerce and sustainability, which are both just huge right now, maybe it’ll flatten out a little bit, but I don’t see us going back from a demand standpoint. I don’t see us sliding back all that much. What do we do about it? I think automation is probably the key. Continuing to try to move the plant forward from an automation standpoint and becoming more customer-friendly on the e-commerce side and figuring out how to interact with those customers and that marketplace, which is a bit different. We’ve added on fulfillment and some other things to try some storage and warehousing to try to go after that marketplace.
D’Angelo: Al, the rigid box industry’s a little bit different than corrugated. Do you see things any differently? Hoodwin: A rigid box tends not to be vital to a lot of our customers’ operations. It tends to be more of an add-on product. We are essential to some companies, so we’re riding the wave with the corrugated folks in terms of being busy, and I would expect that we will be busy through the end of the year and making as much as we can, based on the limited number of employees we have and based on the materials we can get our hands on. I don’t see that changing before the end of the year. D’Angelo: At Harris Packaging and American Carton, you’ve got corrugated at Harris Packaging and folding carton at American Carton. You’re seeing things from two sides of the coin down there. But how does it look going forward? Bivens: From a corrugated perspective, it looks strong. Business the last nine or 10 months has been really, really good. We’ve outpaced the industry significantly. We had made investments prior to the pandemic in the plant that really paid dividends over the last year. We were well positioned to grow. We think that strong conditions in corrugated will last at Harris through at least the end of the year, and then in 2022, they may taper off just a little bit and be at a “new normal” of accelerated growth, but not quite as robust as we were in 2021. Harris: Same thing at the folding carton plant. We’ve had an outstanding year, lots of growth within our existing customers, and also some new customers as well. It’s been a challenge, the very quick amount of high growth, and not having everything staffed and the same issues of trying to get people. We’ve gone from a two-week lead time for our customers to a five- to
six-week because we just can’t keep up with the demand. So, it’s been crazy. I expect it to continue that way for a while. We are trying to staff up as best as we can to get that down maybe to a three- or four-week lead time. But I see it being steady as it is right now probably through the end of this year and maybe into next year as well.
D’Angelo: Michael, due to the unique nature of your business, we could say you kind of wear a folding carton hat and a corrugated hat as well. Do you get to see a couple of different futures, or do you see things saying strong on both sides? Drummond: Well, I think that this year is going to continue to follow up strong. When I started this year, I didn’t think it was going to do that. I saw a lull about two weeks ago, and then it just vanished and went that much stronger. So, I’m seeing a strong demand through the end of the year. I just don’t know where it’s going to go. People say, “Will you run stuff for me?” and I’m like, “Great. Here’s your price.” They say, “Well, it’s gone up a lot,” and I say, “So has paper. If you want it, great. If you don’t, that’s fine.” Pricing had stopped being an issue, because paper increases have gone crazy.
D’Angelo: Jack, on your side? Fiterman: I agree, again, with what everyone’s saying. I think business is going to remain strong. I think there’s been pockets of softness in the last two weeks from who I talk to. But I think, for the most part, it’s going to be very busy, and it’s going to be a busy fall again. For the integrated suppliers, the protein business is going to continue to grow every year—pork, chicken, turkey. Let’s face it; that’s a lot of what they run. That’s going to continue to grow. I agree with what Jana was saying. I think business is going to be strong for sure for the next 12 to 18 months.
D’Angelo: The interesting thing for me about the e-commerce statistics is that of the top 10 fastest-growing e-commerce shippers, if you will, or participants in the last year, Amazon’s not in the top 10, because they were already so huge to start with. So many people kind of caught up to them and found a lot of spots and spaces in the market. Going to the comment I think it was Ian made, about comparing e-commerce sales in China compared to here, where it’s just kind of scratching the surface, paying attention to what Amazon does, the growth—and the others will all take a completely different philosophy from Amazon—that’s still got to be something that’s encouraging for the box business. Don’t you think, Jack? Fiterman: Yes, I think it’s very encouraging, because as independents, we’re not supplying the Amazons. We’re supplying our customers’ e-comm sites. So, we want our customers to grow. If their business was 90% shelf-ready and 10% e-comm, and now it’s going to 70/30 or 60/40, that’s what independents should be looking at: How do we do that with our customers? What equipment do we need? How do we help our customers be more profitable with less damage? I’ve seen more inside print in the last month—it’s unbelievable the amount of inside print work I’ve seen.
