THE SHIPPING STATUS QUO Reduced capacity and rising costs are creating new challenges for boxmakers September/October 2022 Volume 26, No. 5 ALSO INSIDE 2022 Midterms: Key SpecialImplicationsSection: Continued Momentum for Wages Member Profile: Larsen Packaging Products A PUBLICATION OF AICC, THE INDEPENDENT PACKAGING ASSOCIATION
BOXSCORE www.AICCbox.org 1 TABLE OF CONTENTS September/October 2022 • Volume 26, No. 5 BoxScore is published bimonthly by AICC, e Independent Packaging Association, PO Box 25708, Alexandria, VA 22313, USA. Rates for reprints and permissions of articles printed are available upon request. e statements and opinions expressed herein are those of the individual authors and do not necessarily represent the views of AICC. e publisher reserves the right to accept or reject any editorial or advertising matter at its discretion. e publisher is not responsible for claims made by advertisers. POSTMASTER: Send change of address to BoxScore, AICC, PO Box 25708, Alexandria, VA 22313, USA. ©2022 AICC. All rights reserved. Visit www.AICCboxscore.org for Member News and even more great columns. Scan the QR code to check them out! COLUMNS 3 CHAIRMAN’S MESSAGE 4 SCORING BOXES 8 LEGISLATIVE REPORT 12 MEMBERS MEETING 14 ASK RALPH & TOM 18 SELLING TODAY 22 LEADERSHIP 26 DESIGN SPACE 32 MEMBER PROFILE 58 THE ASSOCIATE ADVANTAGE 60 WHAT THE TECH? 62 STRENGTH IN NUMBERS 68 THE FINAL DEPARTMENTSSCORE 10 WELCOME, NEW & RETURNING MEMBERS 31 AICC INNOVATION 64 FOUNDATION FOR PACKAGING EDUCATION 66 INTERNATIONAL CORRUGATED PACKAGING FOUNDATION544638FEATURES 38 THE SHIPPING STATUS QUO Reduced capacity and rising costs are creating new challenges for boxmakers 46 A FISCAL CLIFFHANGER With the unpredictable 2022 midterms approaching, what are the key business issues facing boxmakers? 54 SPECIAL SECTION: CONTINUED MOMENTUM AICC Salary, Hourly Wage, & Benefits Report shows wage pressures building in 2021
SUBMIT EDITORIAL IDEAS, NEWS & LETTERS TO: BoxScore@theYGSgroup.com
Vice President: Serena L. Spiezio Content & Copy Director: Craig Lauer
Al Hoodwin, Michigan City Paper Box, Michigan City, JosephIndiana Morelli, Huston Patterson Printers, Decatur, Illinois
DIRECTORS AT LARGE
Editor: Virginia Humphrey, vhumphrey@AICCbox.org
Senior Editor: Sam Hoffmeister Copy Editor: Steve Kennedy Art Director: Alex Straughan Account Manager: Max Lalwani
Joseph M. Palmeri, Jamestown Container Cos., Macedonia, Ohio
Phone FaxToll-free703-836-2422877-836-2422703-836-2795 www.AICCbox.org
AICC México: Juan Javier Gonzalez, Cartró, S.A.P.I. de C.V., Tepotzotlán, Mexico
AICC Canada: Renee Annis
EMERGING LEADER DELEGATES
Great Lakes: Josh Sobel, Jamestown Container Cos., Macedonia, Ohio
Jack Fiterman, Liberty Diversified Industries, Minneapolis, Minnesota
Cindy Huber, Director of Conventions & Meetings
AICC PO Box Alexandria,25708VA 22313
Publisher: Michael D’Angelo, mdangelo@AICCbox.org
Director of Administration and Director of Latin America
TarynADVERTISINGPyle
Managing Editor: Julia Berley
Director: TBD
Vice Chairman: Tim Connell, A.G. Stacker Inc., Weyers Cave, Virginia
ABOUT AICC
Chelsea May, Education and Training Manager
Patrick Moore, Membership Services Manager
WHEN YOU INVEST AND ENGAGE, AICC DELIVERS SUCCESS.
EDITORIAL/DESIGN SERVICES
703-535-1391 • tpyle@AICCbox.org Patrick Moore 703-535-1394 • pmoore@AICCbox.org
West:DIRECTORS
Cassie Malone, Corrugated Supplies Co. LLC, Chicago, LaurenIllinois Frisch, Wasatch Container, North Salt Lake, Utah
ADVISORS TO THE CHAIRMAN
President: Michael D’Angelo, AICC Headquarters, Alexandria, Virginia
Laura Mihalick, Senior Meeting Manager
Guy Ockerlund, OxBox, Addison, Illinois
Gene Marino, Akers Packaging Service Group Chicago, Illinois
Secretary/General Counsel: David Goch, Webster, Chamberlain & Bean, Washington, D.C.
PROVIDING BOXMAKERS WITH THE KNOWLEDGE NEEDED TO THRIVE IN THE PAPER-BASED PACKAGING INDUSTRY SINCE 1974
Taryn Pyle, Director of Training, Education & Professional Development
Secretary: John Burgess, Pamarco, Roselle Park, New Jersey
Immediate Past Chairman, Associate Members: Joseph Morelli, Huston Patterson Printers, Decatur, Illinois
MariaCONTRIBUTORSFrustaci,
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 o ers free online education to all members to help the individual maximize their potential and the member company maximize its profit.
Chairman:OFFICERS
Chairman, Past Chairmen’s Council: Joe Palmeri, Jamestown Container Cos., Macedonia, Ohio
John McQueary, CST Systems, Atlanta, Georgia
AICC Canada: Terri-Lynn Levesque, Royal Containers Ltd., Brampton, Ontario, Canada
Gary Brewer, Package Crafters, High Point, North Carolina Finn MacDonald, Independent II, Louisville, Kentucky
Midwest: Casey Shaw, Batavia Container Inc., Batavia, Illinois
First Vice Chairwoman: Jana Harris, Harris Packaging/ American Carton, Haltom City, Texas
Mike Schaefer, Tavens Packaging & Display, Bedford Heights, Ohio
ASSOCIATE MEMBER DIRECTORS
Chairman: Greg Jones, SUN Automation Group, Glen Arm, Maryland
Steve Young, Ambassador-at-Large Richard M. Flaherty, President, ICPF
Kevin Ausburn, SMC Packaging Group, Springfield, EricMissouriElgin, Oklahoma Interpack, Muscogee, Oklahoma
OVERSEAS DIRECTOR
Alyce Ryan, Marketing Manager
Vice Chairs: Matt Davis, Packaging Express, Colorado Springs, Colorado
PUBLICATION STAFF
The YGS Group • www.theYGSgroup.com
Southwest: Michael Drummond, Packrite, High Point, North Carolina
Kim Nelson, Royal Containers Ltd., Brampton, Ontario, Canada
Southeast: Ben DeSollar, Sumter Packaging Corp., Sumter, South Carolina
Immediate Past Chairman: Jay Carman, StandFast Packaging Group, Carol Stream, Illinois
Northeast: Stuart Fenkel, McLean Packaging, Pennsauken, New Jersey
A quick stop in Toronto for the AICC Canada Holiday Party did not disappoint. That group is an incredibly strong presence for the independent in Canada—and they’re some of my favorite boxmakers to boot. We also attended the International Corrugated Packaging Foundation fundraiser in New York and enjoyed the experience immensely alongside AICC and Fibre Box Association members alike.
BOXSCORE www.AICCbox.org 3
Gene Marino Executive Vice President, Akers Packaging Service Group Chairman, AICC
I
On the heels of that meeting, I found myself in California for the AICC West Coast golf outing, which has been a meeting staple for quite some time, and it was not over hyped. I found myself back at the hotel that evening at a tableful of Associate members where several hours of laughing and camaraderie were had, making a memorable experience for sure.
t has been an exciting year as your AICC chairman and one I will not soon forget. A bit of a pandemic-related shift created an early window for me, as SuperCorr was my kickoff last August, and what a successful start it was! The Orlando, Florida, conference was very well attended, and many of us were ready to move beyond the chal lenges and get back to meeting in person. AICC’s staff of professionals works tirelessly alongside your board of volunteers to provide compelling content mixed with social interaction, and this event delivered.
Chairman’s Message
A working winter board meeting takes place every January, at which much of the strategic heavy lifting is completed—one of my favorite exercises. Our committed volunteers, alongside a dedicated team of true AICC professionals, unpack our most critical value propositions to challenge our assumptions and continue to improve upon AICC messaging and product offerings that best benefit our membership.
The Spring Meeting in Palm Desert, California, brought us warm weather and more attendance records. Capping off the trip with a presentation by Capt. Richard Phillips made this a special event. May began with the Southeast Summit and was followed by the Midwest Summit with the Chicago TAPPI tabletop event. While I am writing, the Midwest golf outing and Northeast Summit are on the calendar and expected to be five-star events, as well. My time as your chairman will conclude at Corrugated Week in San Antonio, where I am looking forward to the passing of the torch to Chairwoman Jana Harris.
A stop in Kansas City, Missouri, for the AICC Packaging Xperience program provided two days of excellent presentations and content, with AICC again exceeding expectations to provide value to its membership.
There was of course much that I regrettably could not attend, like the Mexico meeting and the Canada golf outing—not for a lack of trying, however! I have been extremely fortunate to be a participant in this industry. It is all about the people. Our suppliers, com petitors, peers, partners, and all related participants are what makes this such a special industry. Thank you for your support, your kind words, and your friendship. Many thanks to my advisors, Al Hoodwin of Michigan City Paper Box, Joe Palmeri of Jamestown Container, and Joe Morelli of Houston Patterson. Many thanks to AICC President Mike D’Angelo and the entire AICC team. You make this look so turnkey—you are all true professionals. My gratitude to the Akers/Akey family for their support during my tenure, as Itwell.has truly been an honor to be your chairman.
A Year to Remember
Scoring Boxes
BOXSCORE September/October 20224
Not only was demand rising at a faster level, but the pandemic caused serious disruptions of the global supply chain. Even though inflation-adjusted consumer spending reached 9.5% in 2021, supply disruptions led to commodity price increases, then to wage inflation. Even with offers of higher wages, manufacturers could not fi nd enough employees. During the pandemic, people’s attitudes toward employment shifted, leading many workers in the U.S. and abroad to remain out of the workforce.
T
Efforts to halt the virus’s spread led to immediate and massive job layoff s. During February and March 2020, 22 million jobs were lost as businesses either shut down completely or cut back operations severely. The chart below shows monthly changes in employment since January 2008, the beginning of the Great Recession. It took two full years for employment to decline about as much as it did in just two months at the onset of the coronavirus pandemic. Then followed a long, slow recovery that took another
BY DICK STORAT
Cumulative Employment Change Since Jan. 2008 AdjustedSeasonallyThousands, January '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 (10,000)(5,000)-5,00010,00015,00020,000 Source: BLS
All major economies provided some stimulus to support unemployment. As the chart at the top of p. 6 shows, the global average amounted to about 7% of GDP. However, none were nearly as generous with discretionary easing as the U.S., where the federal government disbursed assistance costing close to 13% of GDP, more than double the stimulus in China or the European Union, according to Goldman Sachs.
he rapid onset and global spread of the COVID-19 virus gave rise to immediate and unprecedented actions that still are forcing the economic pendulum to swing in larger arcs today, some 2½ years later. The economic responses to the virtual shutdown in domestic and global economic activity near the end of the fi rst quarter of 2020 started a chain reaction of large changes in economic activity, the likes of which have not been felt in recent history.
four years for employment to reach the level at the start of the Great Recession. At that point, the economy continued a long-term trend of adding jobs at a steady rate of just under 200,000 jobs per month, a period during which supply and demand were in relative balance and inflation remained controlled at under 2% per year, while economic activity grew steadily but slowly.
The sudden loss of income led the United States and other economies around the world to provide immediate fiscal stimulus, most often as cash deposited in consumers’ bank accounts to prevent consumer spending from plummeting. That infusion of cash accomplished what was intended and more. GDP declined by 5.0% in the first quarter and by 31.4% in the second quarter (annualized percent change). Consumers responded by spending much of their cash infusion to yield a 33.4% recovery in the third quarter and 4.3% growth in the fourth quarter, holding the economic downturn to 3.4%
for 2020. Strong consumer spending led to an extremely robust 5.7% GDP growth in 2021, as employment returned to 90% of pre-COVID-19 employment by the end of last year, restoring as many jobs in two years as had been gained during six years following the Great Recession. Th is created situations in which consumer demand grew faster and more strongly than the supply of goods and labor could keep up with.
