A PUBLICATION OF AICC, THE INDEPENDENT PACKAGING ASSOCIATION
July/August 2020 Volume 24, No. 4
RESPONDING TO A WORLD IN TURMOIL AICC members lead and give back amid the COVID-19 pandemic
ALSO INSIDE AICC Innovation: Education, Development, Emerging Leaders Members Meeting: Bottlenecks Broken Down Member Profile: PDI
TABLE OF CONTENTS July/August 2020 • Volume 24, No. 4
THE ASSOCIATE ADVANTAGE
WHAT THE TECH?
STRENGTH IN NUMBERS
THE FINAL SCORE
WELCOME, NEW & RETURNING MEMBERS!
RESPONDING TO A WORLD IN TURMOIL AICC members lead and give back amid the COVID-19 pandemic
BoxScore is published bimonthly by AICC, The Independent Packaging Association, PO Box 25708, Alexandria, VA 22313, USA. Rates for reprints and permissions of articles printed are available upon request. The statements and opinions expressed herein are those of the individual authors and do not necessarily represent the views of AICC. The publisher reserves the right to accept or reject any editorial or advertising matter at its discretion. The publisher is not responsible for claims made by advertisers. POSTMASTER: Send change of address to BoxScore, AICC, PO Box 25708, Alexandria, VA 22313, USA. ©2020 AICC. All rights reserved.
Visit www.aiccboxscore.org for Member News and even more great columns. Scan the QR code to check them out! BOXSCORE www.aiccbox.org
OFFICERS Chairman: Jay Carman, StandFast Packaging Group, Carol Stream, Illinois First Vice Chairman: Gene Marino, Rusken Packaging Inc., Cullman, Alabama Vice Chairmen: Jana Harris, Harris Packaging/American Carton, Haltom City, Texas Matt Davis, Packaging Express, Colorado Springs, Colorado Gary Brewer, Package Crafters, High Point, North Carolina Immediate Past Chairman: Joseph M. Palmeri, Jamestown Container Cos., Macedonia, Ohio Chairman, Past Chairmen’s Council: Al Hoodwin, Michigan City Paper Box, Michigan City, Indiana President: Michael D’Angelo, AICC Headquarters, Alexandria, Virginia Secretary/General Counsel: David P. Goch, Webster, Chamberlain & Bean, Washington, DC Counsel Emeritus: Paul H. Vishny, Esq., Chicago, Illinois AICC Canada Director: Renee Annis DIRECTORS West: David DeLine, DeLine Box Co., Denver, Colorado Southwest: Eric Elgin, Oklahoma Interpack, Muscogee, Oklahoma Southeast: Ben DeSollar, Sumter Packaging Corp., Sumter, South Carolina Midwest: Casey Shaw, Batavia Container Inc., Batavia, Illinois Great Lakes: Mike Schaefer,Tavens Packaging & Display, Bedford Heights, Ohio Northeast: Stuart Fenkel, McLean Packaging, Pennsauken, NJ AICC Canada: Terri-Lynn Levesque, Royal Containers Ltd., Brampton, Ontario, Canada AICC México: Pedro Aguirre Martinez, Tecnología de Cartón, Querétaro, México OVERSEAS DIRECTOR Kim Nelson, Royal Containers Ltd., Brampton, Ontario, Canada
DIRECTORS AT LARGE Finn MacDonald, Independent II, Louisville, Kentucky Guy Ockerlund, OxBox, Addison, Illinois Kevin Ausburn, SMC Packaging Group, Springfield, Missouri Nelva Walz, Michigan City Paper Box, Michigan City, Indiana EMERGING LEADER DELEGATES Daniel Brettschneider, CST Systems, Kennesaw, Georgia Cassi Malone, Corrugated Supplies Co., LLC, Chicago, Illinois ASSOCIATE MEMBER DIRECTORS Chairman: Pat Szany, American Corrugated Machine Corp., Indian Trail, North Carolina Vice Chairman: Joseph Morelli, Huston Patterson Printers, Decatur, Illinois Secretary: Greg Jones, Sun Automation, Glen Arm, Maryland Associate Board Director: Tim Connell, A.G. Stacker Inc., Weyers Cave, Virginia Immediate Past Chairman, Associate Members: David Burgess, JB Machinery, Weston, Connecticut ADVISORS TO THE CHAIRMAN Greg Tucker, Bay Cities, Pico Rivera, California Jerry Frisch, Wasatch Container, North Salt Lake, Utah Pat Szany, American Corrugated Machine Corp., Indian Trail, North Carolina PUBLICATION STAFF Publisher: Michael D'Angelo, firstname.lastname@example.org Editor: Virginia Humphrey, email@example.com
SUBMIT EDITORIAL IDEAS, NEWS & LETTERS TO: BoxScore@theYGSgroup.com CONTRIBUTORS Maria Frustaci, Director of Administration and Director of Latin America Cindy Huber, Director of Conventions & Meetings Chelsea May, Education and Training Manager Laura Mihalick, Senior Meeting Manager Patrick Moore, Member Relations Coordinator Taryn Pyle, Director of Training, Education & Professional Development Alyce Ryan, Marketing Manager Steve Young, Ambassador-at-Large Richard M. Flaherty, President, ICPF ADVERTISING Information: Virginia Humphrey, firstname.lastname@example.org Opportunities: Taryn Pyle 703-535-1391 • email@example.com AICC PO Box 25708 Alexandria, VA 22313 Phone 703-836-2422 Toll-free 877-836-2422 Fax 703-836-2795 www.aiccbox.org
EDITORIAL/DESIGN SERVICES The YGS Group • www.theYGSgroup.com Vice President: Serena L. Spiezio Content & Copy Director: Craig Lauer Managing Editor: Jessica Price Senior Managing Editor: Sam Hoffmeister Copy Editor: Steve Kennedy Art Director: Alex Straughan Account Manager: Max Lalwani
ABOUT AICC PROVIDING BOXMAKERS WITH THE KNOWLEDGE NEEDED TO THRIVE IN THE PAPER PACKAGING INDUSTRY SINCE 1974 We are a growing membership association that serves independent corrugated, folding carton, and rigid box manufacturers and suppliers with education and information in print, in person, and online. AICC membership is for the full company and employees at all locations have access to member benefits. AICC offers free online education to all members to help the individual maximize their potential and the member company maximize its profit.
WHEN YOU INVEST AND ENGAGE, AICC DELIVERS SUCCESS.
Never Stop Growing
hen I proudly became AICC chairman at the 2019 Annual Meeting in Toronto (which now seems like 100 years ago), my message was “Grow Your Company With AICC.” Our world got turned upside down in March. Each one of us has been disrupted in some way, and there remains a great deal of uncertainty in the future. There is no way to minimize it and no way to escape it. The COVID-19 pandemic has been a punch in the gut to our businesses, our families, and the country. Despite this inescapable fact, I am sticking with my message. Although the catalyst may be different—politicians have never before taken the economy offline—we have all been through economic ups and downs. We have all been through personnel and team challenges. We have all had to deal with disruptions in our market and with our customers. You may think that everything feels different, and you would be correct. But I believe that everything is also the same. The fundamental tools and activities that you relied on to establish your business have not changed. The best practices and culture you created to sustain your business have not changed either. You have had to be, and have been, adaptable—that is the nature of the independent. You may have even remade your business in the past, perhaps more than once. Today’s situation may find you reevaluating your mission, your values, your vision, and your messaging. There is never a bad time to review these drivers of your company, and it is wise to do so given what you have been through in these past four months. But there are pillars in your business that you have relied on, and you will continue to do so. Numbers, customers, operations. Since the onset of the pandemic, we have all been counseled to “know the numbers” and that “cash is king.” So, we have all taken a hard look at the numbers, trimmed expenses where we can, and regularly monitored cash flow. Have you checked in with all your customers? How are they doing? Can you be indispensable to them at this time? Does the way you operate still make sense? You have certainly changed to accommodate the new needs brought on by the pandemic. Can technology bring about more, positive change? Growth in your sales book and the size of your company may or may not be restricted by the events of the day. But you never stop growing in your understanding of your business and the environment in which you operate. Your AICC membership is a pillar in your business, too. To help you grow. To help your teams grow. To facilitate peerto-peer exchanges, webinars on the important topics of the day, and AICC’s Packaging School, which has seen attendance increase by 300% since March. Assess your numbers, connect with your customers, scrutinize operations, and grow with AICC.
Jay Carman President, StandFast Packaging Group Chairman, AICC BOXSCORE www.aiccbox.org
Box Shipments at the Beginning of a New Era BY DICK STORAT
ince the arrival of COVID-19 in January, our social, business, and economic lives have been upended in a way never seen in modern times. The effect of the quarantines and social distancing requirements to minimize the spread of the virus has thrown the U.S. economy into the most rapid and deepest decline that anyone alive has witnessed. The corrugated business has also felt the unprecedented economic shock waves of the pandemic. In assessing the impact on box shipments, one should be humbled by the large number of currently unknown alternative economic and societal outcomes that may ultimately develop. Comparing the behavior of corrugated shipments and their key market drivers to the deepest economic recession that had slowed economic growth in the 19 months between December 2007 and June 2009 can provide some insight for independent corrugated converters and other stakeholders in the U.S. corrugated business. The charts and table associated with this article provide some interesting parallels between the two eras, even though the Great Recession unfolded over more than a year and a half, while the impact of the pandemic is barely a half-year old. During the first quarter of this year, the nationâ€™s GDP declined by 4.8%, and economists are projecting a second-quarter economic decline of some 20% or more. Most knockdown boxes are shipped to manufacturers, some three-quarters of which go to producers of nondurable goods, and some 44% end up packaging some food or beverage product. These are the box market drivers that we will use to gain insight into potential box shipment trends.
