Nov/ Dec 2018 AICC BoxScore: Welcome New Chairman

Nov/Dec 2018 Vol. 22 Issue 6

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A PUBLICATION OF AICC, THE INDEPENDENT PACKAGING ASSOCIATION

November/December 2018 Volume 22, Issue 6

WELCOME, AICC CHAIRMAN

JOE PALMERI

Meet the man forging the Association’s path forward through engagement

ALSO INSIDE Simply Productive Strategic Success AICC’s 2018 Annual Report

TABLE OF CONTENTS November/December 2018 • Volume 22, Issue 6

COLUMNS

46 FEATURES

46

WELCOME AICC 2018–2019 CHAIRMAN JOE PALMERI Meet the man forging the Association’s path forward through engagement

52

52

STRATEGIC SUCCESS Long-term partnerships can open doors to resources, enhanced customer service, and growth

66

CHAIRMAN’S MESSAGE

4

SCORING BOXES

8

LEGISLATIVE REPORT

12

MEMBERS MEETING

25

ASK RALPH

28

SELLING TODAY

32

TACKLING TRENDS

34

ANDRAGOGY

36

MARKETING MIX

44

IN REMEMBRANCE

74

THE ASSOCIATE ADVANTAGE

76

STRENGTH IN NUMBERS

80

THE FINAL SCORE

SIMPLY PRODUCTIVE Becoming a better company starts with becoming a better leader

60

3

DEPARTMENTS

60

10

WELCOME NEW MEMBERS

39

GOOD FOR BUSINESS

78

ICPF UPDATE

AICC’S 2018 ANNUAL REPORT Investment, engagement, and value highlight AICC’s 2018 fiscal year

66 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. ©2018 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

1

OFFICERS Chairman: Joseph M. Palmeri, Jamestown Container Companies First Vice Chairman: Jay Carman, StandFast Packaging Vice Chairman: John Forrey, Specialty Industries/Krafcor/ NuPack Printing Vice Chairwoman: Jana Harris, Harris Packaging/ American Carton Vice Chairman: Matt Davis, Packaging Express Immediate Past Chairman: Al Hoodwin, Michigan City Paper Box Chairman, Past Chairmen’s Council: Tony Schleich, American Packaging Corp.

President: A. Steven Young, AICC Vice President: Michael D’Angelo, AICC Secretary/General Counsel: David P. Goch, Webster Chamberlain & Bean Counsel Emeritus: Paul H. Vishny, Esq. AICC Canada Director: Jana Marmei AICC México Executive Director: Sergio Farfan

AICC México: Pedro R. Aguirre Martinez, Tecnología de Cartón Overseas Director: Kim Nelson, Royal Containers Ltd.

SUBMIT EDITORIAL IDEAS, NEWS & LETTERS TO: BoxScore@theYGSgroup.com

EMERGING LEADER BOARD DELEGATES Josh Sobel, Jamestown Container Companies Daniel Brettschneider, CST Systems

CONTRIBUTORS Maria Frustaci, Director of Administration and Director of Latin America Cindy Huber, Director of Meetings and Conventions Chelsea May, Education and Training Manager Laura Mihalick, Senior Meetings Manager Taryn Pyle, Director of Education and Leadership Development Alyce Ryan, Marketing Coordinator Richard M. Flaherty, President, ICPF

DIRECTORS-AT-LARGE Kevin Ausburn, SMC Packaging Group Gary Brewer, Package Crafters Marco Ferrara, Cartones Sultana Finn MacDonald, Independent II Nelva Walz, Michigan City Paper Box

PUBLICATION STAFF Publisher: A. Steven Young, syoung@aiccbox.org Editor: Virginia Humphrey, vhumphrey@aiccbox.org

DIRECTORS David DeLine, DeLine Box Company Eric Elgin, Oklahoma Interpak Guy Ockerlund, OxBox Mike Schaefer, Tavens Packaging & Display Stuart Fenkel, McLean Packaging AICC Canada: Terri-Lynn Levesque, Royal Containers Ltd.

ASSOCIATE MEMBER DIRECTORS Chairman: Dave Burgess, JB Machinery Vice Chairman: Pat Szany, American Corrugated Machine Corp.

Secretary: Joe Morelli, Huston Patterson Printers Director: Greg Jones, SUN Automation Group Immediate Past Chairman: Ed Gargiulo, Equipment Finance Corp.

ADVISORS TO THE CHAIRMAN John Bollender, Niagara Sheets LLC Greg Arvanigian, Arvco Container Dave Burgess, JB Machinery

EDITORIAL/DESIGN SERVICES The YGS Group • www.theYGSgroup.com Vice President: Jack Davidson Senior Managing Editor: Ashley Reid Senior Editor: Sam Hoffmeister Copy Editor: Steve Kennedy Associate Editor: Drew Bankert Creative Director: Serena L. Spiezio Art Director: Jason Deller Account Manager: Brian Hershey

ADVERTISING Information: Virginia Humphrey, vhumphrey@aiccbox.org Opportunities: Taryn Pyle 703-535-1391 • tpyle@aiccbox.org AICC PO Box 25708 Alexandria, VA 22313 Phone 703-836-2422 Toll-free 877-836-2422 Fax 703-836-2795 www.aiccbox.org

ABOUT AICC AICC, The Independent Packaging Association, is uniting and celebrating the success of inspired, independent packaging companies. We are a growing membership association which has served independents since 1974.

WHEN YOU INVEST AND ENGAGE, AICC WILL DELIVER SUCCESS.

Chairman’s Message

If You Invest and Engage, AICC Can Help You

I

’m honored to be the next chairman of AICC. It’s been a long journey for me to this point. I started attending these meetings as a teenager in the mid-’70s and have been part of this great organization for a long time.

Back then, in an effort to get the younger generation more engaged, AICC started the “Sons of Bosses,” affectionately known as the SOBs. Some of you may remember that. Later, to attract involvement beyond family, it was expanded to our Next Generation program. Today we have the Emerging Leaders program. Though the name may have changed from when I was involved, the benefits to the next generation have not. Many who went through those programs with me over 25 years ago are now the owners of the companies they were representing back then. I know, at some point in the future, our current Emerging Leaders will do the same.

I’m also thrilled to be part of the fourth father/son or father/daughter combination that has served as AICC chairman/president. I’m proud to follow the steps of: • George Arvanigian (1979) and Greg Arvanigian (2001) • Don Morphy (1984) and Brad Morphy (2007) • Bill Flinn (1995) and Cindy Flinn Baker (2005) • Joseph R. Palmeri (1996)

Our company is a founding member of AICC. Jamestown Container was established

by Glenn Janowsky in 1956, and my dad was one of the first five employees. Jamestown was among those first 51 companies present in St. Louis in the fall of 1974. We’re proof that multiple-generation companies have a great place in our industry.

As I enter my year as chairman, I have a simple message for the independents in our industry—in fact, for all our industry.

Whether or not you’re a small sheet plant trying to grow your business—if you invest and engage, AICC can help you.

If you’re a brown box plant trying to make the transition to graphics or digital—if you invest and engage, AICC can help you.

If you’re a box plant that wants to add a complementary business, such as foam fabricating, contract packaging, or packaging supplies—if you invest and engage, AICC can help you.

Or if you’re a large multiplant operation and may think you’ve “outgrown” what AICC has to offer, think again. You and your employees, too, can benefit—if you invest and engage.

No company is too big or too small to benefit from what AICC has to offer. To me, it’s pretty simple: AICC has helped our company, now in its 62nd year, and it can help yours, too.

Joseph M. Palmeri President, Corrugated Packaging, Jamestown Container Cos. Chairman, AICC BOXSCORE www.aiccbox.org

3

Scoring Boxes

Keeping Tabs on Manufacturing Growth

BY DICK STORAT

K

eeping up with trends in customers’ market conditions is an important task for any independent corrugated converter. This article provides information and tips on where to look and how to use the information that is available.