The result of this large pendulum swing in fiscal easing and a large negative swing of the pendulum tracking supply chain disruptions created an artificial shortage of goods. So, prices did indeed rise. Inflation is now running at levels not seen in more than a generation, causing consumers to suffer the erosive effects of
The Swinging Economic Pendulum
Dick Storat is president of Richard Storat & Associates.
(Percent
levels—the widest pendulum swing since the late 1970s.
As the impact of rising interest rates increasingly dampens spending, the likelihood of a recession continues to increase. Many economic forecasters believe that recovery from this impend ing downturn will be slower than from the last sharp but short recession. That is how generous government assistance, tangled with persistent supply chain mishaps, led to higher prices, which in turn are now requiring sharply rising interest rates to bring inflation under control. These higher interest rates will likely slow consumer spending and thereby increase greatly the likelihood of a recession by the end of this year.
GDP) 14%12%10%8%6%4%2%0% '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 1210-202468 Source: FRB, BLS U.S. Producer Price
The chart below shows the monthly producer (PPI) and consumer (CPI)
World U.S. Euro Area China Japan in Response to Coronavirus Pandemic of and Consumer Price Indices
rapid inflation. Even though wages have grown, they are lower now than at the start of the pandemic, once the effects of inflation are considered.
price indexes since 2008. Prices at the manufacturing and consumer levels have been higher than the Federal Reserve Board’s 2% target since early 2021. In May, the PPI increased by 10.8% and the CPI by 8.6%, compared to year-earlier
(Year-Over-Year PercentCPIChange)PPI Federal Reserve Target: 2.0%
He can be reached at 610-282-6033 or storatre@aol.com
Fiscal Easing
Scoring Boxes
BOXSCORE September/October 20226
Legislative Report
Scan the QR codes and contact your local representatives and senators.
reconciliation bill, attributing the funds of this new tax to the hospital insurance trust fund would have violated the Byrd Rule, a Senate rule that prevents a reconciliation bill from containing nonbudgetary provisions or provisions that directly affect Social Security. That is why the NIIT did not fund Medicare when it was adopted in 2010, and that is why attributing the rev enues raised by its expansion to Medicare would violate the Byrd Rule today.
AICC recently joined 130 other associations representing small and medium-size businesses in opposing these taxes, and I urge you to use the QR codes on this page and contact your legislators. Tell them that raising taxes on small and family-owned businesses with the economy on the brink of a recession harms not only these businesses but also the families and communities who rely on them.
A
While expanding the NIIT is sometimes characterized as closing a tax loophole and it is stated that it would increase Medicare funding, neither of these claims is true. When the NIIT was created as part of the Affordable Care Act, it was meant to apply to investment income only. The business income of small, individually owned, and family-owned firms in which the owners ran the business was specifically exempted. This exemption was intentional and in no way constitutes a loophole.
ccording to recent media reports, two tax increases under consideration would fall entirely on small, individ ually owned, and family-owned businesses: 1) expanding the 3.8% net investment income tax (NIIT) to individuals and families who actively participate in their business, and 2) limiting the ability of small, individually owned, and family-owned businesses to fully deduct their losses during an economic downturn by expanding and extending the so-called “excess business loss limitation” for “noncorporate taxpayers.” Combined, these would increase revenues by more than $400 billion over 10 years, shouldered entirely by small, individually owned, and family-owned businesses.
Eric Elgin is owner of Oklahoma Interpak and chairman of AICC’s Government Affairs
This is ill-advised tax policy, and it is being considered at a moment when the economy is no longer growing. Firstquarter GDP fell by 1.6%, and many economists and forecasters predict that second-quarter GDP will also be negative. Meanwhile, the small business sector may already be in recession, as those businesses have lost employment in three out of the last four months, even as large companies have increased their employment.
Moreover, the revenue raised by the NIIT does not fund Medicare. As the NIIT initially was adopted as part of a
REPRESENTATIVES SENATORS
Editor’s note: At press time, the U.S. Senate had just passed a revised version of the Build Back Better Act, known as the Inflation Reduction Act of 2022. Although that legislation excised some of the provisions discussed in this article, action in the House of Representatives is still pending, and therefore, readers are invited to contact their representatives and voice their opinions on the issues presented.
While expanding the NIIT would raise taxes on small and family-owned businesses when they are profitable, extending and expanding the excess loss limitation rules would hurt them in the next economic downturn. During the Great Recession of 2008–2009, many businesses were able to survive, in part, by policies that allowed them to offset the losses they were incurring against taxes they had previously paid. This assistance was par ticularly important for cyclical industries such as construction, manu facturing, and travel and tourism. Extending and expanding the excess loss limitation rules into the future would prevent pass-through businesses from having this relief in
Don’t Tax Family-Owned Businesses!
Because it does not close a loophole and does not fund Medicare, expanding the 3.8% NIIT represents nothing more than an 11% increase in the rates imposed on family-owned businesses. Based on U.S. Treasury data, an estimated 1 million small and family-owned businesses, representing more than half of all pass-through business activity, would be at risk of having their rates increased under this policy.
BY ERIC ELGIN
the next recession, increasing the odds that they don’t survive.
BOXSCORE September/October 20228
BOXSCORE September/October 202210
BRANDON SPRADLIN President3900N.10th Philadelphia,St.PA 19140 215-403-7250www.amboxco.com
BORREGAARD USA INC.
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HEINZEL IMPORT EXPORT GASTON NAVARRETE Finance Manager 570 Lexington Ave., Suite 2500 New York, NY 10022 212-953-5685www.heinzelsales.com
RDA CONTAINER TED BRANT 70PresidentCherry Rochester,Rd.NY 14624 www.rdacontainer.com585-247-2323
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H.P. CADWALLADER INC. JEB COLEMAN Business Process Specialist 175 Ruth Harleysville,Rd. PA 19438 215-256-6651www.hpcadwallader.com
SCOTT MOUW Sales Manager 100 Grand Rothschild,Ave.WI 54474 908-205-3360www.exilva.com
AMERICAN BOX & RECYCLING CO.
PETER NEHR General Manager 2035 Stonebridge Rd. West Bend, WI 53095 www.wigreenllc.com800-952-2212
Welcome, AICC’s New Members!
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Corrugated Week Is Here!
A
ICC and TAPPI look forward to welcoming thousands of participants to Corrugated Week 2022 at the Henry B. González Convention Center in San Antonio, September 19–21, for Corrugated Week. With numerous networking opportunities, educational breakouts, inspiring keynote speakers, and a packed trade show floor, this is the can’t-miss event of 2022. Attendees will get a true Texas experience with an authentic Western-heritage rodeo at Tejas Rodeo. Attendees will also be able to participate in the 2022 Corrugated Week Golf Classic at The Quarry Golf Course, a two-day production seminar, and a one-day course on die cutting productivity. the full schedule of events and event sponsors at www.corrugatedweek.org
See
BOXSCORE September/October 202212 Members Meeting
BOXSCORE www.AICCbox.org 13
Members
Meeting FOOD COURT ENTRANCE CORRCAFE TOSESSIONGENERAL 20'100 10120' 20'106104 107Paper Packaging&109 110 Box & Carton Blue Book 111 CelmaachBarberánCombustionBurner112Systems114116117Weldmaster11811920'Dieco/Graphics2Press120BoardConvertingNews122GeorgeKochSons12420'S.A.12512712812913020'Koenig&BauerPerformance20'200Steam Mitsubishi20120'HeavyIndustriesAmerica America,Zund206Inc. 207 20' 20' DICAR Inc.LaboratoriesPrintDigital208Inc.210 Systems21320'AirDesign,Inc. BahmuellerBGM216&Goepfert218KentoDigitalPrinting MachineryServicesWPR224220221Preflex219DigitalPrepressServices22520'FlintGroup22620'Thacker231InspireAutomation233TalleresSerraS.A. Corporation20'300 301 20' 20' PapersystemsBW30720'Matik313Erhardt&LeimerInc.RapidBond20'314 Balemaster315 Integrated20'318FujiFilmInkJetSolutions USA31920'MercuryINC PolicartPolicart/Bricq-324SRL 325WSAUSA,LLC CoatingsMagnum326Inks& American327Baler eProductivity330Software332333Corrugated331Training&ServicesT.CONUSA 401 20' HARPERTISCO/20' 20'406HP 407 20' 409SoftwareAmtech20'20'BaldwinTechnologyCo.Inc. MachineryAutomationRingwoodDucker-41241441820'JBInc. Corrugated41920'Chemicals Engineered20'424Recycling Technologies429427425OMPYoungLimited Valmet,430Inc.432Quest7 501 20' 513507KOLBUS20'20'20'FosberAmerica/Tiruna20'20'Geo.M.MartinCompany International20'518 519 20' CorrugatedStafford20'Products Noblelight20'524HeraeusAmericaLLC 527525StaffordCuttingDiesReS.p.A. Lubricants-Nye528Fuchs Contractors53120'Industrial(PIC) 601 20' 20' SUN Robotics613607Group/Highcon/AutomationParaSRL20'20'HaireGroupValcoMelton615BHS61920'20'INNOVEYANCE 20'624MuhlenSohnInc 625 20' 20' Boxmachine,GlobalLLC InternationalFriese20'630Cristini/NorthAmerica/SharpGroup Corrucleaner631JKSPServices/633KongsbergCuttingSystems 701 20' Technologies711707Signode20'20'20'HangloryUSAEaglewood International,20'712AllianceSystems MoistTechApplication721719717SauerSystemPacePunches,Inc.BlowerCompany725J.M.FryPrintingInks727CSTSystemsInc.729Corp. EquipmentInternational730BalerCorp.732HITEKInc. Machines80120'BaysekInc.80720' 20' Stacker,A.G.Inc. ReplacementsCorrugated810 Kiwiplan81320'Inc. Machinery20'816TienChinYu Automated81920'ConveyorSystems,Inc.(ACS)Absolute/Baumer820hhs824Pamarco 825 20' 20' MoscaEAM-CorpCorrugatedCuir826828Hansen-Rice,Inc. Corporation83120'Aircon Nextwire,20'900LLC. Machinery90120'EMBAAB90720'SamuelPackagingSystemsGroup 20'912ADI/PDMTradeGroup International913INXInk915Wulftec917OpSigal 20'918Bobst932930931SYSTEMSInternational91920'Apex92520'HOCKER/KERNICINC.Balers&Shredders & BloombergCo. 933ZenithCutter and20'1000PaperDustPros 100120' 20' CorrugatedBHS Advantzware20'1006 101110091007Cleaning(ARCS)ICASA Deublin10121014StickleSteam1016JJCServicesLLC 101720' 30'Valentine1018Miller1020OlympicWire&Equipment1024Insun Mid1025AmericaPaperRecycling International1026Albany Macarbox1027SL CloudLab10301032WallaWallaEnvironmental Johnson110120'KadantInc.1105Domino Corporation20'1106RochesterMidland Quantum1107Ink110920'KohlerCoating1110MoffittCorp. Hummingbird1115111320'GAPCOGeorgia-1119ConwayMachineInc.11211123BorregaardUSA Durst1124ImageTechnologyU.S.LLC Roll112520'NationalKoteAmerica1126ElitronInc. 113120'EFI MECHANICALBULL OFFICESALES NEWWHAT'S/SESSIONGENERAL To Exhibit, Contact: Linda lcohen@tappi.orgCohen914-944-0135 Exhibit Hall Hours: Tuesday, September 20 12:00pmWednesday,5:00pmSeptember 21 12:00pm - 4:00pm AICC.ofcourtesyPhotos As of August 5
BOXSCORE September/October 202214
The following are the six industry webinars that we recently conducted:
BY RALPH YOUNG AND TOM WEBER
All Access Pass holders can watch all these webinars and more at NOW.AICCbox.org.
One of the larger response rates we received during and after the webinars was about achieving the most cost-effective
discussed restructuring within corrugated boards to remove fiber costs and lessen supply chain interruptions by potentially offering more local options.