BOXSCORE July/August 2020
The first chart at the top of the next page shows the decline of manufacturing and box shipments over the course of the Great Recession. The data have been indexed with the value of each indicator placed at an average of 100 in 2012. U.S. manufacturing declined by a total of 20.8% over the course of a year and a half. Durable goods such as autos and appliances demonstrated the most rapid decline, dropping by 27.2%. Nondurable goods production, which includes such essentials as food, medicine, and cleaning products, showed less of a decline than did overall manufacturing. It dropped by 13.6% over 16 months. Within the nondurable goods category, box-intensive manufactured food products fell by only 3.7% over the course of 12 months. The bottom chart on the next page shows the same data for the beginning of the coronavirus era. Manufacturing, food, and box shipments this year show some similarity to that of the last recession. While it is far from clear that the current
economic nosedive has bottomed out in April, the easing of quarantines during May carries with it the hope that most of the economic damage was done in the months of March and April. The declines in the manufacturing sector during the coronavirus era somewhat match up to those of the Great Recession, except that they have been compressed into a fourmonth period. This year, the bottom fell out of manufacturing production by 18.6% through the first four months, compared to its similar 21% decline during the last recession. Just as in the last recession, durable goods have absorbed the brunt of the downturn, as extensive unemployment forces households to focus spending on necessities at the expense of automobiles and other big-ticket items. In the last recession, durable goods production fell by a total of 27.2% in a decline that lasted the entire length of the recession. In the first four months of this year, durable goods production has declined by a very
Indexed Manufacturing, Food & Box Shipments Great Recession Era 115 110
2012 = 100
105 100 95 90 85 80 75 07J
Indexed Manufacturing, Food & Box Shipments Coronavirus Era 120 115 110 2012 = 100
105 100 95 90 85 80 75 19J
similar 25.7%. Last year, less than 8% of U.S. box shipments went to durable goods manufacturers, so the impact on total box shipments was cushioned. Nondurable goods production also declined by similar amounts during both economic contractions. In 2008â€“2009, production fell by a total of 13.6% over 16 months. Most recently, it has declined
by 11.1%, less than half of the decline reported in durable goods markets. Food and beverages constitute the largest subsector of nondurable goods, accounting for 44% of current nondurable goods production. Food and beverage shipments dropped by only 3.7% over the first 12 months of the last recession. However, so far this year, the
same category of products has dropped by 8.6%, less than the overall nondurable goods decline but still more than during the last recession. The larger drop came despite consumer overstocking of some food, household, and disinfecting supplies during February and March. One of the factors leading to a larger decline now is the suddenness with which unprecedented unemployment came at the start of the current epidemic. In these charts, box shipments have been cast into a three-month moving average to reduce month-to-month volatility. During the last recession, these average box shipments dropped by 15.1%, reaching bottom 15 months after the recession started. During the early months of this coronavirus era, they have remained stable, advancing by a fractional 0.2% between January and April. The concentration of box shipments on food and other essentials in part explains this stability in the early months of the current crisis, but another factor is also at play. As quarantines began, consumers increased their online purchases of goods to avoid contact with others. The switch has been massive and positive for box demand, as the increased intensity of corrugated packaging to protect online orders has helped to sustain box demand so far. What will happen in the months ahead is anyoneâ€™s guess as box suppliers try to manage the inventory reduction demands of customers and the economic adversity to be endured as the pandemic plays out. However, independent paper packaging converters will likely see market conditions that should limit the shrinkage in box demand to less than that for the entire manufacturing sector. Dick Storat is president of Richard Storat & Associates. He can be reached at 610-282-6033 or firstname.lastname@example.org.
Welcome, New & Returning Members! KAMPACK JACKIE SIMMONS Director of Human Resources 100 Frontage Rd. Newark, NJ 07114 Phone: 973-589-7400 www.kampackinc.com
SOUTHLAND BOX CO. HIDEYA TAKAGI President/CEO 4201 Fruitland Ave. Vernon, CA 90058 Phone: 323-583-2231 www.southlandbox.com
DOMINO BILL MYERS Marketing Manager 1290 Lakeside Drive Gurnee, IL 60031 Phone: 847-244-2501 www.dominodigitalprinting.com
ALL THINGS ENERGY
YOUR TRUSTED ENERGY ADVISOR SINCE 1996 MANAGING OVER 25 MILLION KWH FOR AICC MEMBERS Your Industry Expert: Carolyn Johnson, CEP, EMP 800-520-6685 D: 667.330.1137 email@example.com www.appienergy.com
BOXSCORE July/August 2020
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Bottlenecks Broken Down
n a three-part video conference, AICC members tapped into the collective knowledge of three AICC experts: Scott Ellis, principal of Working Well, on processes improvement and leadership; Ralph Young, AICC corrugated technical advisor, on all things corrugated; and Tom Weber, AICC folding carton technical advisor, on paperboard issues and plant operations. Also included were their peers to uncover and solve bottlenecks in their own plant. This video conference was a unique learning opportunity. It went beyond the traditional structure of lecture, practice, and planning action items and allowed attendees to email the real-life bottlenecks they were facing in their plants, ahead of the first session, to hear real solutions to their problems. The idea of this series was first brought up by Weber. He noticed members were facing significant swings in demand, changes in staffing, and changing processes at a time when they were also trying to physically distance staff members and keep them healthy. AICC members are having to think creatively and in new ways to adjust to the new requirements. He gave the example of
BOXSCORE July/August 2020
one company, which had two people at the end of a folder gluer, needing to limit to one because they needed 6 feet in between them. This would have slowed their production down by about 40% and would have been a major bottleneck for the plant. They were, however, able to find an alternate solution by adding 12 feet of conveyor to the end of the machine, allowing their people to have physical distance and to not slow down production. It’s solutions like that that this series aimed to offer to attendees. While this was not a call-in show that would solve all issues in 30 seconds, it was a forum to share ideas and raise issues. On issues that were not able to be solved, or needed additional time, energy, and effort, the AICC experts worked with the participants offline. A bottleneck, defined as a situation that causes delay in a process or system for this program, can be a machine, a system, or a person. Bottlenecks are important to overcome, as Ellis explained, because in manufacturing, it doesn’t matter how fast one process can go if there is another one in the line that is slower. It is the theory of constraints; you can only go as fast as your slowest process.
Questions raised included everything from print plate and cutting dies check-in to software, creating standard procedures across multiple plants, scheduling, and more. Terri-Lynn Levesque, vice president of administration at Royal Containers, sums up the value of this series: “Everything about this webinar was put together with purpose. From the carefully selected panel of experts to the open forum questions and best practices, it was the most engaging audience I have experienced. I know all of us walked away with a new list of efficiency goals to implement at all levels of business. At a time when COVID-19 has forced us to look at business through a new set of lenses, this webinar helped us focus on observations, gathering accurate data and implementing new ways to solve ‘old’ problems.” Experts and attendees shared similar experiences and solutions they had found. This videoconference was offered at no charge to AICC members, and a recording of the three-part series can be obtained by contacting Chelsea May, AICC’s education and training manager, at 703-836-2422 or firstname.lastname@example.org.
Advantages of Corrugated Microflutes Versus Paperboard is available free to AICC members at www.aiccbox.org/store.
Looking Beyond COVID-19 BY RALPH YOUNG
o, what now? At the time of this writing, we were still all in stayat-home lockdown—well, almost. Home Depot is still open, so some long overdue projects are getting completed at our home. Let’s take a look at some changes we may see when we come out of this quarantine.
Markets at Work and Home If you are selling into the commercial side of the corrugated packaging market, creating packaging for products such as towels and tissue and products supplied by companies such as Sysco, expect a drop-off. Historically, this has been about 40% of the market. Now that we have learned how to work at home and balance family life, we will not go back to the same old routine. So office snacks, catered lunch meetings, coffee, and kitchen and bathroom supplies will all be transferred to our homes. E-commerce is here to stay, and home delivery of food and ready meals will continue at an unexpected higher level. Retail and dining at away-from-home establishments are going to be devastated. Even though streets are closing to encourage outdoor dining, it will still be a very slow emergence. Materials and Mills Winds of change are also impacting the folding carton and rigid box spaces. Reports are that their shipments had been down, yet there has been a run-up on food and pharmaceutical packaging. Your folding carton and rigid box expert, Tom Weber, has said that the growth in microflute corrugated substituting for high-caliper folding carton grades
BOXSCORE July/August 2020
continues. The spillover effect here is that there may be increased demand for small-flute low-basis-weight corrugated structures, now that these containerboard grades are made by more than a dozen mill systems. OCC collection has been extremely hampered by the lack of commercial activities at restaurants and offices. Prices have doubled in the last few months. Coated recycled boxboard and uncoated recycled board have been particularly hard hit by the impact on their cost structure, such that there have been price increase announcements. One mill is reconfiguring a paper machine from medium with a 50-50 mix of new fiber/recovered fiber to uncoated recycled board—the stuff used to make cores and tube, and yes, the base that toilet paper and paper towels are wound onto. This will ultimately impact containerboard mills, both linerboard and medium, that are fully dependent on OCC and DLK. There may be attempts to reduce the price gap that has existed between virgin grades and recycled grades. Or, the mills that have the cleaning ability may start to blend into the fiber mixed office waste or sorted office waste, up to the extent that physical and printing properties begin to change and new grades need to be established. Reshoring will occur, but gradually and unevenly, across the manufacturing sector. Did you know that, a few years ago, Congress removed the requirement that products be labeled with the country of origin? So where are your food and durable products coming from? Expect to see the reshoring of manufacturing as the preference for at
least Chinese goods begins to wane and the economic need to change the trade deficit balance hits. This should open opportunities for new customers and increase volumes for both the integrateds and independents. Where can I find a good pair of leather work boots made in America? This is personal! Educate Yourself and Your Team Your Association is always on top of world events and their impacts on the North American markets. We have considered it essential that we post updates on the virus and its impacts, along with our regular Zoom updates, on which best practices have been shared by members and Associates. AICC’s online courses have seen a major jump in participation. Selling attributes, customer relationships, and corrugated and board modules seem to be heavily accessed. Don’t stop taking those online courses, which now total more than 80 modules. It will be many months or years before we see “full employment.” Career starts for college grads will be minimal at best. Wages will go down. Unions will need to reinvent themselves. Keep track of all the developments and possibilities mentioned here to help best prepare your company for the future. 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 email@example.com.
Blister Packaging, Part 2 BY TOM WEBER
Factors in Sourcing Blister Card Raw Materials Blister cards are an integral part of blister packaging. The material from which they are formed and the materials with which they are coated impact everything from security and printability to how well the package seals and how economical it is to produce. So it’s vital to ensure that the blister card material you choose is the optimum match for your functional requirements. In general, there are four main factors to consider: • What should the blister card stock itself be made of? • What coatings will the blister card require? • How does the blister card stock fit into the supply chain? • What testing procedures are needed to ensure the highest quality and performance? Of What Should the Blister Card Stock Be Made? Blister card stock, or substrate, is available in a variety of options that can be tailored to the goals of the packaging and the requirements of the manufacturer.
BOXSCORE July/August 2020
TY Lim / Shutterstock.com
n the May/June issue of BoxScore, we took a look at blister packaging— mainly descriptions of the types and what it’s best used for. In this edition, we’ll dive deeper into the world of blister packaging, particularly the stocks, coatings, supply chain, recyclability, and performance. First up, it’s all about starting with the right materials and understanding the considerations that must be made before sourcing.
Standard display packages can be made with any grade of paperboard. All blister card stock is made from clay-coated paper, which has a smooth clay coating applied over a rough paper base. Standard claycoated paper is a basic platform that can fulfill most blister card stock needs at the most economical cost. The two primary types of blister card stock are: • Standard clay-coated paperboard: It is often referred to as CRB or CCN and is basically recycled paperboard that has been clay-coated. Though this type is the most economical, it has limitations. It does not have the fiber strength, stiffness, or consistency of virgin paper due to its varied recycled materials content from day to day, and even with the clay coating, the printed finish may be of a lower grade due to the surface inconsistencies.