Since most corrugated containers are used by manufacturers to protect their goods during transport and promote them to consumers, this article will focus on the manufacturing sector.

There are two primary indicators of manufacturing conditions in the U.S. The first is the Purchasing Managers IndexÂŽ (PMI), published monthly by the Institute for Supply Management. It provides the results of a monthly survey of more than 400 manufacturing supply chain managers in 18 industry sectors on the first business day following the survey month. That makes it especially useful

4

BOXSCORE November/December 2018

as a first indicator of how manufacturing performed during the month immediately past. The survey results are published as diffusion indexes, which are calculated as the percent responding growth of a factor such as inventory, production, etc., plus half of those reporting no change (the other half of the no change responses are considered as negatives).

The PMI is a composite index based on the diffusion indexes of five monthly indexes with equal weights: new orders (seasonally adjusted), production (seasonally adjusted), employment (seasonally adjusted), supplier deliveries (seasonally adjusted), and inventories. The survey results are not usually revised after initial publication. Additional diffusion indexes, such as prices, backlogs, customer inventories, new export orders, and imports, are also published along with other survey

details at www.instituteforsupply management.org/ismreport.

For those who want to take a deeper dive into manufacturing conditions, the narrative included in each month’s Report on Business discusses statistics in each category and provides selected commentary from respondents. It also lists the commodities up or down in price and commodities or components in short supply.

The chart on the following page shows how the PMI has varied since 2008.

Particularly since the middle of last year, the index has been consistently signaling very broad growth.

The survey asks whether the time needed for delivery of supplies needed by manufacturers is increasing or decreasing, and shows the results as the supplier deliveries index, as shown in the bottom

Scoring Boxes

Purchasing Managers’ Index 70

60 55 50 45 40 Below 50 shows manufacturing contraction

35

Below 42.7 shows economic recession

30 08

09

10

11

12

13

14

15

16

17

SOURCE : INS TIT U T E F OR SUPPLY M A N AGEMEN T

Above 50 shows manufacturing expansion

65

18

Purchasing Managers’ Index

ISM Supplier Deliveries Index

Higher values mean longer delivery times for manufacturing supplies

70 65 60 55 50 SOURCE : ISM

chart at right. Higher values mean longer delivery times. Currently, a historically high percentage of manufacturers are reporting extended deliveries and are commenting that labor shortages and transportation bottlenecks are constraining deliveries. Here is what the September Report on Business had to say about delivery performance: “This is the 24th straight month of slowing supplier deliveries and indicates the supply chain’s difficulty in keeping up with new order and production demand. Lead times continue to extend, supply chain labor issues continue to restrict performance, and transportation issues are limiting supplier execution.”

As strains on the supply chain increase, it becomes less likely that manufacturing growth will climb, even as demand for goods continues to remain robust.

The second widely used indicator of manufacturing growth is the report on industrial production published midmonthly by the Federal Reserve. At the most summarized level, industrial production includes activity in the mining, utility, and manufacturing sectors.

For independent boxmakers, the manufacturing sector is the most important.

Historically, more than three-quarters of all box shipments are used by producers of nondurable goods such as food and other consumables expected to last for three years or less. That makes the series on nondurable goods manufacturing the most relevant for the corrugated industry. Monthly data becomes available around the middle of each month for the preceding month, and revisions to the past five months’ data are provided as more complete information is received by the Federal Reserve.

45 40 06

07

08

09

10

11

12

13

14

15

16

17

18

Supplier Deliveries Index

BOXSCORE www.aiccbox.org

5

Scoring Boxes

Industrial Production

The chart at left shows the monthly performance of the indexed production of nondurable consumer goods since 2016.

Starting in the fourth quarter of last year, production of these consumable goods has outpaced prior-year data every month.

The resulting growth through August this year is 2.5 percent above last year’s eight-month total.

For boxmakers that want to explore factory production in greater detail, the data tab on the Federal Reserve website, www.federalreserve.gov, provides a portal to industrial activity and a detailed set of indexed factory production data for myriad sectors. One of importance to many boxmakers is the food manufacturing sector. The chart at bottom left documents the above-average performance of this sector, where production has grown by 4 percent this year.

Whether you prefer to look at the earliest available ISM survey data or the Federal Reserve’s midmonth indexed data, they both offer the opportunity for you, the independent boxmaker, to keep your fingers on the pulse of your customers’ market conditions.

Nondurable Consumer Goods

4.0%

106

3.5% 3.0%

102

2.5%

100

2.0% 1.5%

98

1.0%

96

0.5% 0.0%

94

SOURCE : U.S. CENSUS

Index (2012=100)

104

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

2016

2017

2018

Percent change year-to-date

U.S. Industrial Production Food

116

0.050 0.045

114

0.040 0.035

112

0.030

110

0.025 0.020

108 106

0.015

104

0.010

102 100

0.005 0 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

2016

6

2017

BOXSCORE November/December 2018

2018

Percent change 2018-to-date

SOURCE : U.S. F EDER A L RESER V E

Index (2012=100)

118

Dick Storat is president of Richard Storat & Associates.

He can be reached at 610-282-6033 or storatre@aol.com.

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Legislative Report

‘NAFTA 2.0’: USMCA Is Good for Our Industry

A

t the time of this writing, the airwaves are saturated with the high drama of the Supreme Court. Seemingly clawing for attention in this “chattersphere” is President Donald Trump’s newly renegotiated United States-Mexico-Canada Agreement (USMCA), the new name for what we have known since 1994 as NAFTA. While the principal provisions of this agreement don’t directly affect the corrugated, folding carton, rigid box, or partition industries, we will be the beneficiaries of the downstream flow of business from our customers who supply into the auto, dairy, and related manufacturing sectors. In addition, new requirements for worker-organizing rights and higher pay scales in Mexico will put that country on a more level playing field with the U.S. and Canada, which for decades have had these protections and higher wages in place.

8

BOXSCORE November/December 2018

I am happy that this new agreement has come through the yearlong negotiating mill.

For many months now, the uncertainty over the future of our $1 trillion North American trilateral trade relationship has cast a shadow on what is otherwise a very prosperous and growing economy. Now, it’s back to business as usual for the U.S., Canada, and Mexico.

Or is it? According to an article in Bloomberg News in early October, Senate ratification of the new agreement is “not a foregone conclusion.” Bloomberg quoted Sen. John Cornyn, R-Texas, as saying, “I know people are still going through the details, but it’s not a foregone conclusion that it will get confirmation by the Senate.”

By way of a civics review, recall that it’s the U.S. Senate that must approve foreign treaties and “advise and consent” on various presidential appointments (reference “high drama of the Supreme Court,” above).

This is where my role as chairman of AICC’s Government Affairs

Subcommittee comes in. Whether you agree with my assessment or not, I think it’s important that we in the manufacturing community, and especially our packaging side of it, express our views on this. Of course, I hope you’ll agree that this is a good agreement that’s good for our economy. And if you do, let your senators know this. We’ve made it easy for you to do this—scan the QR code at the top of this page, and it will take you to the U.S. Senate Directory.

We have yet another opportunity for a win for our economy. Let’s do it!

Eric Elgin is owner of Oklahoma Interpak and chairman of AICC’s Government Affairs Subcommittee. He can be reached at 918-687-1681 or eric@okinterpak.com.

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New Members

Welcome, New Members!