I
• How to Build a Material Testing Lab
• Testing Requirements or Guarantee Board Strength
Ask Ralph & Tom
n case you missed any or all of the six-part series of webinar presentations this year, we wanted to give you the highlights and remind everyone that we are open and available at any time for email questions or verbal conversations. We hope that you have a key takeaway or two to consider from this article.
advantage of engineering board combinations. While we have discussed this theory in many AICC seminars, webinars, BoxScore articles, and Packaging School courses over the years, it is still a new concept to those who are new to the industry and who have not been exposed to selecting the strongest components to build each ECT grade or combined paperboard structure for a key client application.
Th is concept focuses on the reality that, at a minimum, corrugated is a unique combination of three components. Historically, most plant personnel have viewed liners as the most important component and had little respect for the contribution and significance of a medium’s potential contribution to ECT and therefore to the final box performance. Th is logic path is better appreciated once all parties have an understanding and results from a fluted edge crush test. We offered options to consider investigating the internal support provided by 30, 33, and 36 basis weight flutings. We also
In the reference and resource sections, we pointed out to those in attendance our wide range of AICC white papers that are offered at no cost to AICC members. Also, we listed the BoxScore searchable library, technical brochures, other network technical experts, third-party testing facilities, similar European trade associations, and the collection of mill specification sheets. With more than 140 containerboard machines in the North American market, it does not appear possible that any two would produce the same exact sheet, thus making our examples of testing physical attributes
• Physical Attributes of Paperboards and Containerboards.
• A three-part series, the Fluted vs. Paperboard Workshop.
Takeaways From Our Most Recent Webinars
Anotherformats.relatively unknown combined-board property is torsional stiffness. This methodology can compare the costly crush degradation that occurs across the width of converting equipment and the differences between machines. With regard to linerboard and medium component physical properties, tensile and stretch were discussed, as these are important considerations for lightweights and microflute applications.
One of Ralph’s favorite “aha!” moments in the paperboard, label, and microflute three-part series was the methodology of two uncommon testing protocols— known to most for determining top-to-bottom strengths. These are corner crush and block compression testing. They can be viewed at www.appliedpapertech. com/test-methods. At this site, most of the containerboard and corrugated test methods can be viewed in both one-sheet and video
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BOXSCORE September/October 202216
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Ralph Young is the principal of Alternative Paper Solutions and is AICC’s technical advisor.
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We went beyond current thinking and introduced the complexity of the global movement in responding to environmental, social, and governance requests from both domestic and international companies. Th is has become a rather hot issue and is not likely to just go away, much like the issues of heavy metals, toxic chemicals, barrier coatings, wax, forest certification, more use of recovered fiber, life cycle analysis, the use of mixed waste, increased containerboard capacity, rightweighting and -sizing, energy consumption, water recovery, and wastewater reuse.
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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
Ask Ralph & Tom
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Our overriding webinar themes consisted of reducing process variations, especially in paper and production protocols. We shared more than a few examples of what seem to be typical for the industry, as well as what we considered to be good, responsible control targets. We looked at the well-known box and folding carton degradation factors that affect functional performance throughout the supply chain—and those that every structural design department must have in order to properly design and construct for manufacturing proper secondary packaging and master shipping containers.
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manufacturers experienced in the past two years, when the COVID-19 pandemic created a record number of online shoppers, is waning. Stimulus checks and advanced child tax credit checks put extra money in consumers’ pockets at a time when supply chains were backed up and manufacturing was struggling with making and shipping products. The increase in demand and decrease in supply contributed in part to the inflation issue.
BY TODD M. ZIELINSKI AND LISA BENSON
The Impact on the Corrugated Industry
A Recession Defined
widespread), and duration (length of time). It defines a recession as “a significant decline in economic activity that is spread across the economy and that lasts more than a few months.”
So, where are we currently? The U.S. Department of Commerce’s Bureau of Economic Analysis reported that GDP for the first quarter of 2022 was down 1.5% over the previous quarter. As of this writing (late June), the Federal Reserve Bank of Atlanta’s estimate for real GDP growth in the second quarter of 2022 is 0.3%. However, this slight expansion doesn’t mean we can write off the possibility of a recession.
The National Bureau of Economic Research (NBER) is generally recog nized as the authority for determining when a recession has begun and ended. The NBER includes a decline in economic activity in its definition of a recession but expands on it to include depth (level of decline), diffusion (how
In a 1974 New York Times article, economist Julius Shiskin created some rules of thumb to define a recession, including two consecutive quarters of negative economic growth, measured by a country’s GDP. This became the most popular and often discussed indicator of a recession.
The issues boxmakers are facing today are being echoed across all indus tries. The surge of activity corrugated
A Direction for Sales Growth Amid the Threat of Recession
BOXSCORE September/October 202218 Selling Today
The NBER committee looks at more than GDP. Other influences include personal income, employment numbers, consumer spending, industrial pro duction, and wholesale and retail sales. The committee doesn’t look at future projections or even what is happening today. They look at what has happened in the recent past. The problem is that you don’t know you are in a recession until you are in it.
ecession warning flags are waving vigorously. The United States is experiencing inflation not seen in 42 years. In June, the Federal Reserve raised interest rates by 75 basis points to curb it, its most significant single increase since 1994. Existing home sales are falling, gas prices have peaked at record levels, and the index of consumer sentiment is plummeting. According to Morgan Stanley, most economic models show a 60% likelihood of a recession.
But now, as inflation soars, consumers are pulling back, and spending is decreasing. Retailers such as Walmart and Target are reporting excess inventories. Many in the corrugated industry have cleared backlogs and are getting back on even footing. Some have even taken the opportunity to expand and invest in new equipment, creating
R
excess capacity. AICC reported that new orders and output contracted in June for the first time in two years. Contracting orders and excess capacity will create an opportunity for boxmakers to consider their plan of attack, particularly with the looming recession.
Getting the Most Out of Current Accounts
Selling Today
Evaluate your B’s and C’s to determine if they have the potential to move up to A’s and B’s, respectively. For those that meet most of your profile criteria, except for annual spend, evaluate them to see if there is potential. Look at what you estimate—or know—their annual spend to be versus what it is. Start with the ones with the most potential, and find out what additional needs they have and if they are open to your help. If your reduced share of a company’s business is because of something your company has done (e.g., unacceptable quality, shipping, customer service), you will need to make amends if there is a chance of growing it. Sometimes there is nothing you can do to increase your share of a customer’s packaging spend.
Overarching goals for most businesses are growth, profitability, and survival, especially in tough economic times. Those who panic and start chasing every opportunity, no matter how low the mar gins or how bad a fit, will be stuck with low-margin, bad-fit customers when the crisis is over. This will not help you reach your goals for growth and profitability, and your company’s survivability may be on shaky ground. Taking a strategic approach to target the right types of opportunities will help you survive and maybe even thrive during these challeng ing times.
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.
Turn Up New Sales Efforts
Now is the time to identify the types of opportunities and accounts that will give you the biggest bang for your buck. Think about annual spend, margins, monthly order size, geography, ease of work— anything that makes them a good fit.
Once you begin seeing growth from your existing customer base and winning bids on the right type of new opportu nities, it’s time to clean house. Any C accounts—those that take a lot of effort
for little return—break up with them. They are hurting your bottom line. It may not be easy, but it is necessary. With a looming recession, it is necessary to ensure that you are optimizing all of yourTargetingresources.the right accounts is a step in the right direction, but without processes and a supporting sales model, to create a continuous flow through your pipeline, creating growth may be a struggle. Our previous article, “Death of the Traditional Sales Process” (July/August BoxScore), lays out a plan for redefining your sales infrastructure and processes to proactively attack the right type of accounts.
accounts are good opportunities—perhaps not perfect but worth pursuing. The C’s are what is left. They fall below the threshold you’ve set for providing good opportunities.
Surviving and Thriving in Tough Economic Times
Start with your customers, and find those you would like more of, the ones that are easy to work with, bring good margins, and meet your other criteria. Focus your efforts on these types of Consideraccounts.rating your current accounts as A, B, or C. The A’s are the prime accounts that meet your criteria for order mix and frequency, spend, etc. The B
BOXSCORE September/October 202220
This is the time to turn up the dial on new sales efforts. You will need to be strategic to keep pace with your existing sales level or see growth. This means pursuing prospects with the potential for high annual spending and higher margins.
BY SCOTT ELLIS, ED.D.
and supervisors. While participation is mandatory for current managers, machine operators are required to attend only two consecutive meetings before deciding to participate longterm. During this time, they will learn that participation is a plus for consideration for internal promotion. Th is “exclusive” club will accept volunteer assistant operators that qualify (length of employment, attendance, etc.). Also, there is no shame in an operator being content to make a career of the position. The existence of the club and the gains that will be made over time will create an expectation for operators to lead their teams.
Th ose who manage a team successfully share the traits mentioned above, but they have a more elevated perspective of winning. Th ey appreciate the contribution of an individual or a crew, but they focus in on the coordination of the entire team to safely produce quality products at the speed of end-user demand. Th is diff erence in perspective requires technical and interpersonal skills that come only with experience. Provision of
ur industry has an honorable history of promoting from within. We also have a very poor success rate with operators who transition to supervision. Th is is due in part to the interpersonal challenge of managing one’s peers, but the main obstacles have to do with the disparate skills and motivations required for achievement.
It reminds me of baseball—because everything reminds me of baseball. Players are motivated by the team win but focus on individual performance.
O
experience is the diff erence maker for leadership success.
Preparing Machine Operators to Lead
Th e best operators possess people skills to a degree that they can train others and share the workload with the whole crew. Th ey are motivated by a will to better their individual or crew performance and by competition with other shifts or machine centers. Th ey strive to safely produce quality products at the speed of demand, be that from the next process in line or the shipping department. Th ese are admirable and useful traits. For those who keep score with a cross-training matrix, operators engage by gaining profi ciency at multiple machine centers. Th ey may have the added incentive of pay diff erentials earned at the varied processes, but the matrix is motivating even without pay increases. Incidentally, there is a new course on Packaging U that features the use of the cross-training matrix.
BOXSCORE September/October 202222 Leadership
It is rare that a retired player moves directly to team manager, as they must gain experience assisting, coaching third base, or wrangling pitchers to develop the necessary skills and perspective to Preparationmanage. of leaders may be accomplished by a variety of methods; I will offer one strategy here. Start a leadership club including all current production managers, including leads
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BOXSCORE September/October 202224
training (e.g., Dale Carnegie, SuperCorr, or the Science of Paper course), with the expectation that they return with practi cal ideas for improvement to explain and then work with the group to apply. As the club proves the value of the time investment, local experts may be invited in. Field trips to supplier and customer facilities are invaluable perspective enhancers. The group might utilize group problem-solving tools to address real-time issues. This adds immediate value and models the use of the tools so that members may put them to use in their own areas ofWhatresponsibility.istheROI of a strategy like this? The investment is significant in terms of effort, time, and perhaps even lost production opportunity. The return will be engagement of the willing and self-selection out of the leadership
The agenda may be as simple as assigning a member to lead discussion on a key topic such as safety, production measurement, conflict management, or waste reduction. This can be as easy as sourcing information to address a recent challenge. In the discussion, all are encouraged to participate and to recommend topics to address specific needs. While a seasoned superintendent may be able to comfortably facilitate a group, a rookie will need assistance to prepare and encouragement to overcome the nerves involved in public speaking, even on this scale. In this situation, the courses at Packaging U are a perfect match. Whether the topic is waste reduction, delegation, or production code accuracy, there is a course to inform and prepare the discussion leader. At some point, there may be worth in sending one or more members to outside
Leadership
ranks for the unwilling. In meetings like these, perspectives are changed, skills are modeled and developed, and ultimately, a culture is changed. Yes, it is one more thing to add to your to-do list, but developing leadership is always worthAnd,it.oh, by the way, had you not heard? There’s no crying in manufacturing.
Scott Ellis, Ed.D., delivers training, coaching, and resources that develop the ability to eliminate obstacles and sustain more effective and profitable results. He recently published Dammit: Learning Judgment Through Experience. His books and process improvement resources are available at workingwell.bz . AICC members enjoy a 20% discount with code AICC21.