• Solid bleached sulfate (SBS): SBS is a medium-density virgin fiber paperboard that can be coated on both sides, giving it a white finish. It’s much smoother, stronger, and brighter than basic CCN or CRB paperboard, and its surface makes it especially well suited to accept bright colors and more complex graphics. It also has superior scoring, creasing, and hangar characteristics compared to CCN or CRB grades. What Coatings Will the Blister Card Require? Selecting the type of blister card stock is only the first step in designing the optimum blister package for your product. The function of the card is ultimately determined and enhanced by the types of coatings that will be applied to it, and
many coatings are highly specialized. The coating and the card must be considered as an integrated unit, so it’s important to consider the specific characteristics the packaging must meet: • Adhesion requirements. Does the coating need to adhere to itself (in a fold-over card), to a different type of card stock (a card-to-card application), or does it need to heat-seal directly to thermoformed plastic film? • Heat seal or cold seal? Coatings that can be heat-sealed offer excellent reliability and durability. When heat sealing is appropriate, it’s important to get a few pieces of additional information. What temperature is needed to achieve a good seal? Typical temperatures range from 190 to 210 degrees Fahrenheit. Also, what is the heating element dwell time? It typically ranges from two to five seconds. Cold sealing (or pressure-sensitive sealing) enables the card stock to be joined using only pressure and no heat. Cold sealing is harder to use in high-speed packaging operations and is much better suited for small runs. • Resistance to tearing. Does the blister pack require an additional film lamination to add tear resistance? And if so, how much tear resistance is required? Permanent adhesives are used to laminate films; the advantage of this is that they create a structure that prevents tearing and product tampering. Higher tear resistance can add significantly to the cost of the final unit, and it typically is employed only for high-value retail-display products. • Ease of opening. How easily should the package be opened? Should it be easy to open, or does it need to be robust in order to add extra security? What Other Participants in the Supply Chain Need to Be Consulted? Applying blister card coatings is a highly specialized process—so specialized, in
BOXSCORE July/August 2020
fact, that coating providers often focus solely on the exacting standards that govern the creation, chemical engineering, and application of the card-coating process. That means the card stock is often the result of a supply chain that includes the paper mill, the coating company, and the commercial printer that creates the card for actual insertion by the product packager. Therefore, there are additional important issues to address: • The coating company must consult with the supplier of the raw paperboard. We’ve already discussed the types of paperboard typically used in blister packaging, but the type of paper isn’t the only variable. For instance, what is the caliper of the paper? The actual thickness of paper, typically measured in thousands of an inch, is the paper’s caliper. When two cards are used to hold thermoform plastic film, the caliper for each board piece can be as low as 12-point or as high as 24-point. So it’s necessary that the coating company qualify the paper grade and supplier to make sure the adhesive package works through the whole process. • How will the card stock be printed? Different types of projects require different types of delivery to the commercial printing facility. Will the coated card stock be delivered in rolls? How will this affect the coating? Or will it be delivered in sheets? Will the stock need to be die cut, and if so, will it be via a rotary or platen die-cutting process? The efficiency of the printer and packaging company is dependent on the quality of the raw material that they choose to fulfill the job. How Important Is Recyclability? Green manufacturing and sustainability are becoming more and more important to consumers and retailers alike. In fact, Walmart has a scorecard that rewards products that use recycled materials,
reduced packaging, or packaging that can be easily recycled. Opting for a blister card approach versus a clamshell can help boost recyclability by decreasing the amount of plastic used. Nearly all paper companies produce papers with pre-consumer or post-consumer recycled content. Card stocks made with recycled content can be hard to work with. However, some specialized coatings and laminations can help reduce these problems by improving the quality of the printing surface. In addition, some of the latest blister coatings are more environmentally friendly than others, with lower to no volatile organic compounds and other Environmental Protection Agencyregulated attributes. What Testing Procedures Ensure the Highest Quality and Performance? Of course, just as important as careful planning when determining which blister card coatings are most advantageous is testing to make sure they work as desired. At the very least, a prototype should be given a squeeze test to make sure the plastic film’s adhesion to the blister card stock, or the adhesion of card stock to card stock, is sufficient to withstand normal handling wear and tear and, of course, transit conditions. Ideally, several more tests should be administered, such as testing the tear strength of the blister card, hot and cold blister adhesion resistance, transit method harmonics (vibration), and lastly, an inspection of the quality of the print surface, which is paramount to the success of any packaging run. That’s it for this edition; see you next time. Tom Weber is president of WeberSource LLC and is AICC’s folding carton and rigid box technical advisor. Contact Tom directly at firstname.lastname@example.org.
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Selling in the Time of COVID-19 BY TODD M. ZIELINSKI AND LISA BENSON
t the time of this writing, most of us have been social distancing for at least six weeks. We are hopeful that by the time you are reading this, many businesses will have found their new normal. The COVID-19 disruption descended like a tornado, providing very little opportunity to plan. One day you were running business as usual, knowing the virus was impacting lives “over there,” and the next, it was on top of you, leaving your head spinning as you tried to determine whether you were considered essential. Fortunately, corrugated and packaging manufacturers that provide products and services to critical industries were considered essential. You may have found that orders increased from some industries but fell off to nothing in others. Balancing keeping your employees safe and keeping your business running efficiently and profitably could be a new Olympic sport for many. This time hasn’t been short on challenges. You have to be agile and open to doing business differently than you are used to. Those are the companies that will come out of this with damage minimized. Even as the country reopens for business, it is likely that social distancing will remain with us for quite some time. Traditional sales and marketing activities—trade shows, face-to-face meetings, plant tours, networking events—may take some time to return to normal, which will likely be a new normal with new protocols in place. Now What? So the question becomes: How do we sell and market ourselves under these new conditions and limitations? Many
BOXSCORE July/August 2020
companies have been pulling back on spending and resources for growing their businesses, but you may seriously want to reconsider that strategy. Now is the time to take action. With traditional sales and marketing activities in the rearview mirror, we must look at new ways of connecting with customers and prospects. Virtual meetings, which were an occasional occurrence if at all, will be routine. Virtual plant tours can be done with cellphones with some practice (be cognizant of where your camera is directed). Connecting on LinkedIn can take the place of networking events and provide an opportunity to start a conversation with a prospect. Virtual trade shows, which have been around for a while, although not widely popular, are expected to pick up momentum.
Tone Down Your Sales Pitch Now isn’t the time for the hard sell. Be helpful. The messaging we see that resonates with our packaging clients is helpful and educational in nature. Ask yourself, for example, how you can be helpful to your customers and prospects to help them navigate the new rules and regulations, to assist with their operations, or to help them better serve their customers. Develop your message around this. It can be in the form of a webcast, a case study, or other content that you push out on your blog, through email blasts, or on social media. Don’t Try to Reach Everyone Prioritize the markets you play in. Look at where your current demand is coming from. While we are in the middle of the pandemic, demand is in food and
beverage, medical supply, pharmaceutical and biotech, and cleaning products— products that need to be replenished quickly. Go after the markets that might be struggling to meet demand, and let them know how you can help. Pick Up the Phone Pushing out your message electronically is a good way to get your brand and message in front of people. Picking up the phone is still critical. People are not traveling, so reaching them will be easier. Essential businesses may have fewer people in the offices, but they are operating, so someone will answer. Some people may be working from home, but they are reachable through cellphones and computers; office numbers are often rerouted to a cellphone; and VOIP phone systems, which are common, allow users to take calls through their computers. So don’t be afraid to use
the phone in combination with the virtual activities we mentioned. Moving Forward If you are able to continue with your sales and marketing efforts during this time, you will be positioned with a healthy pipeline when we are through this. When we come out of this, if you keep your messaging educational and helpful, most prospects are going to remember, value, and appreciate it. We don’t know how long it will be before we can go back to traditional sales and marketing activities. It could be as long as 12–18 months. If you thought this was a short-term situation, it might be time to start thinking differently about the strategy and execution of your front-end sales process. If you don’t have a process in place to adapt to our current reality, you might have a real struggle
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when we come out of this. Pulling back on and constricting sales and marketing activities may leave you behind the eight ball. Conversely, creating a process around virtually connecting with prospects will leave you with a healthy sales pipeline. Todd M. Zielinski is managing director and CEO at Athena SWC LLC. He can be reached at 716-250-5547 or firstname.lastname@example.org.
Lisa Benson is senior marketing content consultant at Athena SWC LLC. She can be reached at email@example.com.
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Communication in the New Normal – and Waffles BY SCOTT ELLIS, ED.D.
he world changed in February. I knew we were in trouble when the Waffle House closed. The Waffle House Index is an informal metric used by the Federal Emergency Management Agency to determine the effect of a storm and the likely scale of assistance required for disaster recovery. Though the global storm came in the form of a virus, it affected the economy with similar impact. The index has three levels, as designed by former agency head Craig Fugate: • Green: Full menu—restaurant has power, and damage is limited or no damage at all. • Yellow: Limited menu—no power, or power from a generator only, or food supplies may be low.
• Red: Restaurant is closed, indicating severe damage or severe flooding. So, while Waffle House is likely at the green level, business in general will be at yellow for some time. In the midst of the storm, we reconfigured teams, asking many people to work from home. Prior to this, we had resisted the idea of telecommuting, fearing loss of productivity and accountability. Here in the new normal, many have embraced the flexibility the practice creates, though the best practices for communication are still being worked out. Among the communication obstacles found in telecommuting are communication context and lack of social involvement. What I am calling communication context
includes the nonverbal and tonal cues, as well as shared experiences, that come with being in the room. The social involvement at the proverbial water cooler gives us clues about alliances and the cultural climate. Working at a distance limits our ability to gain the perspective needed for optimal communication. To overcome these obstacles, we have employed online meetings in which participants may see one another, which helps in part. I suggest we go further and intentionally inquire about context, taking time in person or online to talk one-on-one about the quality of communication. If possible, periodic in-person collaborative work sessions, when combined with a meal, will provide the opportunity to gain
A3 Template Title: What Are You Talking About?
Owner / Date
5. Proposed Countermeasures
1. Background Why are you talking about it?
What is your proposal to reach the future state, the target condition? How will your recommended actions aﬀect the root cause to achieve the target?
2. Current Conditions Where do things stand today?
–Show visually using charts, graphs, drawings, maps, etc.
What activities will be required for implementation, and who will be responsible for what and when?
What is the problem?
What are the indicators of performance or progress? –Incorporate a MAPP, Team Charter, calendar, or similar diagram
that shows actions/outcomes, timeline, and responsibilities. May include details on speciﬁc means of implementation.
3. Goals/Targets What speciﬁc outcomes are required?
7. Follow-up 4. Analysis What is/are the root cause(s) of the problem?
–Choose the simplest problem-analysis tool that clearly shows the cause-and-eﬀect relationship.
What issues can be anticipated? –Ensuring ongoing PDCA. –Capture and share learning. –Who is on point to measure eﬀectiveness?