CARAUSTAR INDUSTRIES MARK BUTRYN Vice President of Sales 5000 Austell-Powder Springs Rd. Austell, GA 30106 Phone: 770-745-3707 www.caraustar.com mark.butryn@caraustar.com QUALITY SYSTEMS ENHANCEMENT INC. BASKAR KOTTE CEO/President 1790 Woodstock Rd. Roswell, GA 30075-2138 Phone: 770-518-9967 Fax: 770-518-9968 www.enhancequality.com baskar@enhancequality.com GREEN BAY PACKAGING INC. BRYAN HOLLENBACH Executive Vice President 1700 N. Webster Court Green Bay, WI 54302 Phone: 920-433-5111 www.gbp.com bhollenb@gbp.com UPSOFTWARE SRL SERGIO PEREZ CAMPS Director Colectora Panamericana Ramal Pilar Km. 43,5 Pilar, Buenos Aires 1667 Argentina www.upsoftware.com.ar sperezcamps@upsoftware.com.ar

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BOXSCORE November/December 2018

SOLUCIONES INTELIGENTES EN EMBALAJE S.A. DE C.V. ALEJANDRO URBIE Director General Malintzi 18, 20 y 22 Col. Malintzi Puebla, PUE 72210 Mexico Phone: +52 222-222-4191 www.sie.com.mx alejandro.urbie@sie.com.mx ASC MANUFACTURING S. DE R.L. DE C.V. EDUARDO ARROYO Executive Carlos Rousseau 300 El Milagro Apodaca, NLE 66634 Mexico Phone: +52 818-321-0838 www.ascdemexico.com ventas@ascdemexico.com CAJAS Y EMPAQUES DEL POTOSÍ S.A. DE C.V. JAIME EDUARDO VALDES ZIRATE Director General Eje 114 #444 Int 3 San Luis Potosí, SLP 78395 Mexico Phone: 444-182-6920 www.cajasyempaques.com.mx jvaldes@cajasyempaques.com.mx EMPAQUE MEX S.A. DE C.V. JORGE LUIS CANTÚ RIVERA Dirección General Av. San Rafel 12, Parque Moll Industrial Reynosa, TAM 88756 Mexico Phone: +52 899-926-5805 www.empaquemex.com jorgecantu@empaquemex.com

COMPANY BOX KYLE DEJESUS Vice President of Sales and Marketing 13347 South Point Blvd.

Charlotte, NC 28273 Phone: 980-215-0960 www.companybox.com kyle.dejesus@companybox.com PROVEEDORA DE CAJAS ESPECIALES S.A. DE C.V. JULIO PONCE DE LEON General Manager Industria Textil No. 2328 Fracc., Ind. Zapopan Norte Zapopan, JAL 45130 Mexico Phone: +52 333-636-1802 www.cajas-especiales.com.mx julioponce@cajas-especiales.com.mx GENESIS PACKAGING & DESIGN INC., AN RR DONNELLEY CO. BRUCE LIPSCOMB Vice President of Operations 20 W. 345 101st St. Lemont, IL 60439 Phone: 630-972-3287 www.rrdonnelley.com/genesis bruce.lipscomb@rrd.com

Upcoming AICC Events A well trained workforce increases your productivity.

January Increase Your Influence: Learn to Flex Your Communication & Conflict Management Styles FREE 2 Part Webinar 1/16/2019 & 2/5/2019 Flexographic Printing: Raising the Standard 1/23/2019 » 1/24/2019 Clemson, South Carolina AICC 2019 West Coast Ski Meeting 1/30/2019 » 2/2/2019 Whistler, British Columbia

Monitoring and Controlling Color in the Pressroom 2/12/2019 » 2/14/2019 Renton, Washington Sales Strategies for Today’s Market 2/20/2019 » 2/21/2019 Los Angeles, California

February

AICC 2019 East Coast Ski Meeting 2/22/2019 » 2/24/2019 Stratton, Vermont

Introduction to Flexography and Print Assessment 2/5/2019 » 2/7/2019 Renton, Washington

Digital Xperience 2/26/2019 » 3/1/2019 Charlotte, North Carolina

Learn more at www.aiccbox.org/calendar When you invest and engage, AICC will deliver success.

Members Meeting

Photos courtesy of Dennis Young.

Driving Disruption: The Road to Success

AICC and TAPPI once again drew a bustling crowd of exhibitors and attendees to Corrugated Week.

A

ICC, The Independent Packaging Association, and TAPPI welcomed more than 1,700 attendees and 180 exhibitors during Corrugated Week, September 24–27, in Indianapolis.

Corrugated Week, hosted every four years, offered an incredible opportunity for members to participate in a week of workshops and sessions and be on the cutting

More than 1,700 attendees More than 180 exhibitors

12

BOXSCORE November/December 2018

edge of industry trends, innovations, and new products and services.

The education began on Monday, September 24, with two optional pre-conference seminars: • Bonding Process Variables for the Corrugator, led by Jon Porter, JPorter Consultants. Participants learned to increase their working knowledge of the corrugator bonding process, maximize their runability across all board combinations, and improve board quality.

• Productive Machine Measurement: Benchmarking and Buy-In, led by Scott Ellis, Ed.D., Working Well LLC. The course began with the premise that what you measure is what you get. This course provided the tools and understanding to measure the right things and to

communicate them for peak team member engagement. Methods of building buy-in were demonstrated with multiple process improvement tools, and key production performance measures were practiced.

Participants also worked with a machine crew on real-time setup reduction process.

Keynote presentations offered inspiration and new ideas to attendees: • Jim Porter, president, business development and Latin America, WestRock, offered an update on the industry and how recent innovations will impact its future.

• Jim Craig, Olympic gold medalist, brought his Olympic spirit to Indianapolis to share his experience in leadership and how to succeed.

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Members Meeting

Leaders from AICC and TAPPI cut the ribbon to the Corrugated Week show floor.

Workshops included two digital print panels. The first panel, moderated by Peter Snyder, Harper/Love, brought together digital printing experts to discuss the impact this technology is having on the industry overall. Panelists included: • Larry D’Amico, Durst • Liz Logue, EFI • Sean Moloney, SUN Automation • David Murphy, HP • Dennis Van Ijzerloo, Barberán During the second panel, Jeff Wettersten, president, Karstedt Partners, opened the session by giving an update on digital printing for all activities related to packaging and shared the results of a recent study done by the Specialty Graphic Imaging Association (SGIA) on digital adoption across all packaging segments. He then moderated a panel of boxmaker members that are currently using or exploring the use of digital printing in their company. Panelists included: • Stephanie Shelton, Custom Packaging

• • • •

Rick Darling, Custom Packaging Jeff Putt, DeLine Box John Ballentine, Tango Press Brad Albright, ColorHub

Other sessions included: • Automation/Robotics/Material Handling: Moderated by Eric Sextonson, Ducker-Ringwood, this session brought together panelists to make presentations related to changes and developments in the areas of automation, robotics, and material handling. Panelists included: −− Brian Foley, Automatän −− Doug Vandergriff, WSA USA −− Ronald Schuszler, Ducker-Ringwood −− Dave Ahrendt, Alliance Machine Systems International −− Paul Gilliam, Systec Conveyors, an Inspire Automation Company • Two Days of ERP Software Solutions: During the first day, ERP solution providers presented their

latest disruptive technology. The second day gave time to ERP users to meet with their suppliers as a group to discuss issues, hear suggestions, and allow users to learn from each other.

Panelists in the first session included: −− Jay Farr, Advantzware −− Cosmo DeNicola, Amtech −− Jim Silianoff, Arden Software −− Aleks Zlatic, EFI −− Dana Disney, Kiwiplan • Material Handling/Safety Panel: This panel, moderated by Chris Harris, WPR Services, began with several short presentations on the main safety concerns in box plants today, followed by several forklift companies and safety solution providers who shared insights and solutions.

Panelists included: −− David K. Martin, International Paper −− Leo Karris, Packaging Corp. of America −− Jimmy Helms, Syntech

BOXSCORE www.aiccbox.org

15

Members Meeting

Huston Patterson was highly involved at the conference, particularly with their session titled Navigating the Challenges of Balancing Family Business, Business Leadership, and Home Life.

Huston Patterson was highly involved at the conference, particularly with their session titled Navigating the Challenges of Balancing Family Business, Business Leadership, and Home Life.

16

BOXSCORE November/December 2018

−− Gil Combs, Keytroller, a Division of ID Systems −− Barry Morse, Hyster • Trends and Best Practices for Finding & Keeping the Best People in Your Company: Gene Marks, The Marks Group, offered tools and tips to recruit and retain the best people. He then moderated a panel discussion with converter and supplier members to learn their best practices.