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E f f i c i e n c y u s t a i n a b i l i t y C o n t a c t y o u r d e d i c a t e d e n e r g y c o n s u l t a n t , N o e l T e m p l e , f o r m o r e i n f o r m a t i o n : 667.330.1159 ntemple@appienergy.com appienergy.com
L e t o u r t e a m w o r k a s a n e x t e n s i o n o f y o u r t e a m t o r e d u c e y o u r e n e r g y c o s t s , r e d u c e y o u r e n e r g y d e m a n d , a n d i m p r o v e e n e r g y e f f i c i e n c y & s u s t a i n a b i l i t y .
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M I T I G A T E R I S I N G E N E R G Y C O S T S B Y L E V E R A G I N G A T R U S T E D E N E R G Y C O N S U L T A N T
N o t s u r e h o w t o n a v i g a t e v o l a t i l e e l e c t r i c i t y a n d n a t u r a l g a s p r i c e s ?
Those familiar with graphic design coursework know that projects involve the development of 30–50 thumbnails followed by refi ned sketches. Sketches rarely only have simple linework, though. The students always end up doodling and sketching smaller details into the designs as they visualize their solutions. They begin to work out the details of how it all links together during these brainstorming stages. If each class and each project follow the same requirement of
BOXSCORE September/October 202226 Design Space
Fluid intelligence is the capacity to think from different points of view quickly to problem-solve without relying on past experiences and accumulated knowledge. It allows us to take independent information and create relationships between the points of reference. Th is is how abstract problem-solving is performed. Crystallized intelligence, though, is based on your past experiences and knowledge. Th is type of intelligence increases with age—“Oh, I worked on something like this in the past. I have a solution for you.” When you run into a problem that can’t be solved with the information available to you or based on past experiences, fluid intelligence helps you take that leap. The purpose of 30–50 sketches during the brainstorming phase isn’t to torture the students but to exhaust their initial gut reactions and
AICC Emerging Leader Contribution
Because the class I teach is part of the art department at UTA, it doesn’t follow the traditional packaging science teaching methodologies. Instead, there is a strong focus on fluid intelligence, creativity, and the ability to multitask with what’s expected in the industry. They learn about ArtiosCAD, Adobe, the corrugated industry, and how to design both the structure and art for boxes and displays. Each semester, students are assigned three projects for which they must create the structure and art. Over the course of their projects, they work on both elements simultaneously and have progress checkpoints for each. Rather than getting burnt out on one or the other, switching back and forth lets them process new information at a slower pace and retain it better. Remember, this is all new to them, so in some cases, it’s like taking two classes at once. Their foundations
ow did you get into the boxmaking industry? Everyone’s always curious, but not everyone sees it as their calling. Growing up, I loved Tetris and origami. Over time, graphic design and technology worked their way into my daily life. Naturally, it makes sense that I would end up working as a designer with a foot in both structure and graphics, and I love every day. Puzzles and problem-solving are my dessert.
Reframing Your Approach
BY SHABAN AL-REFAI
H
in creativity, art, and the 3D form help them approach design situations in uncommon and unique ways because they aren’t restricted by all the science and manufacturing limitations. People can be taught manufacturing or how to use a program because those are concrete or hard skills, but creativity falls into a weird gap. It’s a soft skill that can be honed over time, like public speaking, and a mindset or viewpoint of a nonlinear approach that’s intrinsic to the individual, like a personal quality.
30–50 thumbnails, the students become extremely proficient at brainstorming and problem-solving, which increases their fluid intelligence over time.
In addition to working in packaging for more than seven years, I also teach packaging at night at a local university. Being allowed and encouraged by my management to teach at the University of Texas at Arlington (UTA) has allowed me to give back to the community while keeping myself sharp. Every semester, I run into new students who have no idea about our industry, and I get to reinforce my own foundations with every class.
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thoughts about a solution so that they must tap into their creative muscles and grow. Fluid intelligence is thought to decrease as we become adults, but research suggests that this happens only when we stop challenging and allowing ourselves to get creative. Being an efficient multitasker only enhances these skills, because you don’t need to actively sit and think about the solutions. A designer can mentally work on solutions for projects that require more effort while working on more mundane projects that don’t require any effort. Everyone does this to some degree in their day-to-day life, like washing dishes or prepping dinner.
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BOXSCORE September/October 202228 Design Space
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As the industry becomes more diverse, there needs to be a shift in the desired skill sets and aspirations of incoming future designers to include fluid intelligence, creativity, and an ability to multitask. In the field, I run across designers who know only graphics or structure, with no desire to learn the other side, because they feel as if they aren’t creative enough to connect the bridge; I believe this is holding back the industry. By being open to learning a new skill or taking on a project that’s outside of their scope, they can gain insights that will help them in the future. I came from a creative background in which being multifaceted was necessary, and it has only helped me excel. I love being handed the oddball projects that others don’t look forward to and creating a solution where one wasn’t apparent. In the meantime, encourage your team to engage in activities or projects that flex their creative muscles and increase fluid intelligence. It helps make the day-to-day become more exciting, because creativity isn’t just a one-trick pony.
Shaban Al-Refai is a designer in structure and graphics at Harris Packaging Corp. He can be reached at harrispackaging.comshabana@
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BOXSCORE www.AICCbox.org 31
• It’s About Time: Maximizing Your Packaging and Point of Purchase
• Recruiting Top Talent (Both on the Shop Floor and Front Office)
ICC is offering more than 150 industry-specific live and previously recorded webinars as part of the 2022 All Access Pass. The pass also includes One Point Lessons to allow employees of member plants to get quick tips and tools to enhance theirWhenskills.acompany invests in professional development, it invests in the organization’s potential. Teams are equipped with shared knowledge that helps them perform at a high level, and the organization is positioned to attract and retain topWithtalent.more than 150 webinars included, the All Access Pass represents a value of more than $30,000 but costs only $1,895 for the entire company. Access to all of these webinars and recordings is available to pass holders through August 2023. Webinar topics include:
Professional Development
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The All Access Pass gives participating companies:
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and maintaining an on-hand inventory of 5,000 stock and custom products. The company operates out of two locations: its 103,000-square-foot distribution and manufacturing headquarters, and a 50,000-square-foot off-site warehouse. Of the 75 full-time employees, 25 are devoted to the corrugated production floor, where they oversee an annual output of 150 million square feet. Like many young sheet plants, its equipment roster includes older but venerable workhorses: a Langston 50" x 110" two-color flexo folder gluer, a Simon 24" x 61" flexo folder gluer, and a Staley 66" x 113" two-color rotary die cutter. Larsen’s more recent machine investments are a Solarco 98" jumbo lineal feed press, a Universal 86" x 185" two-color jumbo printer slotter, a Vega Altair 290 specialty folder gluer, and
Products.PackagingLarsenofcourtesyPhotos
Today, Larsen Packaging Products is a $25 million company selling a full line of some 30,000 packaging supply items
LOCATIONS: St. Charles, Illinois
OWNER: Bill Larsen
Larsen Packaging Products was founded as J&M Supply in 1989 by Jim and
Member Profile
JOINED AICC: 2022
The exterior of Larsen Packaging Products in St. Charles, Illinois.
BOXSCORE September/October 202232
ESTABLISHED: 1989
t’s not uncommon for an independent converter to offer various lines of ancillary packaging supplies to its customers. After all, anyone buying custom or stock boxes is probably also buying tape, foam, bubble wrap, stretch fi lm, padded mailers, and the like. Many a keen entrepreneur has recognized the additional sales and service opportunities in offering these items.
‘$1,000 in Inventory’
Over time, marketplace confusion forced a reconsideration of the company name. “We were called J&M Supply, but there was JM Supply, Jason Supply, and everybody was getting everybody confused,” Larsen says. “So, we ended up with Larsen Packaging—it’s obviously our name—but I also felt the addition of ‘Packaging’ gave us a better descriptor of what we do.”
BY STEVE YOUNG
WEBSITES: www.larsenpackaging.com www.waybeyondthebox.comand
What’s less common, though, is for a long-established distributor of these kinds of products to add in-house converting capability—in effect, to become a startup sheet plant. Yet that’s exactly what Bill Larsen, CEO of Larsen Packaging Products in St. Charles, Illinois, did in fall 2019.
Larsen Packaging Products: Way Beyond the Box
I
COMPANY: Larsen Packaging Products
PHONE: 630-384-1130
Marilyn Larsen. “They started with $1,000 in inventory,” President and Owner Bill Larsen recalls. “I went to trade school to become a carpenter, so I built some 18-inch-wide racks down one side of the garage. We stacked up his inventory there, and that was the beginning of Larsen Packaging.”
There was a strong business case for Larsen’s thinking. He explains, “The other mass distributors that were popping up around us not only sold bubble wrap, shrink wrap, etc., but they also sold stock boxes. We could buy from them really easily, but buying from them came
BOXSCORE September/October 202234
Bill Larsen, CEO of Larsen Packaging Products, and the company’s Grazella gluer-stitcher.
Member Profile
‘Let’s Grow This Thing!’ Larsen’s decision to start a manufacturing operation within his packaging supply distributorship was born out of a longheld desire to better serve the company’s growing customer base. “My dad and I banged heads for 20 years,” he says. “I was just out of high school, and I said, ‘Let’s grow this thing!’”
Around that same time, First American Bank, a Chicago-area commercial lender, was running a series of television ads. One of the ads portrayed a man standing in what appeared to be a corrugated sheet plant and saying, “We make boxes.” Larsen says, “I was tired of telling people we don’t sell boxes. When I saw that ad, I thought, ‘Th at’s what I want to do. I want to start making boxes.’”
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a Gazella gluer stitcher with two-piece capability. Larsen also plans in the fi rst quarter of next year the addition of an Apstar 47" x 110" three-color flexo folder gluer with die-cut section.
Larsen is particularly proud of his compa ny’s vendor-managed inventory program, whereby a customer sets minimums and maximums allowable for all their packaging materials and supplies. Larsen then manages the customer’s inventory on hand so that there is no need for a reorder of any one item. “We put all the items they want us to procure on a spreadsheet,” Larsen explains. “We say, ‘How many do you want on your floor at any one time? Give me a range.’”
In the current climate, still reeling with supply chain disruptions, Larsen has an added advantage. “Right here, right now, we have never been less aggressive, because this is low-hanging fruit for us,” he says. “All the integrateds that have these extended lead times—I talked to a guy the other day who told me one of their presses was out six weeks!”
BOXSCORE www.AICCbox.org 35
Members Meeting
Speed and Service
laden with packaging supplies and related products, as well as a menu of specialized services to support each customer’s unique needs. This diversity of offerings, says Larsen, gives the company a competi tive edge and encourages customer loyalty.
The levels provided by the customer are then logged in and maintained at that level by Larsen. “These are tailor-made for each individual end user,” he says. “We want to fly under the radar. Once we get somebody on a vendor-managed inventory program, I don’t ever want them thinking about us. There should never be a reason
In the competitive world of packaging supply distribution, the transactional nature of the sale makes the business vul nerable to poaching by competitors. Larsen and his sales team, therefore, take nothing for granted when it comes to getting the order and keeping the business. “I go back to my dad’s sales tactics,” Larsen says. “You
As a stocking distributor with 5,000 products in stock, Larsen can fill orders immediately for everyday packaging supplies. The company also offers blanket order fulfillment, allowing customers to purchase items in bulk for a better price, to be held on Larsen’s floor, and then have them delivered on an as-needed basis.
On the Larsen Packaging production floor, workers feed the company’s Staley 66” x 113” two-color rotary die cutter.
Plus, he adds, customers were begin ning to ask about custom work. “That stock box thing we were chasing for so long now turned into, ‘Can you get us this box?’ ‘We want this printed.’ ‘Can you do a die-cut?’”
For Larsen, this was a great opportunity, but he also admits he was in uncharted waters. “I just didn’t tell people, no. I just told them how much. In a lot of cases, we were buying from somebody I shouldn’t have been buying from, but I didn’t know any better,” he says. “Nobody sat me down in an International Paper confer ence room and gave me Corrugated 101.”
Larsen remembers those closed doors. “I just took notes for 20 years on who it was who wanted to buy from the manufac turer,” he says. “The minute we were the manufacturer, I went back immediately and overturned 20 years’ worth of bodies that were buried. We knew where they were, and we went out and plucked them one after another.”
for them to call us, to say, ‘There are too few of this,’ or ‘There are too many of that.’ It’s vendor-managed, and it’s on us.”
with a cost: They were going to put on their 20–30 points as well, meaning we couldn’t be as competitive as we’d like.”