BOXSCORE July/August 2020
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a degree of social and cultural effectiveness. There may also be benefit in standardizing communication methods for project planning and status updates, as well as proposals for problem resolution. For this purpose, the A3 report is an excellent tool. This great tool has a dumb name. The title is based on the paper size (29 cm x 43 cm) typically used to create the plan. The tool is used to communicate a project proposal or status. I believe companies that use the A3 as a standard way of communicating save a great deal of time. As important is the great value gained in teaching individuals a process for speaking with data. There is no more potent teacher of judgment in problem-solving than this. Many great ideas have been cast aside because their presentation lacked confidence or enthusiasm. Unfinished ideas have been implemented, only to be short-lived because they were not supported by data.
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The steps involve clear definition of a problem, the current conditions, well-defined goals, thorough analysis, proposed solutions, a plan, and follow-up to test the plan’s effectiveness. This is a critical-thinking guide. If an inexperienced problem-solver were assigned the completion of an A3, that person would likely be lost and intimidated. However, if the A3 format is used regularly in group investigations and problem-solving, it will become second nature. Having done this, you will find it easy to stop the next person who wants you to think for them. “Boss, I wonder if you could help me with this problem?” is the way it normally begins. The first time they ask to borrow your brain, you may spend 30 minutes asking the A3 questions together. The next time the request comes, just say, “Sure, fill out your A3, and then I will be happy to discuss it with you.”
More about the many uses for this great tool are found in John Shook’s Managing to Learn, published by Lean Enterprise Institute. Also, a class on AICC’s Packaging School describes how to approach Proposals, Problems, and Projects With A3. Scott Ellis, Ed.D., of Working Well provides the brutal facts with a kind and actionable delivery when a leader, a team, or a company needs an objective, data-based assessment of the current state of operations and culture. Training, coaching, and resources develop the ability to eliminate obstacles and sustain more effective and profitable results. Working Well exists to get you unstuck and accelerate effective work. Scott can be reached at 425-985-8508 or email@example.com.
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Putting Clients in the Driver’s Seat BY NARA SKIPPER
s we pull up to our house, my daughter looks out the car window and sees a bright teal package sitting on our front steps. She says, “My book club was delivered!” There is a rush of excitement, and the box gets opened. She picks out the books she would like to keep, and we’ll send the rest back in the same branded box. This particular subscription model charges only what you keep and includes free returns. The color of the box is eye-catching, and it’s been designed to open and close easily for returns. It’s a sturdy box, clearly chosen for holding heavy books. It is a simple scene that reminds me of the power of a branded box. The options for purchasing goods and services are endless. We’re bombarded with deliveries, in both homes and businesses. There is never a day I don’t see a UPS or FedEx truck driving through our neighborhood. In the past few decades, e-commerce has gone from nonexistent to a multibilliondollar industry with an estimated 2.05 billion digital buyers worldwide in 2020. Businesses are looking for ways to change their packaging so it stands out against others, but they want to do so without sacrifices. If brands are unsure how to combine quality packaging with brand recognition, how can boxmakers help them make smart decisions? Our company, CompanyBox, has two channels of operation. One follows the well-established model of a traditional box plant. The other is completely digital. When we decided to take packaging design online, we knew there would be some new challenges. Face-to-face interactions were minimal. We had entered a new world, in which we were selling custom packaging to e-commerce companies
BOXSCORE July/August 2020
using our digital capabilities. There are five main goals we focus on, though it could be argued these goals can be applied across any packaging channel. They are: (1) maintain client brand control; (2) keep quality consistent; (3) deliver high speed; (4) offer accessible creative freedom; and (5) give nearly unlimited sizing options for true customization.
trust. Trust requires absolute consistency, and packaging is no different. It’s crucial to ensure that every interaction with a brand, whether physical or digital, embodies the same messaging, logo, and design elements. The teal box my daughter recognized had been on our doorstep twice before that. Her expectations were set as soon as she saw it.
Brand Control What we hear from our clients is that the No. 1 priority is brand control. It’s important not only to invest the time to understand their color palettes and typefaces, but also to know that brands want to create something that people can
Consistency It’s that consistency that we are constantly striving for. Boxmakers must be sure to deliver the same quality each time. Without it, we fail to help our customers ensure positive brand recognition. Digital printing especially requires
extra attention to specific colors. Pull test sheets to examine colors and ensure they are being accurately hit. Speed Like most people, I have become accustomed to the speed of e-commerce. Shop on Amazon and expect a delivery in two days or less. Order from a local grocery store for same-day pickup. The Amazon “Prime effect” has upped the ante, but people seem to forget the custom aspect of our business, as we’ve seen this expectation trickling into the packaging industry. Clients call and ask whether they can have their custom boxes by the end of the week. Offering swift turnarounds is something that
digital printing affords us, but we all must tread the line between speed and consistency carefully. A well-built workflow is worth its weight in gold. Speed without sacrificing quality and consistency is the end goal. Customizing Creativity and Sizing The race has started, and e-commerce brands are jockeying for position. They want to be in the forefront of our minds when it’s time to shop. What makes a package unique, and how can brands take complete ownership of their packaging? This was the question that started our journey to make packaging accessible to everyone. We wanted to offer online editing tools for those who were not
necessarily trained in graphic art. Those same clients should be able to adjust box dimensions to perfectly fit their products, without needing a background in structural engineering. Packaging suppliers can offer complete customization, but it should be accompanied by guidelines or professional consultation. First-time clients might not know which font size works best, how much bleed to include, or what the preferred image resolution is. Smart decisions are needed. When CompanyBox took the design process online, one challenge we had to overcome was finding a way to ensure a successful outcome for each of our clients. Built-in algorithms require users to enter only those dimensions that ensure a box will fold correctly. Dropdown menus put an end to text being too small or pixelated to read. The user has all of the design power, but with the option to “phone a friend.” Whether through phone calls, emails, or online chat, it’s critical to offer a direct connection to a knowledgeable customer service team. Beyond that, graphic designers and structural engineers must be challenged to make sure only the very best version makes it to the printer. It’s about being willing to innovate and having an open mind. It is true, smart decisions are needed, but without some form of support, clients are left to walk it alone. Our five goals work for us—clients are happy, package suppliers are successful, and there are more unique and amazing packages on people’s doorsteps. Consider implementing a framework of your own to achieve the absolute best results. Nara Skipper is social media manager at CompanyBox. She can be reached at nara.skipper@ companybox.com.
INNOVATION Education and Development
Empowering Students Through Free Online Courses
uring this time of uncertainty, while many university campuses remain closed, AICC and The Packaging School are protecting the future of our industry by enabling students to continue their corrugated packaging education with free online courses. “AICC and The Packaging School are taking this action to ensure that the two- and four-year packaging programs have access to online content,” says AICC President Michael D’Angelo. “The schools do not have students on their campuses during the pandemic. They need to provide online programming to keep their students engaged in courses that directly relate to the corrugated industry. We have those courses ready to go.” Two courses, Corrugated Containers and Corrugated Basics, are currently available, and additional courses are being added each month. Available during the summer and fall semesters, the courses can be used as a resource for a professor’s course or can be taken independently by a student
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at home. So far, this opportunity has been offered to nearly 400 schools. “Now students across all types of education disciplines, from graphics and marketing to mechanical engineering and environmental sciences, can speak with confidence about the leading material across the packaging supply chain and can find a home within the corrugated industry,” says Drew Felty, CEO of The Packaging School. The courses, already free to AICC members, will bridge the gap between on-campus and at-home packaging
education. Once a school signs up, students in or faculty members of higher education studying wood, paper, or packaging can visit www.packagingschool. com/edu to register for the courses. AICC members are encouraged to share this information with the schools and students in their communities. If you have any questions, contact Taryn Pyle, AICC’s director of education and leadership development, at 703-535-1391 or firstname.lastname@example.org, or Felty at 864-704-2968 or email@example.com.
ELs Continue to Adapt and Grow BY REBECCA RENDON
he impact of COVID-19 hasn’t stifled the AICC Emerging Leaders (EL) group from finding new ways to adjust the restructured rollout announced in March. Just as leaders across our world have done, the ELs continue to mitigate the current limitations, developing creative ways to recruit, connect, and engage their group, prospective members, and the industry.
Engagement Is More Accessible Than Ever “The current situation provides us with a unique opportunity for recruitment,” says Daniel Brettschneider, AICC Emerging Leader Board Delegate. Previously, much of the EL networking and training happened in person, but with the current situation, ELs moved to web-based training and webinars. “Virtual-based work has opened new doors for us, making the EL group more accessible than ever for prospective members and their sponsoring companies to get involved,” says Cassi Malone, another delegate of the ELs. With engagement being fully virtual, it allows prospective members to hop on a webinar or interact with the group, without the cost of travel or full commitment to join the group. ELs Take the Lead “This is the time for ELs to take the lead and get the content they want,” says Brettschneider. “We see these ELs stepping up in every way, and putting those leadership skills into practice,” says Malone.
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“ELs are taking the initiative, creating networking opportunities, doing the leg work in planning, and finding unique ways to make it happen.” With the cancellation of the much anticipated EL field trip in August, several of the EL members have posed new networking ideas to the delegates, such as a monthly virtual happy hour. “Our EL members see how their companies have adjusted to virtual-based communication and sales and are sharing the ideas that have worked for their companies, that we could implement in our group as well,” says Brettschneider. ELs have created another way for current and prospective ELs to communicate with each other via the EL Slack channel, where members can join focus groups and communicate on topics such as HR, health and safety, sales, and more. “Our goal, as always, has been to help the ELs grow their network, learn about the industry, and develop their existing leadership skills,” says Malone. “The impact of COVID-19 has challenged us to look outside the box and be more creative and agile in the ways we provide these ELs with the content they need and want.”
Call to Action “This is the time for managers to look at growing young talent and raising their employees’ value to the organization,” says Brettschneider. “The cost is minimal, and the reward is having an employee who feels invested in, recognized for their leadership potential, and able to contribute to their organization in a greater way.” For more information on becoming an AICC EL, visit www.aiccbox.org/leader or contact Scott Ellis at 425-985-8508 or firstname.lastname@example.org.
Expanded Web-Based Opportunities Free AICC trainings, like the personal protective equipment and CRM webinars that have been developed and offered, are based on requests from the ELs and other AICC members. Many of the ELs have been able to contribute to their organizations by sending a recap of the webinars to
Rebecca Rendon is the former director of marketing at Inspire Automation and is an AICC Emerging Leader. She is now a marketing consultant for the corrugated industry and can be reached at 317-612-1820 or email@example.com.
their upper management, providing them with valuable information on how other member companies are mitigating the COVID-19 situation, as well as offering ideas for how to work through it. EL members are sent newsletters from the delegates, with a list of upcoming webinars, information on current industry trends and events, and requests for training needs and content. Delegates have also published a roster of EL members and their areas of expertise to encourage the group to utilize their network and foster collaboration among members.
PDI BY VIRGINIA HUMPHREY
Company: PDI Established: 2003 Joined AICC: 2019 Phone: 1-866-244-3311 Website: groupepdi.com
Photo courtesy of PDI.