Panelists included: −− Blake Steward, Pacific Southwest Container −− Daniel Brettschneider, CST Systems Inc. −− Bill Nolan, Standard Printing Co. • Strategic Planning, Forecast for the Future: Presenters shared the key economic and market forces that shape the industry, as well as strategies for boxmakers to maximize their futures.

Presenters included: −− Adam Josephson, CFA, KeyBanc Capital Markets −− Mitchell E. Klingher, CPA, Klingher Nadler LLP −− Randy Banks, Sharp International • What’s New: On the show floor, exhibitors were given the opportunity to present their latest innovations.

Presenters included: −− Bobst North America Inc. – BOBST Premium Gap Control for Flexo-Folder-Gluers −− Automatän – Automatän AutoJet VP −− MACARBOX – High Speed Single Pass Digital Cutting and Creasing for Corrugated Board

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Members Meeting

−− Michelman – Michelman’s New OPV for the Digital Preprint Corrugated Market −− HP – HP PAGEWIDE C500 −− Canon – Canon’s Corrugated Solution to the Short Run Conundrum −− BHS Corrugated – BHS Corrugated – SP-S/M/L Splicer Family −− SUN Automation Group – New Patent Pending Replaceable Feed Roll Covers −− CST Systems Inc. – Evolution Starch-Off

−− Thacker Industrial – Thacker Industrial Digital Register −− Hocker North America – New Core Shredder: 120 Cores/Hr −− Kadant Johnson – New Delivery Systems for Steam Showers −− Lachenmeier – Incorporating Ring-Wrapping Technology for Greater Box Plant Efficiencies −− emtec Electronic GmbH – EST – emtec Surface and Sizing Tester −− Graphenea – Graphene Starch Adhesive Enhancer −− Automated Conveyor Systems Inc. – ACS Specialized Solution: Corner Pad Inserter

−− Signode Industrial Group – High-Speed Bundlers Increase Throughput, Reliability & Consistency −− Hitek Equipment – BCM Automated Storage Systems −− Valco Melton – PrintChek – 100% Inline Full Sheet Inspection for Your Flexo or Rotary Die Cutter −− AMC Managing Complexity GmbH – RhineSIM: Plant Simulation in Daily Production Planning −− WPR Services – Alternative Approach to Plant Machine and Area Process

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BOXSCORE November/December 2018

Members Meeting

Information Gathering and Information Pushing −− Erhardt+Leimer – Workflow Solutions for Digital Preprint in Corrugated Operations −− EFI – EFI Nozomi C18000 and the ERP Workflow Ecosystem: Addressing the Future of Efficient Corrugated Packaging −− Kiwiplan – Visual Enterprise Resource Planning by Kiwiplan AICC Emerging Leaders and TAPPI Young Professionals were treated to a special scavenger hunt on the show floor, an exclusive networking event, and a presentation and conversation with Tonya Kowa-Morelli, president, and Joe Morelli, vice president of sales and marketing, Huston Patterson Printers, who discussed their strategies and struggles in Navigating the Challenges of Balancing Family Business, Business Leadership, and Home Life. Joe and Tonya shared their successes and challenges with a transparency and honesty that moved the audience.

“Tonya and Joe delivered a powerful presentation on work-life balance that resonated with all during the Emerging Leaders’ training session in Indianapolis.

The way they have been able to navigate through the challenges of life while also advancing their careers is beyond impressive and is extremely inspiring!” says Lexy Eickelman, corporate marketing manager, Jamestown Container Cos. “Tonya also had a strong message regarding females in business. This really hit home for me, as many of the challenges she has faced, and still faces today, are ones I have also experienced in my career.”

AICC 2018–2019 Chairman Joe Palmeri (right) presented the induction of Kim Nelson, president and CEO of Royal Containers Ltd., into the AICC/RISI Hall of Fame.

2017–2018 AICC Chairman Al Hoodwin (left) presented Terri-Lynn Levesque, AICC Canada director and office manager at Royal Containers, with an appreciation award for her work in the Emerging Leaders program and the industry overall.

BOXSCORE www.aiccbox.org

19

Members Meeting

AICC President Steve Young addressed and engaged Corrugated Week attendees.

Corrugated Week offered several opportunities for attendees in the industry to connect— and reconnect.

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BOXSCORE November/December 2018

During the closing general session, the winners in the AICC/Board Converting News/Corrugated Today 2018 Innovator of the Year Award in the nonmachinery category were announced.

First place was awarded to JS Machine North America for their “System to Seamlessly Integrate All Equipment in the Manufacturing Facility.” Second place was awarded to Kruger Packaging for their “Process for Re-Fibering the Corrugated Structure” entry. And third place was awarded to EFI for their “A System for Accurately Predicting Order Delivery Dates” entry.

The additional finalists were Arden Software North America for their “Customer-Facing Store Front for Direct Packaging Sales” entry, and Amtech for their “A Digital Gateway Connecting the Plant’s Business System to Its Digital Manufacturing Equipment” entry.

Next, the AICC board elections and “changing of the guard” took place as Al Hoodwin, Michigan City Paperbox Co., the 2017–18 AICC chairman, handed over the reins to Joseph M. Palmeri, Jamestown Container Cos., the 2018–19 chairman.

Kim Nelson, Royal Containers Ltd., was then inducted into the AICC/ RISI Hall of Fame. AICC and RISI (Paperboard Packaging Magazine) have joined together to present the Hall of Fame Award since its inception in 1981.

This award goes annually to an individual who has contributed greatly to the benefit and welfare of independent converters in the packaging industry over the years.

Also during the closing general session, Daniel Brunton, managing director, Brunton Business Publications Limited, offered a heartfelt tribute to Tom Vilardi

Members Meeting

of NV Publications, who passed away earlier this summer.

Throughout the week, special networking events were offered to attendees, including a new-member and first-timeattendee reception, the opening night reception that featured mini basketball hoops, pingpong, and other games; a gala at the Dallara Indycar Factory; and an AICC Great Lakes Region reception.

The gala, sponsored by Alliance Machine Systems and AG Stacker, allowed attendees the chance to ride in a race car, drive a simulator, learn the history of the Indy car, and take the pit-stop challenge.

The AICC Great Lakes Reception, held at the Rathskeller Restaurant and Bar, was open to all, and sponsored by Litho Press. The “Oktoberfest”-themed event brought members from around the country to network and mingle.

Thursday morning, 75 attendees toured three box plants: • Litho Press, which has served the industry since 1953, showed four offset printing presses, the VETEK KX3 Pro Digital Printing Press, and two Kongsberg ESKO Cutting Tables.

• Flutes Inc. (Schwarz Partners).

Established in 1998, Flutes is a specialty sheet feeder operating a 98"

MWU corrugator and two 65" Bobst Asitrade Laminators.

• Capitol City Container Corp. offered visitors a look at their new Solarco Short Run Box Machine.

AICC’s next national meeting is the 2019 Spring Meeting, Sales Managers Forum, and Annual Independents’ Cup Charity Golf Tournament, April 1–3, being held at the Trump National Doral Resort in Miami. Registration will open in December 2018. Learn more at www. aiccbox.org/calendar.

The Great Lakes Reception gave show attendees the chance to relax and network with a variety of good food and drinks.