Larsen Packaging’s vendor-managed inventory program gives his company a “stickiness” for those customers on it. “Once we get these programs in play, when they’re called on by a competitor, they say, ‘We got a guy.’ These service levels that we get people on, it’s hard for a manufacturer that does not distribute what they make to do that.”
Larsen Packaging keeps 10 salespeople actively busy, and speed and service are the lead-offs in the sales pitch. The company’s recent move to manufacturing has reopened doors that in the past had been closed, and this, says Larsen, is fertile ground for new business. “It was not easy as a distributor,” he recalls. “We’d go in and say we’re a distributor that stocks material, and that was sour to a lot of people. They’d say, ‘I want to buy from the manufacturer.’”
The table Larsen Packaging Products sets for its suburban Chicago market is
Though Larsen’s corrugated learning curve was steep, he’s proved himself a fast learner. As his customers’ demand for boxes grew, Larsen built his knowledge of board grades, performance specs, and design. He cites examples of tinkering with box dimensions to achieve up to 20% raw material reduction or redesign ing a box for a customer whose product didn’t require a full overlap of the flaps. “We’re always trying to bring things like this to the table,” he says.
Larsen’s approach in this case is to pick two or three items. “Get them on the phone and say, ‘Look, I don’t want to quote you on 85 different things. I want to quote you on two.’ If I’m good on those two, I’ll be good on everything.”
Larsen also plans to move the distribu tion side of his business out of its current location. “Our current location will be manufacturing exclusively,” he says. “We’re trying to separate manufacturing
“I’m looking to make acquisitions up and down Interstate 65,” he says. “I’d like to buy somebody in Indy; I would like to buy somebody in or around Nashville.”
Bill Larsen’s never afraid of a challenge, and the main challenge he’s faced in recent years is melding a stocking distrib utor culture with a manufacturing one. “I’ll say now that where this company was pre-pandemic and where it is now are two completely different companies. Doing the same thing but completely different ways of operating,” he explains. His first priority is finding and hiring professional upper managers who under stand the converting side of his business. Enter Rob Reece, chief financial officer, who joined Larsen in April. Reece came to Larsen Packaging with more than 30 years of manufacturing, distribution, and financial experience. He has held general manager positions with several Midwest manufacturing and industrial supply distributors. As Larsen explains, Reece’s first job is to create a leadership structure so that all day-to-day decisions don’t end up in the CEO’s lap. “I can’t look for equipment or consider acquisitions or other growth options if people are coming to me saying, ‘Hey, I need a price on this,’” says Larsen.
So, where will Larsen Packaging Products be in, say, five years? “The hard part for us is behind us—starting a plant, building a plant,” Larsen says. “The plant’s built; we’re ready to rock and roll. I will always say we are a brown box company. We are not a POP display house; we are not highend graphics; we’re not litho laminating. We don’t do any of that stuff—yet.”
While Larsen describes the importance of building his management bench, he also praises the loyalty of his team and the work they’ve done to build the business to where it is today. “Experience is what we’re truly looking for in the upcoming months, but we have really good people who work here,” he says. “They’re loyal. The longest employees have been here 20-plus years. I’ve got good, loyal people.”
get a customer, you call him, you go see him once a month. You want them to know you care about their business; you appreciate their business. Over time, you’re asking them questions that show you care: ‘How was that last order? Was the driver courteous? Was the invoice OK?’”
Steve Young is 202-297-0583Heambassador-at-large.AICC’scanbereachedator syoung@aiccbox.org
‘100% About Growth’
Larsen sees new equipment as part of this specialization and growth. The three-color Apstar flexo folder gluer, due next year, is part of that plan. He is also eyeing adding another Vega specialty gluer as well as a five-color Apstar with inside-print capability. Larsen sees growth opportunity in food packaging, and he’s currently working on obtaining Food and Drug Administration and other food-related certifications.
Member Profile
Larsen sees the advantage of further dis tribution points for his packaging supplies business, and the equipment he acquires in these plants will supplement his growing converting capabilities. “Depending on what equipment people have, I am open to just about anything,” he says.
From his early days in the company, telling his father, “Let’s grow this thing,” Bill Larsen has built a successful company built on speed, service, and customer satisfaction. Now, as he eyes new opportunities in converting corrugated products, he’s bringing the same high-velocity drive: Says Larsen, “Moving forward here is 100% about growth.”
expansion is also in Larsen’s sights, and he sees acquisitions of smaller sheet plants as a way to accomplish that.
from distribution; they just don’t work wellGeographictogether.”
You can listen to Bill Larsen’s story on AICC’s podcast, Breaking Down Boxes, by scanning the QR code below.
Reece agrees. “They’ll bend over backwards for Bill,” he says.
BOXSCORE September/October 202236
Larsen envisions this for his company, though: “Now that’s stuff I want to grow into. That’s the direction I want to go.”
side of the business will also be a critical part of his job. “Distribution is different from manufacturing,” he says. “To remain competitive, customer service and the sales force have to become more acclimated and familiar with estimating and with our machine capabilities.”
Reece, for his part, says that educating the workforce on the manufacturing
‘Completely Different Companies’
Larsen also counsels his sales team to start small. “If a box buyer’s buying 250 box sizes, you’re the last guy he wants to talk to,” he says. “Do you have any idea how much work that is for him to change vendors for stuff like that?”
any box plants and related manufacturers have been running at or near capacity during the last few years. Yet that increased demand for packaging has created problems when it comes to getting those boxes, inserts, and displays to their destinations on time and on budget.
THE SHIPPING STATUS QUO
M
BOXSCORE September/October 202238
Capacity shortages, rising fuel costs, and other transportation issues are creating challenges to the shipping status quo that, at present, have no easy solutions.
By Robert Bittner
Reduced capacity and rising costs are creating new challenges for boxmakers
BOXSCORE www.aiccbox.org 39
“I’m seeing an increase in the price of every movement. Just a few years ago, I might have paid the same price for two years straight. Now, it’s different every time.”
in the office,” Elgin says. “Everybody’s having to work harder.”
In addition, Vise points out that high turnover has been a chronic issue for many larger carriers. “They tend to have high turnover because their business model is built on bringing in new drivers and training them; they don’t necessarily prioritize retention. So those carriers, even in weaker times, can often have a hard time keeping all of their trucks fi lled.”
Now, he notes, it isn’t so much that there aren’t enough drivers; it’s that those drivers have been working in other segments of the market. “They got their own authority, they set up shop as independent carriers, and they hauled freight in the spot market for brokers on a load-by-load basis,” Vise explains.
Rising Costs, Hidden Rates
The situation is similar for Elgin. “I’m seeing an increase in the price of every movement,” he says. “Just a few years ago, I might have paid the same price for
The good news, according to Vise, is that the capacity lost over the last few years is poised to return. “Th is spring, we’ve seen really astounding growth in the number of payroll employees in trucking, and 60% to 65% of those are going to be drivers,” he says. “So we’ve had a very strong hiring period. And I anticipate that—as long as freight demand stays as strong as it is or at least close to as strong as it has been—that trend will continue, because we’re seeing a shift in volume back into contract.”
BOXSCORE September/October 202240
Lawrence Paper Co., a division of American Packaging, manages its own shipping fleet, which could sound like the best way to guarantee capacity. Yet Shane Old, operations and plant manager, says it has been particularly challenging to fi nd and to keep drivers. “We’ve got enough drivers today,” he says, “but hiring is very hard. There aren’t many applicants when we post a job.”
The technicalities of whether there is a driver shortage, or what the situation should be called, are beside the point, though, if you’re a shipper who has to spend valuable time simply trying to fi nd an available truck. “Having to do all of this extra planning with our freight has defi nitely made more work
The Driver Dilemma
“Most of the time, they don’t have the capacity to do the job,” Elgin continues. “They can do it in a week; they just can’t do it when you need it. So when that happens, you move on to the next option, which could either be a broker or a different carrier. And then you end up just taking the most cost-effective option— assuming you can fi nd an option.”
The fi rst year of the COVID-19 pandemic brought a major shift in both volume and capacity away from the contract market—the typical day-to-day relationship between shippers and their carriers—and into the spot market, where brokers place loads with whoever is available to accept them. “Th at was an unprecedented shift,” Vise says, “and it continued for a long time because of all of the disruptions we had in the supply chain and in the labor market.”
—Eric Elgin, owner, Oklahoma Interpak
Oklahoma Interpak relies on a variety of less-than-truckload (LTL) assetbased carriers as well as brokers for its shipping. “We use trucking companies for everything we do,” says owner Eric Elgin. “Even though we work with about 10 different carriers, it’s harder to fi nd a truck in the fi rst place. When you do, it’s a challenge to get it where it needs to go and when you need it to be there.
Perhaps the biggest current challenge is higher prices, in terms of overall carrier rates as well as fuel costs. “We’re seeing 50% to 70% fuel surcharges from outside carriers,” Old acknowledges, “and we are having difficulty fi nding carriers to lock in rates for more than a couple of days to some lanes.”
The lack of available drivers suggests a driver shortage. Yet Avery Vise, vice president of trucking for independent forecasting fi rm FTR, believes the situation isn’t as straightforward as that. “Yes, we did lose some drivers during the early stages of the pandemic because, at one point, there was very little freight to haul,” he says. “But we estimate that we were back to the pre-pandemic supply of drivers at least a year ago.”
NEW LOCATION NOW.AICCbox.org MORENEW&LOCATIONTRAINING NOW.AICCbox.org
Elgin recalls that one well-known carrier’s policy had been that any shipment of more than seven pallets would be considered a capacity load, meaning the manufacturer would be charged for the
whole trailer. Th at seemed straightforward enough. “So at one point, I sent eight or nine pallets to Arizona” with this carrier, Elgin says. “I went online and used their quoting template, which gave me a cost of something likeNo$700.”additional “capacity rate” was mentioned. However, Elgin learned later that his order had triggered an additional fee. “When I got the invoice, it was over $5,000, which was more than the actual order was worth. There was no indication on the website that the order would trigger the cap or what the real cost would be. In fact, their website still doesn’t give any kind of warning or display the actual price you’ll pay for shipping.”
And then there is the rising cost of fuel. While most larger carriers routinely add a fuel surcharge to every shipment—a fee that helps carriers manage the volatile nature of fuel costs—many smaller carriers do not typically include them. So, when diesel prices rise, either the carrier assumes that cost—shortchanging itself— or the higher price gets passed along to
BOXSCORE September/October 202242
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But that solution has led to other issues. “There are a lot of rules that exist in LTL that have never been enforced in the 21 years that I’ve been doing this,” Elgin notes. “Suddenly that’s changed. The LTL industry has a thing called a capacity rate or cap. What I didn’t know is that it varies from carrier to carrier, and it may or may not be enforced. It may not even be mentioned when they quote a price.”
two years straight. Now, it’s different everyBecausetime.”Oklahoma Interpak has an unusually large shipping territory, the company is pooling more orders together, “so we can maximize whatever carriers we can fi nd,” Elgin says.
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Th at openness extends to communicating effectively with customers as well, as cost increases and potential delays can strain even the best customer relationships. Says Elgin, “At this point, our customers are understanding when it comes to shipping delays and other issues. Everything seems to take longer to get than it ever has, so they’re used to it.”
In time, though, that patience may run out.
“The trucking market started to normalize earlier this year,” he says. “We started to see capacity returning to the larger carriers, and we saw some easing of stress in the spot market, which was dealing with the sharp increase in diesel prices. Rising diesel prices put a lot of financial pressure on very small carriers— many of which had only just started up during the pandemic—that typically don’t get fuel surcharges. So we’re seeing a number of drivers returning to the larger trucking companies.”
—Avery Vise, vice president of trucking, FTR
Slowly Toward Normal Capacity and costs are, for the most part, outside of shippers’ control. Unless a boxmaker decides to make significant changes to the business—building their own shipping fleet from scratch, for example—there is little to be done but wait for the situation to change. “We’ve done analysis on whether we want to start trucking things ourselves,” Elgin says. “We’re not going to do it at thisDespitepoint.”his current frustrations, he believes the “solution” likely would be just as disruptive. “I ship a lot, and I ship on a daily basis to the North, the South, and the West,” he adds. “Say I bought a couple of trucks. If I sent one to California, it would be four or five days before it’s back. And I’d need to fi nd somethingtohaul
BoxScore contributor.