Headquarters: Montréal, Québec CEO: Gaetano DiTrapani
pend a few minutes with Glenn Houston, vice president and a founding partner of the Phipps Dickson Integria Group Inc. (PDI), and one thing becomes immediately apparent: He enjoys his work, values his relationships with PDI’s employees and customers, and is not going to let anything stop him. For Houston, it’s all about service. Not just the big moments like getting the job done right the first time and delivering it on time, but it is also about paying attention to the little things that matter—details like wrapping pallets properly and the way orders are delivered. PDI understands that they are beholden to both their customers and their customers’ customers. What drives Houston? He says the printing business is simply in his blood. He took over his family’s third-generation printing
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business, Houston Press, in 1998. His company specialized in high-end printing for the fashion, pharmaceutical, and real estate industries. However, just a few years after taking the helm, Houston ran into his
first hurdle. In 2001, there was a downturn in the printing business in general. Then 9/11 happened, and many small printing houses were struggling. Houston describes that time as an “aha! moment” for his
PDI Pressman Martin Gagnon (left) and Vice President Glenn Houston hard at work with smiles under their safe face coverings.
medium-sized company. He says it was a time when you either went big or went home. He decided to go big and began exploring mergers and acquisitions. Houston was having a difficult time finding a company that would be the right fit for Houston Press. Serendipitously, while pumping gas, he ran into one of his competitors, Gaetano DiTrapani, then-president and co-owner of Phipps Dickson. After talking for a few minutes, they decided to meet again and continue the conversation. It was at that lunch meeting that it became clear—Houston
found his future partner. At the end of 2003, the two companies merged. “It was a match made in heaven,” says Houston. “We’re still together today, and Gaetano, PDI’s CEO, has been my mentor since the very beginning.” The expanded company was doing well and growing. In 2007, they merged again with another company that happened to be larger—Integria Inc.—adding their third partner and man with a vision: Jamie Barbieri, current president of PDI. Houston was about to face his next hurdle, but this time, he was part of a strong team.
G7 MASTER STATUS Color is very important to customers, especially when it comes to branding. It is not OK to get something close to right. It has to be exact. But how do you know that what you see on the screen will be the same as what is printing on your press and that you’re perfecting your client’s color? G7 is a global set of specifications, created by Idealliance, for “achieving visual similarity across all print processes.” The G7 method ensures that there will be a similarity in appearance across all devices. G7 Master Status is granted only to facilities that have calibrated equipment and systems to G7 gray balance and neutral tone curves and are capable of delivering G7 proofs and print products. Glenn Houston, vice president and a founding partner of PDI, says there is a
huge gain for boxmakers when it comes to critical cycle time and the cost distribution of proofs for approval. There is also a significant convenience benefit of controlling this process in-house and close to all stakeholders involved in the approval process. You can find more information about the G7 Method on the Idealliance website (www.idealliance.org), or contact Houston. He can break it down for you.
PDI had just finished consolidating all of its operations under a single roof in a new 100,000-square-foot facility and purchased a Manroland 900 six-color 56-inch press—then the 2008 market crash hit. Houston says that spending that kind of money and making such significant changes during that time was scary, scary stuff. But they leaned in and stuck with their plan. “There are always going to be ups and downs,” Houston says. “You have to believe in yourself and believe in what you are doing.” Houston says that hindsight is 20/20, and he now knows that big move helped them weather the recession. With the move and merger, they were not only consolidating buildings, but also rationalizing processes, procedures, and personnel. But that was not the only thing that helped them. “The best decision we made was buying that Manroland 900,” he says. When they bought the press, there was still a strong demand for print. However, PDI knew they would soon be competing against the web market. They say when one door closes, another opens. Well, that Manroland 900 press opened the door to the AICC marketplace. They began developing relationships inside of the corrugated market, and they found that business to be an excellent fit for them. “We’re glad to be part of AICC because we have a lot of our experience and knowledge to offer its members, and we want to expand and grow within this market,” Houston says. “AICC will help us do that.” Right now, PDI’s primary territory is Montréal and spreading out into the
province of Québec. “We currently do some business in the U.S. and Ontario, but we are poised for growth right now and have the capacity to expand,” Houston says. “Anyone within a six-hour drive of Montréal is the perfect customer for PDI.” That includes cities such as Boston, New York, and Toronto, as well as upstate New York cities such as Buffalo, Rochester, and Syracuse. Another advantage that has set PDI up to be able to expand the business is the addition of its fourth partner, Vice President of Finance Michelina La Fratta. La Fratta joined PDI in 2009, and Houston says they could not possibly live without her. It’s hard to look at PDI’s history and how they survived—and thrived— through troubling times and to not think about what is in store for them during
these confusing and unpredictable times. Houston says that what the world is going through right now is so different. He’s far more concerned than he was in 2008 when, admittedly, the situation looked rather dire and no one knew how long the recession would last. “I can’t tell you yet what I’m going to take from the situation that we’re living in right now,” he says. “Let’s talk again in a year from now.” One thing that is clear is that if anyone can thrive in this current climate, it is Houston, his partners, and the employees that make PDI what it is today. Leadership’s willingness to continue investing in their business is one reason, but Houston is quick to point out how much of their success is owed to their employees. He gives credit to the entire team, including estimation and planning, prepress and press operators, and those
who work in finishing and shipping. Everyone plays a role in the company’s success. You can see this evidence of PDI’s expertise in the strong relationships they have with their customers. Houston says PDI is always listening—listening to the advice from suppliers and their customers and then implementing that advice in their business. “Strong bonds and relationships that last are crucial,” he says. “You cannot build those relationships quickly. You cannot rush them. The tortoise always wins the race.” Virginia Humphrey is director of membership and marketing at AICC. She can be reached at 703-535-1383 or firstname.lastname@example.org.
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BOXSCORE July/August 2020
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BOXSCORE July/August 2020
RESPONDING TO A WORLD IN TURMOIL
AICC members lead and give back amid the COVID-19 pandemic By Steve Young
n March, every facet of everyday life as we knew it was turned upside down by the pandemic known as COVID-19. Beyond the tragic loss of life and suffering of those affected—nearly 9.5 million cases and over 483,000 deaths worldwide as of press time—the COVID-19 public health crisis has caused massive economic disruption and ushered in a new era of political gamesmanship. Initial reports downplayed the severity of the virus. It was viewed in many quarters as an Asian phenomenon of little worldwide threat. Then, as the virus spread its devastating effects through Europe, the World Health Organization on March 11 declared COVID-19 a pandemic. Our first North American cases arrived in the Pacific Northwest in late
January, and President Donald Trump on March 13 announced a state of emergency in the United States. Our national response to the COVID19 emergency was as rapid as it was severe. The U.S. Centers for Disease Control and Prevention issued sweeping prevention and mitigation guidelines for homes, schools, communities, and workplaces. “Shelter-in-place” and “social distancing” joined our daily lexicon as state after state issued “stay-at-home” orders. Most striking and economically devastating, all “nonessential” businesses were forced to close in order to slow the spread of the outbreak and to “flatten the curve.” Overnight, 6 million workers in restaurants, hospitality, travel, and other “nonessential” enterprises were thrown
out of work, a number that swelled to more than 33 million by early May. Thus, the rising tide of COVID-19 cases and accompanying deaths joined forces with a shuttered economy to irreversibly alter the landscape of daily life.
Corrugated and Paperboard Industries: ‘Essential’ to the Supply Chain In North America, the corrugated, containerboard, and paperboard industries’ first challenge was to ensure they were considered “essential” under the definitions of many states’ business closure and stay-at-home orders. AICC members began expressing concern
about this in early March, fearing their businesses would be shut down and employees denied access. In response, AICC, the Fibre Box Association, the American Forest & Paper Association, and TAPPI, through the Corrugated Packaging Alliance, on March 9 issued a letter to President Trump and Vice President Mike Pence stating the importance of the containerboard and corrugated packaging industries to the critical food, medical, pharmaceutical, and online retail supply chains. On March 18, the Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency
(CISA) issued its critical infrastructure lists defining those industries deemed essential. Paper and packaging were among them. In March, AICC began a daily COVID-19 update for members and on March 20 held the first of a series of nationwide videoconferences for the industry. How were AICC members coping with the new requirements for workplace sanitation, social distancing, and staggered shifts? How were companies altering their business operations in response? And more importantly, how have AICC’s members stepped into their natural leadership roles in doing the right thing for their employees, their families,
“COVID was something that would encompass all of us as employees of Nelson Container and as citizens of Wisconsin.” —Tom Nelson, president, Nelson Container
BOXSCORE July/August 2020
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Photo courtesy of Nelson Container Corp.
Nelson Container wrapped control centers in plastic to reduce the risk of spreading the virus.
and their communities? We spoke with many of those who participated in these videoconferences, both boxmakers and suppliers. The depth and breadth of concern and action on behalf of our industry’s employees, customers, and communities is noteworthy and uplifting.
Leadership, Communication First AICC members, in verbal conversations, written communications, and survey results, relayed their first concern: the welfare of their employees and their employees’ families. In two separate surveys conducted by AICC in March and April, a total of 97% of members responding cited employee education and communication as their most important “first response” to the crisis, followed by establishing social distancing policies and sanitation efforts to ensure safe work environments. “We viewed our initial response as an organizational one,” says Tom Nelson, president of Nelson Container Corp., a sheet plant in Germantown, Wisconsin. “COVID was something that would encompass all of us as employees of Nelson Container and as citizens of Wisconsin.”
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Greg Jones, executive vice president of SUN Automation Group in Glen Arm, Maryland, agrees: “We feel communication is a critical piece and has been an ongoing focus at SUN for the past five years.” Jones says the SUN leadership team meets in person three to four times per year with each employee, and the COVID-19 crisis only reinforced the importance of this engagement. “We had numerous huddles on the manufacturing floor, especially in the beginning, to share our strategy,” he says. “We also leverage and communicate daily using Microsoft Teams meetings and our company intranet, and even if there is no update, we communicate to ensure people are informed and confident in what the leadership plans are for the business.”
Nelson, like Jones, says individual communication was key. “We took time to speak with employees individually and as a group to gauge their anxiety, concern, and commitment,” he says. “The more uncertainty, the more often we communicate when clarity is needed.” Robert Niedermeier, general manager of Valley Container in Bridgeport, Connecticut, recorded five- to seven-minute video messages a few times a week, sent them directly to his employees, and displayed COVID-19related information on video screens in the company’s three locations. “Our communication has been inwardly focused to keep our employees informed with accurate information versus the scary things they hear from the media,”
“You all play an important role as we continue to operate as an essential business.” —Al Hoodwin, CEO, Michigan City Paper Box, in a letter to employees
“We have never disappointed a client. This is a true testament to all the Acme team members!” —John Kochie, general manager, Acme Corrugated Box
for machinery used in the processing of fresh fruits and vegetables. “All of your hard work,” he told employees, “helps people around the world continue to eat during this pandemic.”