BOXSCORE www.aiccbox.org

21

Members Meeting

THANK YOU, SPONSORS! AICC and TAPPI are grateful for the support we received from our members. Meeting sponsors included:

Platinum Sponsor • ARC International

Gold Sponsors • EFI • SUN Automation Group • Mitsubishi

Other Meeting Sponsors • ADI/PDM Trade Group • Advanced Equipment Sales • AG Stacker • Air Systems Design Inc. • Alliance Machine Systems • ARC International • Baumer hhs • BHS • BOBST • Board Converting News • BW Papersystems • CEL Chemical • Corrugated Today • EFI • EMBA

• FOSBER • Geo. M. Martin Company • Global Box Machine • Harmax Rollcon • JB Machinery • Kiwiplan • Lachenmeier/Muller LCS • Mitsubishi Heavy Industries • Rochester Midland Corporation • Signode • Stafford Corrugated Products Inc. • Sun Automation • TAPPI Journal • Valco Melton • Young Shin/Stock

• ADI/PDM Trade Group • Alliance Machine Systems • AG Stacker • ARC International • BHS • BOBST • BW Papersystems • CEL Chemical • EFI • Flexi-Lox

• FOSBER • HAIRE Group • Harmax Rollcon • Harperlove • JB Machinery • Kiwiplan • Mitsubishi Heavy Industries • Signode • SUN Automation Group

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BOXSCORE November/December 2018

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Ask Ralph

A Reflection Heading Into 2019

BY RALPH YOUNG

I

t’s been our practice in these bimonthly communications to share what happens in the national meetings, webinars, seminars, summits, and attendance at technical committees where we represent you as members and associates. We continue with the well-attended and well-received Corrugated Packaging Fundamentals seminars as they move them around the four corners of the country to a location close to you. There is a constant daily review of global news articles that may have an impact on the independent’s space. We review news feeds from industry newsletters and follow six security analysts to measure the pulse of the industry.

To keep our regular readers—and new ones—current on the history of these technical articles, yearly updates of the last six submissions will now be published.

In the past, these bibliographies were run once about every three years.

• “Combining Really Low Basis Weight Boards” • “The European Invasion” • “Fluted vs. Paperboard,” with its excellent summation of highlights from the extensive breakout session at the 2018 Spring Meeting.

• “Substrates” • “Summer Reading List,” which includes mention of the Packaging School module on Warp: Its Cause and Remedies, and the white papers on both score cracking and microfluted and paperboard.

Economic Update Economic reports from AICC are prepared twice a year to present to the Chemical Packaging Committee of the Institute of Packaging Professionals. As

active members in this group, we participate in the health of the organization on your behalf. This is the hazmat gathering where our AICC network is expanded and the Association’s knowledge increases.

• Don’t miss the midmonth industry-​ focused four-page economic report, Scoring Boxes, from Richard Storat and Associates.

• The domestic economy continues along at a positive pace, but the inflation rate has risen to 2.9 percent.

• Some believe that the momentum in paper-based packaging demand may have peaked, yet it remains very high.

• The demand for beverage cans is down 4 percent YTD. CPG food demand continues to lose ground.

• Industrial production is up to 2.8 percent YTD. China’s industrial production is up 6.1 percent year over year.

• While we look to the Institute for Supply Management Index as a coincident indicator of box shipments, it has an R2 value of only 0.62.

• Other than Social Security, China remains the largest owner of U.S. debt.

• E-commerce continues to outpace all other elements of the economy and grows at an estimated 15 percent AAGR. This has a very positive impact on corrugated shipments.

• The U.S. stock market is up 5.4 percent YTD at the time of this printing.

• WTI crude is up from $60 to $70 per barrel this year.

• Former newsprint mills and coated-​ paper mills, some at very low costs, continue to be converted by nontraditional suppliers and focused on the lightest basis weight. Conversion

•

• •

• •

• •

•

to linerboard and not medium is the design, as the former has higher returns. The quality of final products is uncertain at this time.

Security analysts who follow our industry still focus on tons and not the downward shift to use of more recovered fiber, waste paper, and lighter constructions of corrugated packaging. This phenomenon is occurring largely in Eastern Canada and the U.S. Northeast and Upper Midwest. Even with downward movements of less fiber, we see an increase yield in box production of 6–7 percent, so tons have become irrelevant.

Monetary returns, as measured by EBITA, have never been higher.

Exports of containerboard remain steady at 13.2 percent of domestic production, but margins are thinner.

Housing starts remain positive, but at a slow growth rate.

Roll stock inventories of containerboard remain stable at four weeks of supply.

The mill operating rate was at 97.2 percent of capacity.

Boxboard production, the sister business to containerboard and corrugated, sees shipments at a steady pace. Several old mills have closed.

Headwinds: −− China reduced purchases of OCC and has now added a 25 percent tariff. −− China containerboard manufacturing is moving to other countries, and they have made three investments here in the U.S. −− China’s stock market is down 25 percent this year and is highly overleveraged.

BOXSCORE www.aiccbox.org

25

Ask Ralph

−− China is still subsidizing countries such as Pakistan, North Korea, and now African countries, with no chance of being repaid. −− Russian exports of gas and oil constitute 52 percent of their GNP. Per capita income has dropped 13 percent this year.

• Digital printing impact on older technologies: −− Consolidations continue recently with WestRock and KapStone, with independents holding on to about 20 percent of box shipments.

−− Transportation costs have almost doubled, and there is a shortage of truck drivers. −− There are now six other nations that have ownership positions in domestic containerboard operations. −− Trump puts economic pressure on the European Union, Mexico, Canada, and Japan. −− 3Q18 GNP up 3.5 percent. −− One-third of global retail leaders admit that the packages they ship worldwide are at least

double the size of the actual product inside. alph Young is the R principal of Alternative Paper Solutions and is AICC’s corrugated technical advisor. Contact Ralph directly about technical issues that impact our industry at askralph@ aiccbox.org.

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BOXSCORE November/December 2018

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Selling Today

Finding and Communicating Your Competitive Advantage

BY TODD M. ZIELINSKI AND LISA BENSON

I

t’s hard to disagree that the global market is highly competitive. The long-term success of a company is determined by its ability to find a competitive advantage over its rivals. Finding a space within the industry that isn’t being exploited or a space where your business excels will give you a competitive advantage. It could be your company’s product line, cost structure, manufacturing process, relationship with suppliers and distributors, logistics, service, or something else completely.

But just being different isn’t enough.

You need a competitive strategy. An effective competitive strategy will allow a company to maintain a profitable and sustainable position over its competitors.

Understanding the Industry and Your Competitors The first step in creating a competitive strategy is to understand your industry and who your competitors are. Most companies have too narrow a view of their competitors. Michael Porter,

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BOXSCORE November/December 2018

a Harvard business professor and author of 19 books and numerous articles, wrote How Competitive Forces Shape Strategy, which discusses five forces of competition. The article was first published in the Harvard Business Review in 1979 and updated in 2008.

His five competitive forces are still used today as a simple framework for assessing the competitive position and strength of a business or business line within an industry.

The five forces of competition at work within industries include: Rivalry among competitors— 1 High rivalry among competitors through price discounting, new product introduction, marketing, and service improvement can limit the industry’s profitability.

2

Threat of entry—Profitable industries attract new entrants and imitators. New entrants put

pressure on prices, costs, and the rate of investment necessary to compete, which decreases profit potential for existing competitors.

Barriers to entry, such as capital requirements, economies of scale, customer loyalty, etc., can give incumbents an advantage. products or services— 3 ASubstitute substitute product that performs the same function as an industry product and offers customers an advantage (e.g., price, functionality, convenience) can erode industry profitability. of suppliers—Powerful 4 Power suppliers may charge higher prices, limit quality or services, or shift costs to industry participants. of buyers—Savvy customers 5 Power can play one company against another, demanding lower prices or higher quality.

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Understanding the forces that shape your industry is the first step to developing a competitive strategy. Looking at the industry as a whole provides a baseline for evaluating your company’s strengths and weaknesses. To increase profitability, companies can take action against the industry forces, such as positioning your company where the forces are weakest (e.g., focusing on a niche group that is underserved by your competitors), exploiting changes in the forces, or reshaping the forces in your favor (e.g., making it difficult for customers to leave through technology, convenience, services, etc.).