44 the shippers, which could lead them to seekWhilealternatives.talkingwon’t lower fuel prices or eliminate added fees, Vise believes that better communication between shippers and carriers could help to reduce misunderstandings and frustrations arising from the current situation. “There’s traditionally been a sort of arm’s-length relationship between shippers and carriers,” he says, “where a shipper may tend to hold things close to the vest because they don’t want to give the carrier any ammo for raising rates. And carriers are just as likely to hold things close to the vest for the opposite reason.
“I would say the best lesson learned from the pandemic and other recent challenges is the need for shippers to be as open as possible with carriers about what their volume requirements are going to be and what their transportation needs are going to be. It’s to everyone’s advantage to be more open with our business partners. It ultimately doesn’t serve anyone’s interest to play games.”
Summing up, Vise says, “The bad news is that the situation is not going to improve quickly. The good news is that the worst is behind us. We’re headed—although slowly—toward a more normal market.”
BOXSCORE September/October 2022
Based on his company’s data, Vise believes things likely won’t get “that bad.”
Robert Bittner is a freelanceMichigan-basedjournalistandafrequent
“I would say the best lesson learned from the pandemic and other recent challenges is the need for shippers to be as open as possible with carriers about what their volume requirements are going to be and what their transportation needs are going to be.”
back. On top of that, I would still have to maintain the truck. I’d have to hire the people to drive it. Managing a trucking operation is not our core business, and I just don’t think it’s quite worth it yet. Th ings haven’t gotten that bad yet.”
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BOXSCORE September/October 202246 With the unpredictable 2022 midterms approaching, what are the key business issues facing boxmakers? HANGER A FISCAL CLIFF
By M. Diane McCormick
Consider these tax benefits of the TCJA, all on the chopping block:
As the midterm elections of 2022 loom, boxmakers nationwide are wondering how the outcome will impact their businesses and operations. Th e U.S. House of Representatives could change majority from Democratic to Republican. Th e U.S. Senate might stay in Democratic hands—or not. Th e White House remains the residence of President Joe Biden, a Democrat.
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• One-hundred percent bonus depreciation for complete write-off of capital in the tax year the investment was made. Th is provision has provided a big boost for boxmakers who compensated for staffi ng shortages by investing in automation, says Klingher. But it starts phasing out in 2023 and is slated for elimination after 2026.
ven in fraught political times, good tax policy can be enacted, but it doesn’t fall from the sky “like manna from heaven,” says Brian Reardon, president of the S Corporation Association. Good policy requires people to develop and champion it.
BOXSCORE www.AICCbox.org 47
No matter the congressional confi guration, tax experts say there’s work to be done to defend tax provisions that are protecting small, midsized, and family businesses but are due to sunset soon. Add the pressures of a rocky economy, and boxmakers have a lot at stake in the politics of 2022.
“Our goal is to position the Main Street community so we can get the best results out of that coming negotiation that we possibly can,” he says.
“You have to sit down and ask what we can do here, given the parameters of what we’re going to be dealing with in the House, the Senate, the White House, and where the votes are,” says Reardon, whose association advocates for pass-through businesses. “What can we do, and what’s a good direction we can encourage people to move in that has a chance of passing? You have to start thinking about these things now. You can’t wait until the last minute, because then you’re going to end up with some sort of a half-baked compromise that’s not going to make anybody happy.”
• Increased estate tax exemption of about $11.5 million per person. “It’s easier to tax the dead than it is to tax the living,” says Mitchell Klingher, owner of tax consultancy Klingher Nadler LLP. The increase from $5.45 million allows private business owners who have worked their whole lives to build an estate to “keep the business in the family without having to sell it or borrow tremendous amounts of money to pay the estate taxes.” As Reardon notes, estate planning is an everyday concern for private businesses, because every generation “has to buy a certain percentage of the company back from the government.”
• The 199A pass-through, which reduces qualified business income for pass-through entities by up to 20%. The provision is set to expire after 2025.
Tax Provisions
In 2017, Congress passed President Donald Trump’s Tax Cuts and Jobs Act (TCJA). While heralded as a business booster, key provisions that helped S corporations and family-owned businesses are scheduled to sunset by around 2025. It’s a “fi scal cliff ” that demands attention and talks now, says Reardon.
BOXSCORE September/October 202248
—Brian Reardon, president, S Corporation Association
The last two years have been the most profitable in the independent converters’ marketplace that Klingher says he has ever seen, as demand skyrocketed and capital investments drove efficiencies. But sunsetting of the TCJA provisions would deliver a “perfect storm” of disincentives, as higher taxes drain the money that small to midsized businesses would otherwise be investing, says Klingher. “It’s a direct, dollar-for-dollar tradeoff,” he says. “If Congress can do one good thing for the small-business owner, it would be to take these things that are sunsetting and make them permanent.”
energy incentives, could free TCJA’s business-friendly items from the threat of sunsetting, he suggests.
McConnell—are again in position to lead talks, but who occupies their seats when today’s fi scal cliff looms in 2025?
“We think we’re in a good place, but the simple fact is, because the vote count is so close, you’re really talking about one or two votes switching. We have to remain vigilant and stand tough all the way through to the end of the fi scal year.”
“The challenge is, you don’t know who’s running the Congress in that year,” says Reardon. “You don’t know who the president’s going to be. Our goal between now and then is to provide thought leadership and come up with
But after the midterm elections, he adds, “even if Republicans take the House and the Senate, what’s Joe Biden going to do?” Perhaps some horse trading to off er Biden some of his desired initiatives, such as renewable
In fact, when a similar fi scal cliff loomed in 2012, two political opponents hammered out a compromise, recalls Reardon. Today, those same two foes—then-Vice President Joe Biden and then-Minority Leader Mitch
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businesses have relied on for planning. “Most of my members would love to have a five-year cease-fire where the policies can stay the same and they can go about focusing on running their businesses,” says Reardon.
A Stormy Economy
—Mitch Klingher, owner, Klingher Nadler LLP
The age of skirting political stale mates through temporary patches, such as reconciliation bills and sunset provisions, is eroding any certainty that
In this atmosphere, Klingher sees a counterproductive push and pull between Congress and fiscal regulators.
If Democrats gain Senate seats and retain the House, BBB could see new life, so “we’re not resting easy,” says Reardon. “We think we’re in a good place, but the simple fact is, because the vote count is so close, you’re really talking about one or two votes switch ing. We have to remain vigilant and stand tough all the way through to the end of the fiscal year.”
BOXSCORE www.AICCbox.org 51
In a time of tax policy threats and hopes, one enormous uncertainty dangles like the sword of Damocles: the economy. The rare combination of inflation and recession, exacerbated by ongoing supply chain disruptions, puts the kind of squeeze on businesses unseen since the 1970s. Even the disco-era term “stagfla tion,” when prices were high but growth was moribund, is making a comeback.
“Somebody’s got to try to put this together and have some cohesive plan to fix the economy.”
Althoughtax. it appears that BBB is dead, or at least on life support, it remains a significant threat because only two Democratic voices in opposition—from West Virginia’s Joe Manchin and New Mexico’s Kyrsten Sinema—prevented its passage in the U.S. Senate. “Without their leadership, this bill would have passed easily, and it would have been very, very bad for
Main Street,” says Reardon. “We’re going into some economically dicey times. The odds of recession are rising. It’s hard to see how a lot of companies could have survived if they had to deal with that and the BBB adoption at the same time.”
some good ideas and good policies that members can embrace and champion, and hopefully, they get adopted in the next three Reardonyears.”isalso not counting out Biden’s signature Build Back Better Act, which would have hit private businesses with a “triple whammy” by raising tax rates, increasing the capital gains rate, and dramatically increasing the estate
In past eras of economic tension, from World War I to the dot-com bubble and 9/11, businesses have had use of net operating loss (NOL) carrybacks to reduce their overall tax liability and receive refunds, says Reardon. Today, the once-bipartisan solution has become a political football. Th e TCJA, for all its business-friendly measures, eliminated the NOL through 2026, and the House-passed Build Back Better Act would have made its removalReardonpermanent.fearsthat the battle to protect the NOL continues. “We had to fi ght to keep it in the CARES act,” he says. “Then we had to fi ght to keep them from repealing it. Now, I feel
Preparing for Change
At the moment, Reardon is focused on ensuring the BBB Act stays dead, and on education about the importance of allowing the use of NOLs, especially with today’s economic outlook. After the elections, “we’ll start focusing on the fi scal cliff and what we need to do to make certain we’re in good shape forKlingherthat.” currently advises clients to have enough cash available to pay their taxes, while also adding some nontax-related counsel for weathering a possible recession. First, he suggests, make capital investments before interest rates rise higher, banks tighten credit, and the bonus depreciation starts phasing out.
keep going up, and revenues keep going down. You’re going to have lower sales and lower margins, and you’re going to need a plan to deal with it. If it doesn’t happen, great. At least you’ve thought about it in advance, and it’s not crisis management. It’s ‘we’ve got a plan, and we’re going to execute theBecauseplan.’”
M. Diane McCormick is a freelancePennsylvania-basedwriter.
The Federal Reserve sets monetary policy that raises interest rates and dampens demand in order to “cool the economy and rein in infl ation,” but will that solve the supply chain problem that’s driving up prices? In the meantime, Congress has the fi scal powers to stimulate the economy through such tools as stimulus payments and tax cuts. “Somebody’s got to try to put this together and have some cohesive plan to fi x the economy,” says Klingher.
“Let’s keep small business strong and, at the same time, let them prepare for a recession, because it looks like the powers that be are lining up for that,” Klingher says.
small businesses drive the economy and create jobs, lawmakers should write supportive policy, Klingher adds. In the meantime, those businesses should build relations with their congressional representatives and senators, while supporting the work of associations such as AICC that have pooled clout in Washington.
At the same time, have a recession plan in place. Model the business, and plot out corrective steps if sales were to decline and margins shrink. “In a recession, businesses typically lose revenue and lose margin, especially if inflation isn’t curtailed quickly,” he says. “Prices
they’re setting themselves up for failure if they don’t use tools like this to help businesses survive.”
BOXSCORE September/October 202252
Subscribe Wherever You Listen to PodcastsAICCbox.org/BoxesBREAKINGDOWNBOXESCompelling Conversations with Entrepreneurs with Hosts Gene Marino and Joe Morelli
SPECIAL SECTION
alaries and hourly wages of employees in U.S. independent corrugated converting operations rose an average of 7% from January 1, 2021, to January 1, 2022, according to AICC’s 2022 Salary, Hourly Wage, and Benefits Report . The biennial survey was conducted from March through May of this year and is the industry’s most comprehensive report of key employee salaries, wages, and benefits being paid by independent corrugator plants, sheet feeders, and sheet plants in the United States. The report is conducted by Ijamsville, Maryland-based Association Research Inc., an independent thirdparty research fi rm.
.
Breaking this information down further, sheet plant respondents reported higher increases than their counterparts in corrugator plants. Average increase for salaried management employees in sheet plants averaged 7.8%, while salaried management employees in corrugator plants saw their base salary increase 6.2%. Similarly, the hourly wage rate change in sheet plants averaged 8.9%, while corrugator plants’ wage rates increased 6%.
S
SCAN THE QR CODE to get your copy today!
Complete data on salaries, hourly wages, and benefits can be found in AICC’s 2022 Salary, Hourly Wage & Benefits Report . The report is provided at no charge to participants. Nonparticipants wishing to purchase a copy may scan the QR code at right or go to www.AICCbox.org/store. The member price is $225. The nonmember price is $425. For more information, contact Maria Frustaci at 703-535-1382 or mfrustaci@AICCbox.org
AICC Salary, Hourly Wage & Benefits Report shows wage pressures building in 2021
CONTINUED MOMENTUM
full-time employee has been in their position for 5.9 years and received an average pay increase of 7% between January 1, 2021, and January 1, 2022. By comparison, in 2019, the prior survey year, salaries and wages rose only 3% (see “On the Rise,” BoxScore, September/October 2020, p. 60).
