6 minute read
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of all raw materials a must-have in every company’s portfolio.
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 certifi cation, more use of recovered fi ber, 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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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 aff ect 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.
Ralph Young is the principal of Alternative Paper Solutions and is AICC’s technical advisor. Contact Ralph directly about technical issues that impact our industry at askralph@AICCbox.org.
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.
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A Direction for Sales Growth Amid the Threat of Recession
BY TODD M. ZIELINSKI AND LISA BENSON
Recession 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.
A Recession Defined
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.
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 recognized 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 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.” The NBER committee looks at more than GDP. Other influences include personal income, employment numbers, consumer spending, industrial production, 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.
The Impact on the Corrugated Industry
The issues boxmakers are facing today are being echoed across all industries. The surge of activity corrugated 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.
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