A company that can position itself well within the industry may earn high rates of return even in industries that perform poorly. In Porter’s book Competitive Advantage, he discusses the two types of competitive advantage a company can have: low cost or differentiation. Both of these have focus subsets: cost focus and differentiation focus. Cost leadership and differentiation strategies are applied broadly across an industry, while the focus strategies are applied to a narrow or niche market.

Using SWOT to Match Strengths to Opportunities In industries where forces limit a cost leadership position, differentiation either to the broad market or a focused underserved segment will be necessary for long-term growth. This is where having a clear understanding of the competitive forces is critical. It is not enough to just be different; you need to match your differentiation to a market need.

One way to determine your position is by conducting a SWOT (strengths, weaknesses, opportunities, and threats)

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BOXSCORE November/December 2018

analysis. The first two components are an internal look at your company to see where you do well and where you need work. Opportunities and threats look at the external environment.

A SWOT analysis should be based on your customer perceptions and not your own. Many companies, for example, feel they have excellent quality and the best people. If your competitors can say the same things about themselves, it’s probably not a significant strength, and if your customers don’t agree with you, it is definitely not a strength.

The SWOT analysis allows you to focus on competitive advantage by matching strengths with opportunities, which will lead you to your positioning within the market. It can also give you an opportunity to see where weaknesses can be converted into strengths.

Implementing and Communicating Your Competitive Advantage If your analysis uncovered significant changes that require new hires, staff training, policy or procedure changes, acquisitions, capital improvements, etc., you will need a plan or series of plans for carrying out the objectives. Tracking and measuring the implementations is critical to ensuring they stay on schedule and are effective once implemented.

Once you have your competitive advantage nailed down, you will need a 20- to 30-second elevator pitch that effectively communicates your position, speaking to the value you bring, not to your capabilities. Effective communication means that your audience understands what you are saying. Internal acronyms, jargon, unnecessary words, and complicated sentences just muddy the waters. Just because you

know what you mean, it doesn’t mean others will understand. Your message needs to be crystal clear. Simpler is better.

Once you have your message perfected, you must communicate your strategic advantage to the marketplace. Your plan should focus on your target market, market communications (e.g., direct mail, e-blasts, social media, blogs, case studies, phone calls, tradeshows, etc.), budget, and schedule. Develop a plan with a schedule to push your message out into the marketplace (ensure all your employees are familiar with your message as well). The key is to ensure your competitive advantage message is consistent in all forms of communication.

Once your message is out in the marketplace and leads start coming in, it’s easy to forget about your target market and competitive focus. Stay true to your plan, and don’t be afraid to turn away business that doesn’t match your positioning. Saying no strengthens your message and frees you up to concentrate on clients that will develop long-term relationships with you and continue to add to your profitability.

Todd M. Zielinski is managing director and CEO at Athena SWC LLC. He can be reached at 716-250-5547 or tzielinski@athenaswc.com.

Lisa Benson is senior marketing content consultant at Athena SWC LLC. She can be reached at lbenson@athenaswc.com.

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Tackling Trends

Ready to Succeed

BY JOHN CLARK

S

everal years ago, Adm. William H. McRaven, ninth commander of U.S. Special Operations Command, was asked by a young man what he should be doing to one day become a U.S. Navy SEAL. McRaven’s response was short and direct: “When you get up in the morning, make your bed.”

While it sounds like the least likely response possible, it could not be more on point. Success in any job or endeavor is not a destination, it is a journey—a journey that requires sacrifice, dedication, innovation, and the courage to get up in the morning and keep moving forward with the attitude to never, ever give up.

Sometimes the journey is difficult. Those challenges are teachable moments that prepare you for later success.

Success has no permanent address. It is a vagabond, constantly moving and shifting as times and circumstances intervene.

Occasionally you get to restrict it to a narrow patch that you can claim ownership of and shout “mission accomplished.”

Though nebulous by nature, there are certain characteristics that successful teams and companies use to get the best from their people and processes:

team members must believe 1 The in the project and the leadership.

Everyone wants to play on the winning side; no one likes to lose. The team thrives when communications are clear, schedules are known and attainable, and the communications flow freely in both directions between the staff and the management. Leave out one of these components, and the staff will be prone to drift out of focus. In the

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BOXSCORE November/December 2018

world of sports, we have seen a coach lose the team, and it invariably leads to a breakdown of morale and performance, and things spiral out of control.

Keep plans clear and concise. During 2 World War II, by law the president of the United States had to provide the orders for Gen. Dwight D. Eisenhower to invade Europe. The logistics were impossible, the manpower requirements were huge, and then there was the matter of moving millions of soldiers to their point of attack. Franklin D. Roosevelt’s orders boiled down to five words: Invade Europe, defeat the Germans. Concise, clear, and when you think about it, there was really nothing else that needed to be said. individual doesn’t win; the team 3 The wins. No matter how well an individual performs, it is the team that gets the reward or the blame. It is incumbent on every member of the team to put the next person or the next process in a position to be successful. Leaving things undone or shoddily performed destroys budgets and timelines, but most significantly, it kills morale. leader is always responsible.

4 The Someone has to be responsible; someone has to be accountable. The project leader is the person who selects the team, provides the direction, and builds the information and reporting channels to keep the project exposed to all stakeholders. The project leader sets the tone, defines the agenda and the lines of communications, establishes

the timelines, and holds people accountable. With a strong project manager who knows how to manage, you have a great chance at success.

Without such a leader, your chances of success are diminished.

Preparation Meets Anticipation Meets Opportunity In a mature and competitive industry such as packaging solutions, the introduction of lighter-weight papers, digital printing, and decreased order size repeated more frequently has created a world of opportunity for those converters who are willing to adapt and change to face the new normal of business and commerce. Time frames are condensed, response times border on instantaneous, and with cellphones and computers, there is no place to hide. Rather than fight this new reality, embrace it.

As it invariably does, it all comes down to people. It comes down to leadership.

Develop leaders, buy leaders, or be a leader. But take the bull by the horns and make things happen.

And at the end of the day, when the workday is done, the talented project manager gets to go home to a bedroom where the bed has been neatly made.

John Clark is director of analytics at Amtech Software. He can be reached at jclark@ amtechsoftware.com.

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Andragogy

Sell Value, Not Boxes

BY R. ANDREW HURLEY, PH.D.

I

t was a hot summer in the Southeast U.S. And after sweating through much of it, I decided it was time to level-up my HVAC. As any savvy consumer would do, I Googled “HVAC” and familiarized myself with the language: terms like SEER rating, BTUs, tonnage, and refrigerants. I checked out pricing—and felt prepared to go head-to-head with the sales rep. I envisioned the conversation: I’d call, a salesperson would show up, I’d receive a few brochures with the goodbetter-best unit lineup, and be pressured to buy top-line.

I couldn’t have been more wrong.

At first glance, my “salesperson” didn’t appear as I anticipated—he looked like an installation technician. Clipboard, uniform, name patch, and certified details.

Looked legit. After a brief introduction, Jim, my HVAC-certified specialist, asked questions about my current installation and permission to take measurements.

Jim walked throughout the house and measured each room, used various instruments, checked the attic, and literally crawled through the crawl space.

I was impressed.

After 25 minutes of inspection and notetaking, Jim said he was ready to discuss. He plainly laid out his findings on a well-prepared template. But, it was how Jim articulated the decision that was impressive; he asked me to describe how much control I wanted over my comfort.

We discussed allergies, temperature fluctuations, and all sorts of conditions that became variables across a decision that I needed to make.

I’m telling you this story because Jim sold comfort, not HVAC units. He related his product to a value that I (the buyer) needed to define.

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BOXSCORE November/December 2018

I’ve watched a lot of packaging sales folks focus on the features and benefits of cartons and containers versus the value brands are seeking. Most board companies make great board—so this strategy usually turns to a discussion on price really quickly—making you (the salesperson) the bottleneck in the decision-making process.

What are customers really asking for when buying packaging? I think it’s one thing: certainty. Just as the HVAC unit provides comfort, packaging must bring certainty and confidence to my launch.