Response to Positive Cases A persistent major concern expressed in AICC’s nationwide videoconferences was how a company might react if a worker tested positive for the coronavirus. In questions posted every week, the question
Photo courtesy of Michigan City Paper Box Co.
he says, “and to let them know they can count on getting paid.” An important twist in many companies’ communications was to remind employees about the importance of their work in an essential industry in the fight against the pandemic. John Kochie, general manager of Acme Corrugated Box in Hatboro, Pennsylvania, says, “We put out a weekly communication bulletin on three areas: what we have done this week for our employees’ health and safety; why their work is critical; and the high-level state of the business.” Al Hoodwin, CEO of Michigan City Paper Box in Michigan City, Indiana, in an April 9 letter to his company’s employees, wrote, “You all play an important role as we continue to operate as an essential business. Our work helps our customers accomplish their important roles in society during this pandemic,” describing how Michigan City Paper Box provides packaging for replacement parts
At Michigan City Paper Box, Plant Manager Aaron Judson used inexpensive but colorful pool noodles to mark 6-foot intervals for worker separation.
“What do you do?” was raised repeatedly. Most members, when asked about their positive-case scenarios, replied with similar plans of action: follow CDC guidelines; identify and quarantine close contacts; and sterilize the work area or machine center. AICC’s surveys indicate that 80% of members had established just such a contingency plan, even though 75% of these respondents had not reported a single positive case. Among the 22% who reported a positive or near positive instance was Kochie, who faced the situation early on in the crisis. “After the first positive case, it ‘became real,’ and you could feel the apprehension,” he says. “After the second case, you see the fear in employees’ eyes. That was our low point, and for about two weeks after that, absenteeism hit 26%.” Kochie says that during that time, he was in frequent communication with Larry Grossbard, president, and Rich Goldberg, general manager, both of President Container in Middletown, New York. President had experienced several positive COVID-19 cases before Acme. “They gave us great feedback and templates, so I would like to shout that out. Larry and Rich were all over this early,” Kochie says. “With their advice and that of others, we combined three shifts into two and marched on.” He adds that in the weeks following, no further cases occurred. “Attendance has normalized, and we have never disappointed a client,”
Kochie says. “This is a true testament to all the Acme team members!”
BOXSCORE July/August 2020
Photo courtesy of Wonder State Box Co. Inc.
Safety, Sanitation, Separation Figuratively and literally, the highly contagious nature of COVID-19 completely changed the landscape of the manufacturing environment. The concept of social distancing, unfamiliar in normal settings, has been a special challenge in a machine-centered job shop shift environment such as the corrugated and paperboard industries. AICC members, in their comparing of notes in videoconferences, told of changing work schedules, staggering start times of shifts, sanitizing workstations, and altering physical layouts and occupancy of break rooms to reduce numbers and proximity of employees. Suzy Cummins, general manager of RPI Print, a digital print services provider in Seattle, gives a response common among AICC member companies: “We are ending first shift 15 minutes early and starting second shift 15 minutes later. This gives time to adequately wipe down machines and exit the building before the oncoming shift, as well as reduce the total number of employees in the building at the same time.” In AICC’s surveys, 83% of members say one of their first steps in dealing with the crisis was the adequate sanitation of machine centers and workstations. AJ Cooley, production supervisor at Wonder State Box in Conway, Arkansas, a sheet plant in the SMC Packaging Group of companies, describes their efforts at implementing the new social distancing requirements at machine centers. “Social distancing is something that we recognized as crucial to organizational success and our ability to function,” he says. “All machine areas have been roped off with limited access points. No one is allowed in the area, including the general manager, without the permission of the operator.”
Wonder State Box Production Supervisor AJ Cooley set up perimeters around each machine center to limit access and reduce risk for machine operators.
Greg Tucker, chairman and CEO of Bay Cities in Pico Rivera, California, reports that supervisors wrapped all machine touch points in the plant with stretch wrap to minimize contact. Wrap is removed, surface disinfected and rewrapped in between shifts. Bay Cities also does a semiweekly overall plant cleanup and has also staggered shifts, as many have done. “The folks are distanced during breaks,” he says. “Some stay in the lunchroom that was just completely remodeled and expanded; some go outside under our canopy or at picnic benches.” In a “necessity is the mother of invention” moment at Michigan City Paper Box, Aaron Judson, digital print and stock division production manager, used colorful foam swimming pool
noodles to demarcate 6-foot separation points along the rigid box packing line, ensuring that workers there maintained proper distance. In the office, administrative, accounting, and customer service departments in many places began working from home, a trend that may continue post-pandemic to change how plants plan their overall staffing and space layout. This separation, seen as necessary in the health crisis, has its pros and cons, as told by members. Kochie reports that all at-home managers “keep doing all regularly scheduled meetings via videoconference and touch base with their team members twice daily.” In April, Acme’s work-at-home employees came to the plant as on-site workers
were arriving for their shifts to give them a cheering “thank you” for manning the front lines in the plant. Still, in a people- and customer service-oriented business such as the box industry, everyday interaction is important. Says Tom Nelson, “The employees working from home are looking for opportunities to interact with fellow employees. Their desire is to maintain a sense of belonging.” Tucker agrees: “The morale of those in the plant, I feel, is better than those at home. The plant folks like the idea of having a job and coming to work.” Jones thinks the work-at-home model, newly introduced to our industry, may stick in certain cases and also provide some long-term advantages: “Certainly the working-from-home concept is going to have an impact for many,” he says.
“In many ways, it will provide people the opportunity to look at prospective employees who are not in an ideal geographic location to be considered and to accommodate a flexible commuting schedule when needed.”
Whither the Sales Call? The customer-focused in-person sales call, on which the corrugated and paperboard business is built, was an early casualty of industry’s COVID-19 response. In AICC’s General and Associate member surveys, 88% of boxmakers say the biggest initial impact of the crisis was the inability to call on customers and the corresponding inability to receive suppliers or service technicians in their plants. “Obviously, we have no face-to-face interactions with our customers. No office visits by or to our customers,” writes Jeff
Putt of DeLine Box Co. in Denver. “Our sales reps are lonely and aimless.” Suppliers responded similarly, with 85% saying their activity has been severely curtailed. Yet Jeff Pallini of Fosber America in Green Bay, Wisconsin, says, “Nothing has changed in our relationship with our customers. We are doing our best via phone and videoconference to be responsive.” Poteet Printing Systems in Charlotte, North Carolina, has increased raw material and finished-goods inventory and has invested in a remote shipping location to continue to serve existing customers. Roger Poteet, the company’s president, cited these necessary steps in a presentation made to Poteet employees early on in the crisis. Of SUN, which has a large machine parts business, Jones says, “We are using
“The working-from-home concept ... will provide people the opportunity to look at prospective employees who are not in an ideal geographic location ...“ —Greg Jones, executive vice president, SUN Automation Group
team meetings via phone and video to assure our customers of our ability to meet their expectations from a parts and service perspective.” Cummins writes that RPI Print’s supplier relationships have remained largely unchanged: “No visits, but mostly business as usual. We have restricted visitors to the plant as ‘essential’ to keep the business operating, and we have screening questions for anyone that enters the building.”
Financial Fallout The adaptation to new personnel and physical challenges brought about by the pandemic is but one facet of the crisis. As the economic collateral damage mounted due to government-imposed stay-at-home orders, AICC members’ concern for future business and the health of their customer base came prominently to the fore. In AICC’s member survey, 78% of members say their total sales had declined in the previous 30 days, with corresponding declines in production work (65%), quote activity (85%), and order backlog (67%). “The biggest lifeline for survival of a company is cash,” writes Tucker. “Accounts receivable is the most important need for a corporation to get their hands around right now.” The U.S. government’s multitrilliondollar economic safety net, made necessary by the mandatory shutdown of the U.S. economy, included the Paycheck Protection Program (PPP), the Coronavirus Aid, Relief, and Economic
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Security Act, and the Economic Injury Disaster Loan. According to AICC’s April survey, 83% of members who were eligible took advantage of the PPP, which provided emergency loans to small businesses to meet up to 24 weeks’ worth of payroll and overhead expenses such as utilities and occupancy costs. Loans are forgivable if used for those purposes. As generous as these programs have been and as necessary as they have been to sustain the small business community, they do not sit well with most entrepreneurs. Nelson sums up the sentiment well: “As with all programs that give things away, ensuring the intended recipient receives the benefit, preventing fraud, and appeasing those excluded will become its legacy. In the end, similar to a welfare check, it’s not a badge of honor.” At press time, AICC members were typically optimistic about the economic future, with more than half seeing increasing sales within 90 days (or about the time of this publication). Tucker writes sound advice for any entrepreneur: “We have the biggest opportunity for success ever in these times.” Referring to his earlier comment about the importance of cash, he points out that in the environment brought about by COVID-19, there will be opportunities for acquisitions or to acquire good people. “The other opportunity will be great people out there displaced and looking for work,” he writes. “Keep your eyes open, as this is not going to be with us forever, and the decisions you
make today will further your business greatly tomorrow.”
The Road Ahead As the economy has gradually reopened in varying degrees through the summer months, the path forward is only now being charted. Business, industry, and life will be markedly different—or will it? What is the perspective of members of the corrugated and paperboard industries? Niedermeier says, “Business will come back, life will go on; some business will fail, and others will thrive,” adding that plant sanitation methods will continue. “I think we’re simply going to have to keep our sanitary protocols going until such time as a vaccine is discovered or we achieve our ‘herd immunity.’ ” Kochie says there will be “less travel, more technology,” and adds, “But at the end of the day, our business and any sales, really, are all about relationships, and those, too, will go back to normal eventually.” “The economic fallout from COVID will have a much greater effect on our industry,” says Nelson. “I think we will see some closures and consolidations of box plants, industry vendors, and paper producers.” He predicts this will be beneficial in the long run: “The actions taken and lessons learned by the survivors will create more efficient and better-managed organizations.” Putt thinks there will be more instances such as this in the future and that companies need to be prepared to
face them. “I suggest that due to this pandemic—others will be more common in the future, I think—businesses will make few substantial changes to their model; but those changes they make will be mainly around strategic planning for future disruptions of one kind or another.” But in a comment that suggests he doesn’t put a lot of stock in all the talk about a new normal, he adds, “History and the people who live it have short memories.” To Pallini, the crisis is good for the corrugated and paperboard packaging industries in general, because it has given the industry a basis for solid promotion and an impetus for the rebound of a healthy North American manufacturing sector. “First of all, we know corrugated is essential; that’s awesome! I think we will favor more domestic manufacturing solutions rather than always the lowest-cost option,” he says.
Postscript: A Generous Industry Responds Even during the heat of the battle against COVID-19 and the need for company ownership to focus solely on the welfare of their employees and businesses, AICC members stepped up to help their
“We have the biggest opportunity for success ever in these times.” —Greg Tucker, chairman and CEO, Bay Cities
communities in need. Member after member writes about the many ways, large and small, they were supporting local needs to help those most affected. Jeff Pallini writes that Fosber donated 2,000 masks to local hospitals in the Green Bay area and donated to five area food banks. SUN Automation, for its part, similarly provided masks to hospitals and volunteers for food banks but also went beyond to provide catered lunches for front-line health care workers at MedStar Union Memorial Hospital in Baltimore. DeLine and Acme played to their strengths in the crisis, providing much needed corrugated packaging to box up food for food banks and the local transport of donated medical supplies. Acme also donated N95 masks to local hospitals.