BOXSCORE September/October 202254
For the 2022 edition, data was submitted by 23 independent corrugator and/or sheet feeder plants and 43 sheet plants. These companies employed 7,664 workers across AICC’s six U.S. regions. All in all, 28 management and salaried positions were surveyed, along with 87 hourlyAcrosspositions.allcompanies reporting, the average management employee has been in his or her position for 11.7 years and saw an average increase of 7.1% in compensation between January 1, 2021, and January 1, 2022. For other nonmanagement positions, the average
BOXSCORE www.AICCbox.org 55 Management Position Salaries 2022 Av A erage Management Position Salaries Corrugator Plants – U.S. Only $57,618 $68,836 $73,018 $76,425 $76,915 $79,491 $80,229 $81,374 $87,939 $88,681 $91,057 $93,392 $94,537 $97,463 $98,471 $106,255 $112,505 $113,151 $118,730 $139,829 $144,901 $177,052 $181,418 $203,580 $233,196 $0 $50,000 $1 00,000 $1 50,000 $2 00,000 $2 50,000 Line Foreman (Lead Man) Shi ppi ng Supervisor Converting Supervisor Supervisor Finishing Supervisor Planni ng Manager/Scheduler Plant Assistant Controll er Logisti cs Manage r Shift Supe rvisor/Superintendent Quality Assurance Manager Sal es Representative Purchasing Manage r Human Resources Manager Customer Service Manager Design Manager Mai ntenance Supervisor Plant Production Manager Production Manager Accounting Manager MIS/IT Manager Controller Marketing Dire ct or GM (Owne r/ r Partner) GM (not an Owner/Partner) Sales Manager
Quality A ssurance Manager
Management Position Salaries
Planning Manager/Scheduler
Purchasing Manage r
Production Manager
Human R esources Manager
GM (not an Owner/Partner) Sale s Manager
BOXSCORE September/October 202256 66
$46,538 $54,174 $58,631 $64,420 $65,334 $66,295 $66,768 $67,137 $70,073 $72,100 $74,362 $75,082 $78,242 $78,523 $79,364 $80,800 $84,000 $84,557 $84,830 $85,230 $101,015 $111,166 $146,480 $150,538 $186,868 $0 $50,000 $1 00,000 $1 50,000 $200,000
MIS/IT Manage r Design Manager
Customer Se rvice Manager
Sales Repre se nt ative
Accounting Manager
Logistics Manager
Finishing Supervisor Supervisor Shipping Supervisor Converting Supervisor Office Manager
Plant Production Manager Controller
Sheet Plants – U.S. Only
Line Foreman (Lead Man)
GM (Owner/Partner)
Shift Supervisor/Superintendent
2022 Average Management Position Salaries
Marketing Director Maintenance Supervisor
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Nimble OEMs have become hyperfocused on the acceleration of their digital journey to address rapidly growing backlogs. By developing custom digital technologies, manufacturers can address the symptoms of a tight supply chain and accurately forecast. Using digital twin software, they can maximize the time between machine purchase and installation to train operators on equipment using a digital workspace to reduce or eliminate the learning curve when the equipment is commissioned. Training documents, parts manuals, maintenance schedules, and other important communi cations from manufacturers can be right in the palm of converters’ hands through the development of a custom mobile application. Augmented reality (AR) service headsets allow remote service connectivity to view what your operators see and collaborate in real time. Other AR, virtual reality, and digital technologies can also be used for training, engineering, collaboration, and project planning. Converters and equipment suppliers now have the ability to be more connected than ever before.
Tim Connell is director of sales at A.G. Stacker and is vice chairman of AICC’s Associate board.
OEMs and convertors have both seen that the benefits of extended project time lines are the healthier B2B relationships built on dependency, transparency, and trust. Lengthy lead times have contributed to more thorough project planning, which increases the need for more connected customer engagement. Savvy capital equipment buyers are also seeing the longterm benefits of forecasting their timelines to upgrade production capabilities based on overall market demands, versus those of an individual customer. Through this newfound connected collaboration, both parties can set proper expectations with
TIM CONNELL A.G. STACKER INC. VICE TCONNELL@AGSTACKER.COMCHAIRMAN
Are these extended lead times good or bad? Do they benefit or hinder the converters that are forced to look further down the road to forecast their equipment needs and then pay to wait? What about the machine builders that are forced to manage longer backlogs, shifting production schedules, delayed installa tions, and rapidly escalating costs? There is no apparent winner either way. Marketleading organizations have been wise in using this opportunity to streamline processes, strategize new methods of sourcing, and expose other inefficiencies within their processes. Organizations that understand that the “devil is in the details” are addressing these vulnerabilities using digital technology and remain steadfast in their pursuits of operational excellence.
The Advantage
Lessons From Extended Lead Times
nprecedented lead times for machinery have become a persistent reality for corrugated convertors and equipment suppliers worldwide. Numerous factors, including a surge in e-commerce, supply chain interruptions, escalating material costs, and a tight labor market, have compounded the issue and delayed the much-desired “return to normal.”
process improvements that produce more vertical machine startups.
JOHN BURGESS JOHN.BURGESS@PAMARCO.COMSECRETARYPAMARCO
BY TIM CONNELL
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Associate
TBD DIRECTOR
JOE MORELLI HUSTON PATTERSON PRINTERS IMMEDIATE PAST JMORELLI@HUSTONPATTERSON.COMCHAIRMAN
GREG JONES SUN AUTOMATION GROUP GREG.JONES@SUNAUTOMATION.COMCHAIRMAN
Though we’ve faced some of the greatest challenges of our careers over these past few years, I believe we can also look back and be proud of how much we’ve learned, adapted, and conquered the challenges. The relationship between converter and manufacturer now has a greater emphasis on communication, connectivity, and technology than ever before—and I believe that this lesson is building a better path toward a brighter future.
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several million cycles, replacing a worn chute can be costly and time-consuming. Changing a single segmented gate can take no longer than 20 minutes.
End-of-Line Bundling Automation With Remote Monitoring, Data Sharing
Many boxmakers are also opting for the latest speed and production enhancer, commonly referred to as bundle diversion technology. These systems optimize the power of two squaring bundlers that connect with dual-zone conveyors to meet the extreme demands of flexo folder gluers and operate at speeds of up to 36 bundles per minute.
BY JERRY VIVLAMORE
Also, in light of the labor challenges confronting the industry, premium automated bundling technology should include an icon-driven human-machine interface that enables even novice operators to quickly set up a new recipe with just a few taps of the screen. Other technology enhancements to look for are related to the chutes. Next-generation bundlers feature segmented chutes. After
What the Tech?
To cite one example, at Signode we have many tandem bundling systems in place across the United States. One particular facility had seen a large amount of turnover, causing some bundling recipes to become out of spec. Th rough data sharing, we started to see that refeeds and failures were getting high. Our programmers in the European Union were able to go online, check the data, and see where some of the bundle recipes had gotten a little off ; our service tech was on-site, and we had him make the changes immediately. Th e customer’s refeeds dropped to almost nothing.
The end game is that the machine can alert the OEM technical staff that it’s encountering too many strap refeeds.
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s corrugated plants continue to make major investments in technology and equipment, both in legacy and greenfi eld facilities, much attention has been rightly placed on the substantial outlays in fl exo folder gluers. In eff ect the marquee centerpiece of any plant, it shouldn’t overshadow automation investments of the supporting equipment cast further down the line.
In many respects, automated bundling solutions are a small but important example of Industry 4.0 at work in real time. The integration of complex equipment with software platforms leads to predicting and preventing unplanned downtime, reducing losses, and driving productivity gains.
data from the flexo folder gluer to the bundlers. Th is can be achieved through an ethernet cable or through collaboration with OEMs. Remote monitoring software supplies technicians and plant managers with the insight to see how things are operating and help to shift to optimized preventative-maintenance models.
The enhanced productivity, simplified maintenance, production versatility, and robust design of automated bundlers and their integration with software and remote monitoring systems could be the diff erence that distinguishes and future-proofs your operation from its competition.
It’s an elegant solution that directs all bundles to the active bundler during a coil change or while the other temporarily inactive bundler “mends itself” with the auto-refeed feature. Once the inactive bundler changes the coil, it comes back online automatically to share the line.
One such area that deserves consideration is the choice of automated bundling solutions. Independent box manufacturers—and, to be sure, the integrateds—are looking for high-speed bundling or in-line redundancy features that enable auto strap changes and easy-to-program bundle recipes that can be achieved in seconds.
As we know in this industry, enhancing production while keeping quality foremost is of highest priority. Bundling may seem like a commodity equipment choice given the complexity of corrugated facilities, but truly future-focused boxmakers are always on the lookout for smart technology and support to improve operations.
Jerry Vivlamore is corrugated bundler segment manager for automation and packaging technologies at Signode.
Ideal bundling systems are OEMagnostic in relation to the flexo folder gluer and allow for easy transfer of
Thank You, Education Investors
These companies are making a significant contribution to the online education available to all AICC members. For more information, contact Mike D’Angelo, President, 703.535.1386 or mdangelo@aiccbox.org.
The reality is a lot messier, though. What really happened is that the customer was charged $10,000 for tooling that cost
GLUE SETS AICC BoxScore 3.25x4.25.indd 1 12/3/21 12:36 PM
Similarly, when a converter records a sale, they are probably recording four or five different steams of revenue that all get aggregated into something called “sales.” Let’s say a converter sells a point-of-purchase display that is fully
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PRECISION
industries the restatements that resulted from this pronouncement were enormous. Th is pronouncement caused companies to disaggregate sales into their component parts, so that a computer that was sold with bundled software and a maintenance contract would have to record three different streams of revenue that would be recognized in differing amounts over differing time periods.
The Fundamental Flaw in Financial Reporting
Accora
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record revenue from various sources and lines of business. Some can be considered the recoupment of costs, such as freight or tooling, although they may be marked up. Others are byproducts of a manufacturing process such as the sale of scrap. Companies charge customers for items that they produce and for items that they purchase and resell. Finally, there is often a great diversity in the product lines that a company offers—some are the result of very labor-intensive endeavors, and others are more machine-centric—and there is often a great disparity in the profitability of the items sold. Yet every income statement begins with sales.
BY MITCH KLINGHER
Strength in Numbers
packed out and delivered to the customer. The converter has purchased tooling for the order, has bought some display components that were manufactured by someone else, has converted the board into display components, packed out the display with the customer’s product, and delivered it either in their own trucks or by common carrier. The order was for 2,000 displays, the customer was charged $75 per display, and the accounting department recorded a $150,000 sale. Very neat and clean, right?
The Financial Accounting Standards Board (FASB) has been acutely interested in how companies recognize revenue for quite some time, and in May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue From Contracts With Customers (Topic 606), which establishes the principles to report useful information to users of fi nancial statements about the nature, timing, and uncertainty of revenue from contracts with customers. Th is change required every company that issues fi nancial statements in accordance with generally accepted accounting principles (GAAP) to reevaluate revenue recognition, and for many companies in many different
ust about every income statement I have ever seen starts with sales dollars, and almost all readers of fi nancial statements discuss their results with some reference to sales, such as “we had a good year last year—sales were up 15%, and we are now a $50 million dollar company.” But all sales are not equal, areCompaniesthey?
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In addition to this issue, most compa nies sell a fairly varied product line: Some they manufacture, some they purchase and resell, and others are a combina tion of manufactured and purchased components. They sell products to end users, products to brokers, and products to other manufacturers. The margins on all these types of sales vary greatly, and
General and adminstrative expenses 3,500,000 35.00 3,300,000 30.00 8,750,000 87.50 8,200,000 74.55
Assembly and fullfillment 1,000,000 10.00 1,750,000 15.91
Selling expenses 2,000,000 6.15 1,900,000 6.13
Variable costs 22,500,000 69.23 20,000,000 64.52
Mitch Klingher is owner of Klingher Nadler LLP. He can be reached at 201-731-3025 or mitch@klinghernadler.com
$7,500; $8,000 to assemble the displays, with a labor cost of $5,000; $22,500 to pack out the displays, with a labor cost of $12,000; $2,500 for delivery; and therefore, only $107,000 for the man ufacture of the displays themselves. Yet the books will show a sale of corrugated displays of $150,000. The reason for this is that the customer wants one price for the displays, the estimating system does not ordinarily break out the components of the sale, and the accounting system is not set up to look for these breakdowns anyway. So, the short answer is that it would take more people time or custom programming time to achieve this.