Knowing the why behind a sales call can be understood by asking questions around common values. Jim understood this when he asked me how long I want to wait to reach my desired comfort level, just as you should be asking what

transport hazards are important to defend against, whether high attention to print is desired on shelf, and about the importance of an unboxing experience. All of these concerns can be addressed through the tools we have as packaging professionals (transport testing, eye tracking, structural design, and proper material selection). The sophisticated packaging solutions provider communicates packaging merit and keeps the conversation on value, not the box.

R. Andrew Hurley, Ph.D., is an associate professor of packaging science at Clemson University. He can be reached at me@drandrewhurley.com.

Thank you Education Investors These companies are making a significant contribution to the online education available to all AICC members.

For more information, contact Mike D’Angelo, Vice President, 703.535.1386 or mdangelo@aiccbox.org.

Marketing Mix

Changing Attitudes Into Action

BY JOAN SAHLGREN

W

e marketers spend a lot of time wondering how to change ideas into action— how to trigger consumer behavior change. Put simply, how do we get people to buy more of our products? The Paper & Packaging – How Life Unfolds® campaign surveys consumers after we run our advertising on TV to see whether people recognize our paper-centric message. We ask them how they feel about our industry’s products after they’ve seen the ads and compare those responses to the answers from our previous waves of research. This way, we can measure how the messaging is affecting potential behavior. If we change an attitude, we are on the way to a change in consumer behavior.

For example, we ask people whether they agree or disagree with the following statement: “Paper-based product packaging provides important cues about what I’m buying better than other types of packaging.” Baked into this assertion are two ideas: that paper is useful graphically for brands and, as a consumer, that it does this job better than packaging made from other materials. We have seen improvement in this response over six waves of research since the start of the campaign (2015), with now 61 percent in agreement with this statement. We’ve also seen statistically significant improvement on the statement “Paper-based product packaging is an essential part of everyday life,” with movement from 59 percent to 66 percent.

What might this mean? As people see and appreciate paper-based products and packaging’s role in their lives, they also value what it does for them. Combine that with the strong attitudes and

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BOXSCORE November/December 2018

understanding that paper-based packaging is recyclable—in the survey, we’ve seen statistically significant improvement here, with 84 percent agreeing paperbased packaging is recyclable, up from 76 percent—and you can logically anticipate that people will choose, use and reuse, or recycle paper if given the choice.

Our industry can use this to talk to customers, reassure consumers, and be reassured ourselves that people value our products. Our defensive posture on

complicated industry issues can, perhaps, melt away in a more optimistic marketing environment in which consumers are responding more positively than ever to our products.

Joan Sahlgren is senior director of public relations at the Paper and Packaging Board. She can be reached at jsahlgren@paperand packaging.org.

Source: Isobar, Attitude and Use Survey for the Paper and Packaging Board, April 2018. (n= 698).

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AICC TOOLBOX.. ................................................ 39

ONLINE EDUCATION .................................... 40

BOXSCORE TIPS, TRICKS, AND SOLUTIONS TO BETTER BUSINESS

AICC Toolbox

AICC Update on Association Health Plans

E

arlier this year, AICC embarked on investigative endeavors related to the U.S. Department of Labor’s (DoL) introduction of new rules on Association Health Plans (AHPs).

The Trump administration issued an executive order in January creating preliminary new rules for AHPs, kicking off initial and final commentary periods as required by law. On June 19, the DoL issued a final rule implementing the AHP executive order.

AICC, based on action taken by the board of directors, engaged its insurance provider to advise us on how we can make this a member benefit to lower health insurance costs for member companies that have fewer than 75 employees. This is the most attractive feature of belonging to an AHP—allowing small companies to be rated by insurance carriers as large companies. This designation removes some restrictions put in place by the Affordable Care Act (ACA), resulting in cost reductions. AICC surveyed membership in the second quarter of 2018, and 85 percent of respondents expressed interest in AICC providing an AHP to its members.

It’s time for an AHP update. Simply said, not much has happened. While many associations such as AICC are ready to be willing participants, insurance companies have not really stepped up to embrace the new rules. This is not because they don’t want to, but rather because the path to do so is not clear. The main reason is because the ruling, as written, does not supersede states’ ability to regulate insurance within their borders. This makes it difficult to launch an AHP on a nationwide basis. The DoL stresses that the rule “does not modify or otherwise limit existing state authority” to regulate AHPs. On top of that, another limitation to pursuing an AHP launch at this time is that a lawsuit has been filed by Democratic attorneys general in 11 states and the District of Columbia. The suit alleges that the DoL rule was an “unlawful run around” the consumer protections offered in the ACA. AICC in both 2017 and 2018, as one of the issues brought at the annual Print & Packaging Summit

in Washington, D.C., urged Congressional action in favor of AHPs. AICC’s position is that legislation of a matter important to membership is always preferred over executive action. Back in March 2017, the House of Representatives passed H.R. 1101, the Small Business Health Fairness Act of 2017, by a vote of 236 for, 175 against, and 18 other.

The bill “allows small businesses to join together in association health plans across state lines through ‘bona fide’ associations to become larger purchasers of health insurance. Specifically, the bill relieves small businesses that form AHPs from costly state-mandated benefit laws that often make coverage prohibitively expensive.” The measure passed over to the Senate, where it remains in committee.

AICC will continue to monitor events regarding AHPs and keep you, the members, informed as the process unfolds.

We understand that health care and health insurance costs continue to rise, and we want to provide a platform to give membership an opportunity for relief.

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Good for Business

Online Education

Easier Than Ever

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ome days, technology can get the better of anyone, especially when you are trying something new.

Even though we tested and retested and retested, when AICC launched free online education, we know some people had trouble logging in to access the now more than 50 free online courses.

We heard you. Over the summer, we enlisted the help of a developer to make it easier and resolve the login issues members face.

Now all employees at AICC member companies, general and Associate alike, can learn and help build the company in four simple steps: 1. Sign-in on www.aiccbox.org (there is a sign in link near the top of the page).

• This takes you to SocialLink, the members-only section of the website.

• If you have forgotten your password, just give us a call at 703-836-2422, and any AICC staff member can reset it for you.

2. Click “Quick Links” at the top of the page, and click “Free Online Courses for Members.”

3. Click “See all courses” to access more than 50 free online courses to build your skills.

Some courses currently available include: • Essential Principles of Water-Based Flexo Inks: The course provides the basics needed for printers and suppliers of water-based inks. Created with the support of BCM Inks.

• The Corrugator: This course focusing on the corrugator dives into key sections and systems of the corrugator, including the wet end, dry end,

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•

•

•

•

and the corrugator control system.

Created with the support of Fosber.

Optimizing the Flexographic Printing Process: This course covers flexo printing from the beginning of the process to optimization techniques for maximum performance. Created with the support of Pamarco, JB Machinery, Printron, and Absolute.

Safety Basics (English and Spanish available): This course provides employees with the knowledge and skills required to safely perform their assigned duties, recognize potential hazards, and avoid them.

Paperboard Cartons: You will learn how paper is sourced and manufactured, what paperboard grade is best for your application, and the possibilities for creating unique, eye-catching paperboard packaging designs. You will have access to powerful tools that help you select styles, designs, point sizes, print processes, and pricing.

Keeping Score: How to Read Financial Statements: Demystify the four most common financial statements: the purpose of the balance sheet, the

income statement, the cash-flow statements, and the ratio analysis.

This course offers a practical approach for people of all levels of your packaging company to keep score using these tools.

• Fingerprinting the Flexographic Press: Learn to validate the settings on any flexographic press in order to diagnose issues for improvement and to gain speed, quality, and repeatability of print.

• Faster, Better, Smarter With Value Stream Maps: This course gives an essential understanding of the tools for analysis and improvement of material and information flow. The various uses of value-stream mapping (VSM) will be described. Participants will learn to map material flow through the supply chain, production, and warehousing to eliminate bottlenecks and reduce inventory costs.