Poteet Printing Systems switched gears to begin formulating hand sanitizer, which it donated throughout the Charlotte area. Pallini says this about the lasting effects of the COVID crisis: “I hope that we have learned to care more for others and that we are all vulnerable. Our industry plays a major role in keeping the supply chains moving, but we also have a lot of good people that helped out in many personal ways. Our industry will be stronger coming out of this.” Steve Young is AICC’s ambassador-at-large. He can be reached at 703-535-1381.
The Associate Advantage
Leaning on Your Partners BY JOE MORELLI
JOE MORELLI HUSTON PATTERSON PRINTERS VICE CHAIRMAN JMORELLI@HUSTONPATTERSON.COM
PAT SZANY AMERICAN CORRUGATED MACHINE CORP. CHAIRMAN PSZANY@ACM-CORP.COM
GREG JONES SUN AUTOMATION GROUP SECRETARY GREG.JONES@SUNAUTOMATION.COM
TIM CONNELL A.G. STACKER INC. DIRECTOR TCONNELL@AGSTACKER.COM
DAVE BURGESS JB MACHINERY IMMEDIATE PAST CHAIRMAN DBURGESS@JBMACHINERY.COM
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ICC has a network of more than 200 Associate Members that proudly serve the General Membership with services, equipment, and materials that help businesses such as yours succeed. Although COVID-19 has significantly impacted both Associate and General Member businesses, as essential suppliers to the North American supply chain, we have all forged through the shutdown in order to serve our clients. Over the past few months, we have all had to adjust the way we do business, but the reliance on our partners has perhaps never been greater. I have witnessed AICC boxmakers and suppliers continuing to be visible, diversifying their sales approach, and providing significant value to their customers and partners. Being visible during a mandatory stay-at-home order is complicated. In my opinion, the best method of sales is face-to-face interaction, but over the past few months—and for good reason—companies were not accepting visitors. The best suppliers to us and the companies that stood out to me in the industry found other ways to be visible. Phone calls to check in and emails with valuable information are two common methods of staying visible, but the best of the bunch were the people who upped their game on social media, became active online, and created a brand for themselves without being able to be in the office or visit. Ultimately, the boost in social media presence resulted in visibility that will keep these people top of mind when we need to lean on our partners. A few years ago, we at Huston Patterson saw a need to pivot our sales tactics to include more tech-based tools to reach an evolving demographic of clients. During the current situation, that need has never been more apparent. Some of the best
value that has been brought to us was short educational videos. Some of these were nicely produced, well-thought-out clips, but others were just selfie-style videos shot with a cellphone with valuable information about the question I had. I have been part of Zoom happy hours and training calls, and I have witnessed numerous examples of social media networking events that personified the innovation needed to survive in the current sales landscape. Although I firmly believe face-to-face interaction results in the best sales, I’ve been most impressed with those colleagues who are able to provide value to our company in innovative ways. Ultimately, that is our job as a partner—to help our clients be successful. During the shutdown, many people have been working from home without their normal tools, their normal spec sheets, or whatever it is that made their job routine when in the office. One of the more valuable things I saw during the last few months was a number of companies that created virtual portfolios and sent them to the people working from home. These portfolios were not just great marketing material but real content that gave people the tools they needed at home. We have all had to adjust. As AICC Associate members, each one of us has always been eager to engage, build trust, and work together to find solutions, and that remains true. By adjusting our sales tactics and becoming more innovative, more resourceful, and more impactful in the way we provide value, AICC general members will continue to see a committed group of companies there to serve them post-COVID-19. Joe Morelli is vice president of sales and marketing for Huston Patterson Printers and is vice chairman of AICC’s Associate board.
Thank You Emerging Leader Supporters
These companies are contributing to the future of the industry through the AICC Emerging Leader Program.
The AICC Emerging Leaders program is an exclusive series of training, networking, and leadership opportunities for ambitious young professionals in the paper and packaging industry. With the opportunities and information available in the Emerging Leaders (EL) program, young professionals who are ready to commit to their professional development will have the chance to grow into proven, reliable future leaders in their company and industry.
For more information, contact Scott Ellis at firstname.lastname@example.org. AICCbox.org/Leader
When You Invest & Engage, AICC Delivers Success.
What the Tech?
Temperature-Screening Technologies BY MICHAEL HARRIS
n the summer of 1999, I had the opportunity to work in a General Motors facility as an electrical engineering intern for Electronic Data Systems. Back then, it was common for a large manufacturing facility to have a full-time nurse on staff to treat injuries, administer new hire drug tests, educate employees, and help lower worker’s compensation insurance premiums. As time went on, businesses looked for new ways to cut costs; the corporate nurse became a thing of the past. Under the “new normal,” I have personally been to a few different locations in the Midwest that have implemented some level of temperature screening for employees, visitors, and contractors. The only thing that these companies have in
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common is that they all have dedicated an existing employee as the de facto corporate nurse. Why do we take temperature on the forehead? The reason is because it is the most accessible and accurate place. Other places to take temperature, in order of the most accurate to least, would be the ear, mouth, and then armpit. With no end in sight, the pandemic will continue to absorb human resources to administer temperature checks every day. One such facility in the Chicagoland area has a dedicated employee stationed at the time clock for three hours at each shift change with a handheld FDA-certified medical-grade instant digital thermometer. These can be expensed at a price point of $80–$200.
They are easy to read and easy to use, and tests are noncontact. The drawback is that you tie up human resources as a dedicated “trigger finger” to administer the tests. On a two-shift operation, assuming a $60/hour fully loaded rate, this cost is annualized at $93,600. Sure, you could bring in a temp service to administer the tests, but do you really want to put the well-being of your workforce into the hands of a temporary employee? There is some technology out there to help automate this process from PopID, a fever-detection and facial-recognition camera service. The intent of this device is to create a self-policing system for the employee to make the right decision. The system is easy to use. Users upload their photo to the PopID database
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 Dâ€™Angelo, President, 703.535.1386 or email@example.com.
What the Tech?
cloud. Their face becomes a “digital token” across the PopID platform. Any time you present your likeness in front of the scanner, the system creates a time stamp, employee name, and temperature reading. The data is stored into a historical log for employer access. The employer has the choice to check employee compliance or delete the data. This type of system is available at a cost of around $3,000 and has been implemented by fast-food chains such as Subway and Taco Bell. Another technology is from Thermoteknix, and it has received some attention lately with its recent rollout at Tyson Foods. According to Richard Hames, sales director at Thermoteknix, this technology has been available since 2003 and is typically used for employers with 200-plus employees. The FeverID is a skin
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temperature measurement system designed for mass screening of hightraffic pedestrian areas such as public transportation and factories. The portable FevIR Scan Fever Screening System combines thermal and color visualimaging cameras, working in conjunction with a blackbody temperature calibration unit. The blackbody emits a constant temperature that gives this system extremely high accuracy at ±0.2 degrees Celsius. The system can handle multiple personnel at once. Additionally, the software can be set up with high-temperature alarms and has dynamic event-recording that can capture video for up to 10 seconds before and after an alarm. The software and hardware can be sourced for around $19,000–$23,000. Due to environmental and physiological factors, human skin temperatures may
not be an accurate reflection of internal core body temperatures. Raised skin temperatures can occur in the absence of a fever. Additionally, humans not presenting a fever can still spread illness if they are asymptomatic carriers of any disease. To conclude, the three different systems offer you a good-better-best approach for temperature screening your workforce to fit your needs. If you need any additional information to help decide which is best for your facility, my contact information is below. Michael Harris is president of KPI Incorporated. He can be reached at 317-797-9898 or mharris@ kpiincorporated.com.
Strength in Numbers
Managing Customer Credit During a Recession BY MITCH KLINGHER
ver the past few weeks, in addition to the tremendous volume of discussions about Paycheck Protection Program loan eligibility and forgiveness, I have begun to field a lot of calls about customer credit issues. Many converters are getting requests from potential customers, and lots of these inquiries include requests for significantly extended terms. If a normal situation is something like a 2% discount if paid within 10 days, with the undiscounted balance due in 30 days (2% 10, net 30), these requests are more akin to a 2% discount if paid within 20 days, with the undiscounted balance due within 90 or 120 days (2% 20, net 90 or net 120). In addition, there are more requests for converters to carry significant inventory levels of customer product that
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cannot be invoiced until it is shipped. Is it madness to contemplate high inventory levels and 90-day-plus terms to induce a potential customer to move his business to you? If a customer is insolvent and has either filed for federal or state insolvency (bankruptcy) protection or is threatening to do so, you will be lucky to get 10 cents on the dollar for your accounts receivable, and there is not much that you can do to compel the customer to take the inventory that you have already produced to take care of their future orders. If you give a customer extended terms and agree to carry high inventory levels, this exposure is increased tremendously, so the first issue in making these types of decisions is the overall credit
risk being taken. Since we are currently in a recession that is likely to deepen, companies that were previously low credit risks can become high credit risks very quickly, so the first thing I would do is make sure that the customer is willing to send you current financial information and willing to let you tour their facilities. If it is a significant piece of business, have your attorney run up-to-date lien and litigation searches to make sure there arenâ€™t secured creditors who are already in danger, or significant pending litigation. If you have access to credit insurance, pay keen attention to how much risk the insurance company is willing to take with respect to this potential customer. The bottom line is that if you are considering giving a customer extended terms or agree
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Strength in Numbers
to carry large amounts of inventory, you must be certain that the overall credit risk is extremely low. The next consideration has to do with the cost of capital. When I first entered the business world in the late 1970s, the incremental borrowing rate for most businesses was approximately 20%. With that kind of cost of capital, extended terms and high inventory levels could have disastrous implications. Let’s say that a potential customer is expected to purchase about $50,000 per month of product and, in order to properly take care of the customer needs, it is determined that you need to keep $50,000 of inventory in your warehouse. If you give them 90-day terms, your overall exposure will be about $200,000. If your overall cost of capital is 20%, this will cost you $40,000 per year, and if your cost of capital is 4%, this will cost you $8,000 per year. So, while your cost of capital is fairly low, it is easier to entertain extended terms, but if this situation changes, you might have to rethink the situation. If the credit exposure is minimal, your overall financial position is strong, you have enough space to handle the additional inventory, and your cost of capital is low, the final issue is the overall profitability of the business. How long is the payback period on the resources that you have expended in terms of receivables and inventory? If your credit risk exposure is $200,000 and the expected contribution margin of the business is 30%, it will take approximately $667,000 in sales to generate enough cash to cover a potential loss of $200,000. In this example, it will take approximately 13 months of sales at a 30% contribution margin to break even, and this assumes that you don’t have to add any additional overhead to your operation to take on this new business. Extended terms and high inventory levels seem to be becoming the “new
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normal” these days, especially for larger customers, and therefore they cannot be ignored if you want to continue to grow your business. In order to make a good decision, you need to make sure that both the initial and ongoing credit risk is small. Very often, the customer credit is not rechecked after the initial credit application. In any situation in which credit exposure is significant, this must be updated at least annually. If a customer starts paying slowly, it is usually too late to do anything about the problem. In cases of extended terms, you need to put into place a more comprehensive monitoring system, which should allow for regular visits to the customer premises and periodic financial reporting. In summary, if you are entertaining giving extended terms to customers, you must take into account the inventory levels that you expect to carry for that customer in the overall evaluation of credit risk. Your balance sheet must be
strong enough to withstand the credit loss, and your cost of capital must be low enough to ensure that your earnings will not be significantly impaired. You should calculate how long it will take before you can at least break even on the situation—before you decide to proceed. All too often, I see companies take on marginal business from difficult customers because they are seduced by the additional volume of business. In my experience, when a company is having financial difficulties, the first thing that they do is look for additional suppliers. So be careful with new credit risk during this business downturn, and above all, stay safe. Mitch Klingher is a partner at Klingher Nadler LLP. He can be reached at 201-731-3025 or mitch@ klinghernadler.com.