The short answer is margin— contribution margin, to be more specific—and contribution margin by major lines of business, to be even more specific. Let’s consider the two income statements in the table below.
Operating income $1,250,000 3.85 $2,800,000 9.03
Fixed manufacturing expenses 3,250,000 10.00 3,000,000 9.68
Operating income $1,250,000 12.50 $2,800,000 25.45
Fixed manufacturing expenses 3,250,000 32.50 3,000,000 27.27
General and administrative expenses 3,500,000 10.77 3,300,000 10.65 8,750,000 26.92 8,200,000 26.45
Purchased products other 1,200,000 12.00 1,250,000 11.36
Purchased products corrugated 800,000 8.00 750,000 6.82
CONTRIBUTIONS FROM:
Sales
YEAR ENDED DECEMBER 31
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2021 % margin 2020 % margin
YEAR ENDED DECEMBER 31
Strength in Numbers
it is readily apparent that the company had less manufactured margin, less assembly and fulfillment margin, and the same margin from the sale of purchased products. Margins are generally higher from manufactured sales and value-added work, such as assembly and fulfillment, and generally lower from the broker ageTheactivities.othernuance in the second statement is that all the expenses (fixed costs) are expressed as a percentage of margin, not as a percentage of sales. Since margin is an indication of how much money is available to pay for fixed costs, many analysts prefer measuring them as a percentage of margin. By switching to margin as the top figure on the statement, you can run the P&L by starting with margin from customers and listing the top 10 or 20 customers to compare the margins received from them and the change from the prior period. You can start the P&L by margin from salespeople and margin from customers in different industries and break out the trade accounts. The possibilities are almost endless in terms of how you look at your business and much more descrip tive of what went on during the period. To accomplish this, you may need to make some changes to your general ledger and do a better job of reconciling your actual results to the results in your estimating system, but the benefits to your reporting systems can be enormous. So in the future, start thinking more in terms of margin dollars than sales dollars, because at the end of the day, margin dollars are available to pay for everything else, while sales dollars may or may not tell the full story.
the mix may change greatly from period to period. So why, then, do all financial statements start with sales? I suppose one can say that it is an indication of the overall volume of the transactions that flow through the entity, and it is an objective measurement. But does it really tell the story of what went on during the period? The other issue is: If the statement doesn’t start with sales, what should it start with?
Contribution margin 10,000,000 100.00 11,000,000 100.00
Selling expenses 2,000,000 20.00 1,900,000 17.27
$32,500,000 100.00 $31,000,000 100.00
Manufacturing
$7,000,000 70.00 $7,250,000 65.91
2021 % sales 2020 % sales
Both statements have the same amount of contribution margin and expenses, and both show the same level of profits. The first one begs the question, “Why did profits go down when sales increased?” What you can see from the first statement is that margins went down and costs went up. In reviewing the second statement,
Contribution margin 10,000,000 30.77 11,000,000 35.48
Please consider making a pledge today. You’ll be glad that you did. Visit www. packaginged.org to donate.
Foundation for Packaging Education Keep It Rolling!
M
you are investing in your own success. The funds received by the foundation go to ensuring that employee training programs for those already engaged in the paper-based packaging industry—those who work for you—will continue to be developed and made available to AICC members. The bulk of these training programs are provided by AICC through its newly christened Packaging University (formerly AICC’s Packaging School). More than 100 courses in English and Spanish are already available for every team member of every AICC memberPackagingcompany.
If you have not already pledged to be a donor, with the end of the year rapidly approaching, why not sign up and make your tax-deductible contribution now? Visit www.packaginged.org. In so doing,
a year. As part of AICC’s ongoing eff orts to expand education, additional courses are expected to be made available from sources outside of AICC through partnerships. AICC is also looking to develop certification programs. Th is can bring uniformity to the expectations you can have about those seeking work or coming to work forThyou.isis important work being done by your Association. Th at is why we need your support through the Foundation for Packaging Education.
University’s off erings are expected to grow by at least 10 courses
omentum for the Foundation for Packaging Education continues to pick up steam. The Independents Cup Golf Tournament at the AICC Spring Meeting in April in Palm Desert, California, brought approximately $30,000 into the foundation’s coff ers. The fi rst annual foundation fundraising event, November 8–11 at Kiawah Island, South Carolina, is close to being fully booked (www.packaginged.org ).
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ICPF Successes Throughout the Years, Plus Some Parting Words
• Expanded annual participation in ICPF’s annual Teleconferences on the Business of Corrugated Packaging and Its Careers, from 75 students who participated from four to six campuses to over 500 students from 18–20 campuses who now participate each year.
Some highlights of our accomplish ments during this past decade and a half include the following:
• Expanded outreach beyond packag ing design and packaging students to include business, sales, graphic design, supply chain management, chemical engineering, industrial engineering, industrial design, mechanical engineering, tech, and related studies. These students reg ularly join ICPF’s career network as well as post their resumés on ICPF’s Career Portal.
• Jump-started, created, or expanded 19 corrugated packaging programs at U.S. colleges and universities.
• Directly enabled the annual hiring of 100–150 college graduates for entry-level openings and students for internships through ICPF’s annual
• Created the Careers in Corrugated Packaging & Displays Social Network that annually has 700–1,100 students and upcoming graduates who have joined to
International Corrugated Packaging Foundation INTERNATIONAL CORRUGATED PACKAGING FOUNDATION BOXSCORE September/October 202266
specifically pursue student intern ships and careers in the corrugated packaging and displays industry.
always have believed that all should be committed to leaving what they find in their professional and personal lives in a better condition than it was when they found it. As announced earlier this year, in October I will be leaving the International Corrugated Packaging Foundation for another opportunity. I am excited about this new challenge, and the foundation’s partners can be proud of the growth and impact of our initiatives during the 16 years I worked with them, serving at the helm.
• Provided millions of dollars in funding assistance, corrugated packaging equipment, and software at colleges and universities across the United States to educate students in the concepts and skills needed for a corrugated packaging career.
• Established and maintained partner ships with 26 colleges and universities, annually providing industry speakers, mentors, plant tours, and other specialized assistance.
BY RICHARD FLAHERTY
student and university programs and online resources.
I
Richard Flaherty is president of the Foundation.CorrugatedInternationalPackaging
International Corrugated Packaging Foundation
• Introduced and developed ICPF’s Holiday Weekend in New York. ICPF’s unique annual fundraising event brings together manufacturers and suppliers in a social setting. The past 13 weekend events have raised a net return of over $1.6 million to support ICPF in working with universities and students. (Even with the restrictions due to the COVID-19 pandemic, the last two events alone raised an audited net revenue of
One of the most significant partner ships has been with students and new hires in the industry who previously attended ICPF events and used ICPF resources to acquire internships and full-time positions.
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FOUNDATION
the years of the pan demic, ICPF has continued to leverage outreach, education, and the recruiting of students and new graduates into the industry through unique partnerships.
• Through fundraising, focusing on maximizing fund and operation management, and the recruiting of an annual $700,000 to $1 million in new partnership pledges over a period of 10 years, raised ICPF’s endowment from $5 million to a high of over $18 million.
• Developed the regular use of ICPF’s corrugated packaging curricula at colleges and universities around the country to support real-world corru gated packaging instruction. ICPF’s corrugated curricula are accessible from ICPF’s website.
posted on the portal. An annual aver age of 100–150 new graduates and student interns have been recruited into the industry during the past eight years through the portal and other ICPF university programs.
For example, a student advisory board was assembled, and the students have provided valued input on the establishment of ICPF’s “virtual” student dialogue dinners. The student board also assisted with plans and implementation in converting ICPF’s annual teleconfer ences to a virtual format.
• Developed ICPF’s website into a powerful online recruiting tool that explains the corrugated packaging industry and its careers to students. Students and faculty can view testimonial videos, view past teleconferences on the industry, post resumés and apply to openings, access corrugated packaging curricula, and more.
• Created annual Student/Executive Dialogue Dinners where scores of students have been directly recruited by executives for internships and entry-level openings.
Throughout$367,762.)
It has been very fulfilling to serve as a leader and president of ICPF, and I will miss regularly seeing many industry friends, including former students who discovered the potential of the corrugated packaging industry through ICPF. The foundation has been well positioned for continued success in the future. I wish all of you health and happiness.
• Launched ICPF’s first initiative to assist in the recruitment of vocational and tech college graduates for the plant floor. An ICPF pilot with com panies and local colleges is currently being conducted this fall in Atlanta.
• Developed the ICPF Career Portal and Resumé Bank into a respected resource for firms to post entry-level positions for new graduates and student internships. The portal also allows potential student interns and upcoming graduates to post resumés. On average, seven qualified upcoming or new grads apply to each opening
INTERNATIONAL CORRUGATED PACKAGING
During the pandemic, ICPF addi tionally expanded its recruitment of designated ICPF student representatives on 18 campuses who promote corru gated packaging careers and the use of ICPF’s Career Portal to post resumés and apply to industry openings. A key element to this expanded initiative is ICPF’s hiring of exceptional student interns during the pandemic to provide assistance in managing ICPF’s stu dentICPF’soutreach.mentoring program that matches ICPF selected students and industry new hires with students who are seeking internships or considering full-time industry positions has proved to be extremely successful during the pandemic, as well.
Meanwhile, more Breaking Down Boxes podcasts are on the way. Among the millions of business podcasts, Breaking Down Boxes is continuing to rise on the charts in terms of popularity. AICC has engaged familiar names Ed Wallace and Mark Roberts to launch Sales Leadership Groups. We will also introduce membership to Milton Corsey, who will moderate Production Leadership Groups, and to Omar Abdullah, who will educate members on leadership.
ow was your summer? I hope you had some time to rest and recharge. These past three years in our industry have been hard-charging. And while there are signs of potential trouble ahead, from what we’re hearing, most of our members continue to operate at a high rate. We hope you’re one of them.
The new platform, now up and running, is AICC NOW (NOW.AICCbox.org ). Th is site is the location for all AICC media content for members. In addition to hosting AICC’s Packaging University, AICC NOW will be where members go for all content, webinars, white papers, One Point Lessons, podcasts, Ask the Experts, and more. It brings easier access to content and better connectivity among content. Keyword searches now bring together the full AICC offerings on the topic(s) of interest. Searches will be more intuitive, and the site will make suggestions for related content. AICC NOW is a real game changer for all the resources that AICC has had, and will have, available going forward. Please let us know what you think.
Since it’s back-to-school season, I feel obligated to stand up in front of the classroom and share with you what AICC has been up to through the steamy months of summer. We should have been sunning ourselves at the beach, enjoying the mountains, or building tree forts in the backyard. Instead, your hardworking AICC staff has spent the last few months balancing some time for themselves and family with producing new, exciting, and useful programming for you.
Speaking of school, on August 1 AICC launched its Packaging University. Th is is a rebranding of AICC’s Packaging School. It is symbolic of our transition from a partnership with The Packaging School (TPS) of Greenville, South Carolina, an organization that has been hosting AICC’s online packaging courses since 2016. TPS has been a wonderful partner in the development and presentation of AICC’s catalog of more than 100 courses. AICC will maintain its partnership with TPS on course development and cooperation but will move the catalog to a new and exciting platform.
H
BOXSCORE September/October 202268 The Final Score
AICC’s new fiscal year opened July 1. Look for a full report on AICC’s fi nances in the November/December issue of BoxScore Renewals for the new fiscal year, as of June 30, are well ahead of the same period last year, and the new fiscal year starts with six new general members and five new Associate members.
We need a vacation.
None of the above happens without the direction and guidance provided by AICC’s many committees and our active and engaged board of directors.
Michael D’Angelo AICC President
What Did You Do This Summer?
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The 295 QS Ultima ™ offers true DualBox ™ production through TwinFeed ™ and XL slotter, as well as complex internal box die-cutting and creasing with the bottom diecutter. Several available options, like for example HighBox ™ and the award winning LiquidCreaser ™, further enhance its true flexibility and top-class performance.
EMBA 295 QS Ultima
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benefits you’d expect and like all our Ultima machines it features our unique Non-Crush Converting ™ and Quick-Set ™ technologies.
By introducing the EMBA 295 QS Ultima ™, we now offer a complete machine range to fit any customer need. It comes loaded with all the