And I’m sure, Mike, you can talk to it more than I can because you run for the trade, but it’s amazing, the trend of inside print. Drummond: That’s the big one for me right now: inside and double print. We run a ton of double-sided prints, registered inside prints. I mean, I just took a PO today for close to 2 million boxes of double-sided, soft touch, every embellishment for a rollover lock that’s going in the mail. I’m like, “Holy mackerel.” I’ve just never seen the amount of double-sided print that I’m running today. We do a lot of that, and we’re really good at it, so I’m finding a lot of corrugating companies coming to us, saying, “Hey, this is beyond us. We want to take care of other stuff,” just passing off the double-sided print. And especially the level that they want that inside print. We’ve coined a term, it’s an “inside-outside box,” and we’re seeing a ton.
D’Angelo: Anybody else want to add something to that discussion? To summarize, everybody on this roundtable is bullish about the prospects of busy box plants remaining so for the foreseeable future, which obviously takes us to the challenges of the substrate, which was touched on a little bit earlier in the call. Jana, Jenise, Matt, any difficulties getting any grades of paper these days, be it on the folding carton side or the corrugated side? Bivens: On the corrugated side, we still have some challenges. The situation has improved, but we can’t get anything we want anytime we want it, like we have for the last 40 years. It’s gotten a lot better over the last 30 days. We’ve had some increased commitments from our suppliers to us that we have long-standing relationships with. So, we feel like on the whole, it’s better than it was and we’re well positioned for the summer. But we are a little bit nervous about what the fall holds, when business spikes back up as people go into the holiday season and the e-commerce kicks back up. Will there still be enough left for us to hit our increased order amount that we’re at right now? I’ll let Jenise speak on the ACC side of things. Cox: So far, we’re OK with our supply. Our main supplier has committed to us not to put us on allocations. However, one of the other suppliers in the industry, we’ve heard from some of our friends that buy from them, they are starting to do allocations. So, kind of what we started experiencing last fall, September-ish, in the corrugated world, we’re starting to see a little bit in folding, but thankfully, we’re OK as of right now.
D’Angelo: Ian, what do you see? Bernstein: We’ve been OK. We’re a member of one of the cooperative corrugators, so we’ve been pretty lucky in being able to access most grades. The biggest challenge we have right now has been on triple-wall—seems to be still taking six weeks, eight weeks, to get triple-wall in. And then we’ve also had some challenges. Our glue suppliers cut us back on some of the glue that we use, and we’ve seen some other things away from board that have been challenging.
D’Angelo: We’re going to come back to other supply in a minute. Michael, how about you on the paper side? Drummond: It’s definitely tighter than I’ve ever experienced in my life. We’re in a pretty strong position. We have been fortunate, but we’ve got four or five suppliers, and because we’ve got a multitude of suppliers, we’re able to get a little here and a little there and make it work. The interesting thing for me is the amount of mills cranking up in my general vicinity. It’s going to be great for us. Cascade’s putting in a mill in Virginia that’ll be up and running first of next year. Sports Group or New Indy put one in Catawba, South Carolina. There’s another one in Tennessee, and then there’s another one slated for Danville, Virginia. So, I see for me, personally, I’m going to be in great shape, but between now and then, it’s going to be very interesting.
D’Angelo: So, independents continue to have to be resourceful. Jack, I’m sure you’re a resourceful guy; how’s the paper looking for you? Fiterman: Very tight. And I think that the medium remains very, very tight, undersupplied. And I would say that I think white, bottle white, is very, very tight. And also, I would say any of the heavy grades, like 69-pound and higher, are also very, very tight right now. Drummond: They’re more than tight. Fiterman: I would say I agree with what people are saying, that paper supply is a tad better than it was a month ago. My concern is with all the mill downtime that’s coming up this summer, and the busyness that typically hits us, you know, starting in June, July, are we going to go backward again? I don’t know if it was Jana or who from Harris said this, but to Jana’s point, the sheet feeders want to help the independents. It’s not that they don’t want to help. Some of it’s capacity; they only can get so much out, and they’re working every Saturday, working every Sunday. But some of it is, they just don’t have the paper. They just do not have the paper, and that’s a concern. That’s a concern for the independent market for sure.
D’Angelo: And in Al’s case, where you already have a limited number of suppliers and you don’t have any new suppliers buying space or coming in anytime soon, what’s that mean for you? Hoodwin: Thanks, Mike. For our industry and the grade of board we use, there’s only three producers left in the U.S. Due to allocation issues, two of those producers won’t even sell to us at this time. If they did sell to us, their lead time is 16 weeks right now. So the one producer we do have is running around six weeks, so that has limited us. However, let me say, the corrugated industry has come to my