Salary, Hourly Wage & BeneďŹ t Report AICC members who participated in the survey will receive one complimentary copy.
International Corrugated Packaging Foundation I N T E R N AT I O N A L
F O U N D AT I O N
2020 Graduates and Interns Remain Available Through ICPF
s I write this column’s introduction in early June, it is clear that the 2020 hiring season for student interns and new graduates has to be the most tumultuous and uncertain one in well over 60 years. Student internships in some regions have been eliminated or reduced in duration to ensure safety and health. For the same reasons, the hiring of new graduates in some areas has been postponed. However, throughout the country our corrugated packaging corporate partners have been creative by making modifications to continue recruiting the next generation of managers and executives. When I think of the resilience of our industry, it brings to mind the banner currently posted at the entrance of the WestRock paper mill in Hopewell, Virginia: “TOUGH TIMES DON’T LAST, TOUGH TEAMS DO.” ICPF continues its mission to promote the corrugated packaging industry to students. The talent pool for the next generation continues to grow. The stories of a cross section of students recently recruited by the industry through ICPF so far this season follow. Emily VanderMoere, Michigan State University (packaging science major, May ’20) has accepted a position with Green Bay Packaging as a structural designer. “I feel very fortunate to have a job right after graduation, and that’s thanks to ICPF. The Student/ Executive Dialogue Dinners in 2019 and
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2020 were extremely beneficial to me by hearing advice from industry leaders and expanding my network. At ICPF’s dinner this past February I met a Green Bay Packaging executive, which led to being hired as a designer. I strongly encourage fellow students to utilize ICPF’s resources and check out their Career Portal at careersincorrugated.org.” Sophia Luettke, Clemson University (packaging science major and sustainability minor, December ’19) is a management trainee at Packaging Corp. of America (PCA) in Salem, Oregon. “While studying packaging at Clemson University, I became interested in sustainability, material use, optimization, validation, design, and transportation. My education taught me about the applications of corrugated packaging and showed me a career path that would align my interests and knowledge. After joining ICPF’s corrugated packaging career network on social media, I uploaded my résumé to ICPF’s Career Portal, where I applied for a PCA GIFT position that gives new graduates experience in various positions within corrugated manufacturing to ensure well-rounded employees. By using ICPF’s Career Portal, I was able to jump-start my career and connect with the employer in a more personal manner. The trust we built allowed me to take a leap of faith and accept
a position across the country, knowing I’d have a second family excited to welcome me in.” Kelsea Potthast, University of Florida (business administration/ marketing major and packaging science minor, May ’21) has acquired a student sales internship this summer at Hood Container Corp. “I am passionate about developing synergy between the engineering principles of corrugated packaging and the innovative marketing strategies of business. The ICPF Student/Executive Dialogue Dinner and ICPF’s Teleconference on the Business of Corrugated Packaging & Displays allowed me to surround myself with students and executives who pursue creative thinking and diverse perspectives. Not only did this ICPF experience introduce me to internship opportunities within the corrugated industry, but it is the first time my interest in combining marketing with packaging science has been encouraged. While many career fairs and networking events try to fit students into a keyhole position, ICPF has given me the professional support and personal confidence to achieve my own goals. Since working with ICPF, I have been elected president of the UF Packaging Club, become the official ICPF student representative at UF, secured a corrugated packaging sales internship through ICPF, and am looking forward to returning to Michigan next year to moderate ICPF’s 2021 Teleconference.”
International Corrugated Packaging Foundation I N T E R N AT I O N A L
Alvin Naduparabil, Rutgers University (packaging engineering major, May ’20) has been hired as a GIFT management trainee at PCA in Burley, Idaho. “ICPF has played a big part in my education on the corrugated side of packaging and in preparing me for the workforce. Earlier this year, I had the opportunity to travel to Michigan to attend ICPF’s Student/Executive Dialogue Dinner as well as participate in ICPF’s Teleconference on the Business of Corrugated Packaging & Displays from WKAR’s broadcast auditorium. The teleconference and dinner were a great experience and gave me a lot of exposure to the corrugated industry. Being able to speak with students and executives from across the nation opened my eyes to the wide range of directions it could take my career. ICPF has helped me sharpen the tools I need to be a successful packaging engineer, and I will always be grateful for the experience I was lucky to have! Thank you for all your help and for giving me exposure to PCA before I even knew I wanted to work for them!” Makayla Sarkis, Virginia Tech (packaging systems and design major, May ’21) is a junior seeking a summer 2020 student internship. “I have had the pleasure to get a taste of the packaging world, through labs, projects, competitions, and ICPF’s recent Teleconference on the Business of Corrugated Packaging
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& Displays. Using ICPF’s Career Portal, I have been able to discover many different job types and companies. I recently was elected the event planner for the packaging club at Virginia Tech and hope to continue to learn and get the opportunity to gain more experience in all aspects of corrugated packaging. Recognizing the impact of COVID-19 on student internship possibilities, I am working with ICPF to find a shortened, six- to eight-week student design or sales internship in the corrugated packaging industry for the remainder of this summer.” Annie Schaubel, Michigan State University (packaging science major, August ’20) has accepted a position with Hood Container Corp. as a sales trainee in Chicago. “I originally started out as a biology major, but after learning about the School of Packaging at MSU, I was intrigued. I couldn’t be happier with my decision after making the switch. I first attended the ICPF Teleconference on the Business of Corrugated Packaging & Displays in 2018, where I learned about the abundant opportunities in the corrugated industry. In 2019, I completed a co-op with PCA. After attending ICPF’s teleconference again in 2020, I signed up for ICPF’s Career Portal because I knew that I wanted to continue my career in the corrugated industry. The Career Portal is a great tool to use for getting exposure to corrugated companies, whether it is for internships or for full-time positions. I want to thank ICPF for all of the help in my job search. I am very grateful for this opportunity as a recent college graduate, and I am eager to start at Hood Container Corporation!”
F O U N D AT I O N
Cameron Stowe, Michigan State University (packaging science major, May ’20) has been hired as a management trainee at WestRock. “In February of 2019, I was fortunate enough to be nominated to attend ICPF’s Student/Executive Dialogue Dinner, where I had the opportunity to meet phenomenal executives from many companies, including WestRock. As a result of the dinner and my new contacts, I ended up completing a WestRock summer internship. Upon graduation this summer, I will be starting an 18-month WestRock management training program, where I will learn from various departments and branches in the greater Chicago area. Without my experience from the ICPF dinner, I would have never gained such valuable opportunities from such an incredible company. I am looking forward to meeting other packaging professionals and making a difference in the corrugated packaging industry!” Richard Flaherty is president of the International Corrugated Packaging Foundation.
STRONGER TOGETHER As we navigate this crisis, we are here for you. The COVID-19 Coronavirus has challenged all of us. At TAPPI and AICC, we share in your concerns and remain committed to our industry and to the health and well-being of our members, volunteers, staff and exhibitors. All of which is why we made the difficult decision to reschedule SuperCorrExpoÂŽ and focus on the future.
August 8-12, 2021 â€˘ Orlando, FL USA Visit supercorrexpo.org for details #StrongerTogether
The Final Score
A Lesson From the Bard of the Bronx “When you come to a fork in the road, take it.” —Yogi Berra
his issue of BoxScore went to print shortly after AICC began a new fiscal year on July 1. Since the COVID-19 pandemic landed on our doorsteps in March, the AICC staff has been attempting to put together a budget and a Destination Model for what is now fiscal year 2021. Given the uncertainty in the timing of a COVID-19 vaccine and the duration of the resulting economic fallout, the task has been difficult. AICC’s budget committee, executive committee, and the full board of directors have been very supportive and very helpful. Good AICC governance by member volunteers remains a bedrock of the Association. Another characteristic of AICC members is their willingness to share their opinions. AICC surveys go a long way to setting programming and priorities. At the beginning of June, AICC surveyed boxmaker and supplier members to get their thoughts on travel to AICC events in the fall. We asked the same questions to the two member categories, compiling the results separately. You, the members, spoke honestly and passionately, as usual. Eighty-six percent of boxmakers and 86% of suppliers have installed some form of travel restriction, ranging from no travel at all to only necessary travel. A vast majority of the respondents do not have a specific date when the restrictions set by their company will be lifted. Accompanying comments indicate that most members’ reopening process will be very gradual and will depend on myriad factors. Consequently, 84% of boxmakers and 62% of suppliers will not attend an AICC national event during the calendar year 2020. There are subsets in the data that show that 20% of boxmakers and 11% of suppliers will not travel prior to the availability of a COVID-19 vaccine or the implementation of an effective treatment for the virus. Smaller AICC events such as summits or education seminars fared only slightly better relative to travel, with 67% of boxmakers and 61% of suppliers saying they would not attend. AICC also questioned the members on safety measures expected at any national or regional meeting. The full results of the surveys, along with commentary, can be found at www.aiccbox.org/results. So, based on polling, we won’t be seeing you in person anytime soon unless circumstances dramatically change. AICC offers very strong membership value through The Packaging School and the pivot that has been made to videoconferences, webinars, and website content—all necessitated by the restrictions imposed upon members by governments or imposed by the members themselves. We have seen strong growth in the utilization of all AICC platforms. But at its heart, AICC is a meeting, camaraderie, and networking Association. We fully expect to return to this foundation at the soonest opportunity. When will that be? John Kenneth Galbraith once said, “There are two types of forecasters: those who don’t know the future and those who don’t know they don’t know,” which brings me back to the opening line above from the “Bard of the Bronx.” This year has been a journey like no other. It is a journey that, just like for you, has led to many forks. In the interest of delivering success to our members, we always take them.
Michael D’Angelo AICC President
BOXSCORE July/August 2020
AICC BoxScore, The premier magazine of AICC, The Independent Packaging Association, created for the independent corrugated, folding carton,...
Published on Jul 14, 2020
AICC BoxScore, The premier magazine of AICC, The Independent Packaging Association, created for the independent corrugated, folding carton,...