These and the other courses available will enhance your skills and the skills of your team members. Let us help you grow.

When you invest and engage, AICC will deliver success.

g n i r i H o t h t a P A New s e e y o l p m E d e Skill

Available to AICC Members January 2019

In Remembrance

Tribute to an AICC Great

Richard F. ‘Rich’ Eastwood: Industry Leader and Hall-of-Fame Winner

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ichard F. “Rich” Eastwood, chairman and CEO of The Central Group in Mississauga, Ontario, passed away on Saturday, September 15, in Toronto, following a long illness. He was 81.

Rich Eastwood started his career in the corrugated packaging business as a sales representative for Select Carton Services in Toronto. In 1980 he purchased Central Box & Container Ltd., a sheet plant in Mississauga. In 1985, recognizing the growing opportunities provided by fine-flute, or microflute, corrugated, his partners and he started Independent Corrugator, a specialty sheet feeder also located in Mississauga.

Rich was an avid student of the latest equipment and machinery in the industry.

In the early 1980s, at an AICC meeting, Rich led a workshop discussion on how a sheet plant can justify the acquisition of a flexo folder gluer, a machine that, at the time, produced order volumes more common to large, vertically integrated companies than to sheet plants. His research on this workshop later appeared in articles published by Boxboard Containers and Paperboard Packaging, the two leading corrugated industry publications of the day. His study of equipment led to his interest in high graphics on corrugated and the market opportunities they would bring to the industry. Through friendships gained through AICC—most notably with Jack Grollman of Triangle Container Corp. in Philadelphia—Rich positioned his company as one of the leading producers of high-quality flexographic direct

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Richard F. “Rich” Eastwood, owner of Central Graphics and Display, now The Central Group,served as president of AICC in 1993–94. He is shown here at the podium during his presidential year.

printing on combined board. Central Box & Containers’ growing reputation as a corrugated graphics house led to the company’s rebranding to Central Graphics & Display, later to become simply The Central Group. Under the leadership of Rich’s son, Rick Eastwood, The Central Group has become a premier provider of point-of-purchase and marketing services to major consumer packaged goods (CPG) companies and retailers in Canada and the United States.

A visionary industry leader, Rich was an active member of AICC Canada,

AICC International, and the Canadian Corrugated Case Association (CCCA), now called the Canadian Corrugated & Containerboard Association. He served on the board of directors of CCCA from 1985 to 2004. He also served on the board of AICC Canada and as regional vice president for AICC International, representing AICC Canada from 1986 to 1989. In 1989, he became a member of AICC’s executive committee, and in 1993–1994 he served as president of AICC International. Recognizing his contributions to the independent

In Remembrance

sector of the North American and global corrugated industry, AICC, in 1998, named him a recipient of the AICC Hall of Fame award.

During his tenure on AICC’s board of directors, he served as chairman of the Association’s educational development committee, the convention content committee, and packaging design committee, among other leadership posts. He and fellow board member Bill Flinn of Scope Packaging founded the Association’s “Sons of Bosses” group to foster future succession for AICC’s family businesses.

Sons of Bosses is now named “Emerging Leaders.” He and Flinn also advocated for a North American corrugated machinery show, and from those efforts, the industry

now has SuperCorrExpo, a quadrennial show jointly owned by TAPPI and AICC. He was also a founding board member of the International Corrugated Packaging Foundation (ICPF), and in 1999 he was instrumental in chartering the Canadian arm of the foundation. He was a longtime supporter of the packaging education programs at Humber College and Mohawk College, the two principal schools in Ontario offering packaging-​ related education. He was also a longtime member of the Rotary Club Canada.

He is survived by his wife, Beverley; son, Rick (Andrea) Eastwood; daughter, Barb (Kevin) Spears; and four grandchildren, a sister, and a brother. He enjoyed spending time in Muskoka, Ontario, golfing,

fishing, playing tennis, and gardening; he skied until he was 80. He enjoyed cheering on his teams: the Maple Leafs, Raptors, Blue Jays, and Argonauts, as well as every Canadian athlete. Richard and Beverley enjoyed traveling, meeting lifelong friends in Europe, Great Britain, the Caribbean, and Australia. They wintered every year in Palm Desert, Calif., with great friends and worked on educational programs at Indian Ridge Country Club.

Memorial contributions may be made in Rich’s name to Sunnybrook Hospital-Odette Cancer Centre, https:// donate.sunnybrook.ca/tribute, or mailed to Sunnybrook Foundation, 2075 Bayview Ave., Suite KGW-01, Toronto, ON M4N 3MS, Canada.

The Culture We Want Employees act like they own the place Highly productive & profitable People WANT to work here

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FISHB

RAM

DIAG

THE HANDBOOK

THE TOOLS

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Welcome, AICC 2018–2019 Chairman

JOE PALMERI! Meet the man forging the Association’s path forward through engagement

By Geoff Williams

J

oseph M. Palmeri’s life would be a lot different if his dad had been less ambitious—or if his father had worked for a mean-spirited boss who didn’t want to see his employees do well.

Of course, many people’s fortunes are made or lost by extenuating circumstances. Still, it’s an interesting story, how the 57-year-old Palmeri came to have the title of president, corrugated packaging, at Jamestown Container Cos., which is headquartered in Falconer, a small village near Jamestown, N.Y. Palmeri, however, is based out of Macedonia, Ohio, near Cleveland. Jamestown Container has five manufacturing plants.

Palmeri’s father, Joseph R. Palmeri, was 18 years old in March 1956, when Jamestown Container was founded by Glenn Janowsky. Before 1956, Janowsky was working for a container company in Buffalo when he decided to start his company. He relocated to Jamestown, which explains how the organization got its name. Janowsky started his business with

“My master’s thesis was on water-based flexographic ink specifications and the effect they have on the ability to print within tolerance UPS symbols on single-wall corrugated board. Pretty exciting stuff.” five employees, and Joseph R. Palmeri, who started off running machines, worked his way up, becoming a supervisor, then the plant manager, then the general manager, and eventually up to an ownership position. The elder Palmeri is still working for the company as its chief operations officer. Janowsky passed away in 2006 at the age of 80. His son, Bruce Janowsky, is Jamestown Container’s CEO. Joseph M. Palmeri—or Joe, as everyone calls him—has been immersed in the packaging industry from his childhood

days. Well, we’ll let part of our interview with him tell the next part of his story.

BoxScore: Did you know as a kid that you’d want to be part of this business?

Palmeri: I was exposed to it early. I would go down to the plant and do odd jobs for extra money, like painting or weeding and trimming outside the building. But actually, during summers in high school and college, I always worked somewhere else. I’d work at supermarkets, for instance. I never worked in the plant until I went to graduate school.

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With hard work from the office to the plant, Jamestown Container's aim is to help move its customers forward with high-quality service.

BoxScore: So, was it in graduate school that you decided to join the business?

Palmeri: Along those lines. I was an economics major at Niagara University, graduating with a Bachelor of Science in economics. After graduating, I went to work on my master’s degree. I have a Master of Science in packaging from the Rochester Institute of Technology.

My master’s thesis was on water-based

flexographic ink specifications and the effect they have on the ability to print within tolerance UPS symbols on single-​ wall corrugated board. Pretty exciting stuff. I started working at our sheet plant in Medina, N.Y., while I was working on my master’s. I started there on March 26, 1984.

BoxScore: What were you working on at the sheet plant back then?

“I grew up going to AICC meetings. I’ve been attending them since I was 13 or 14 years old. I’d sit there listening to these guys talking with my dad about cardboard and packaging.”

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Palmeri: I started working in the factory on various machines. It’s the best way to learn the business. The very first thing I did, day one, was working on [a] stitcher, doing boxes for Fisher-Price toys. A few of the guys I worked with back then in the factory are still working for us today in various office positions. I eventually worked my way up to many of the different departments in that location and corporately—areas such as design, customer service, quality, scheduling, shipping, supervision, plant manager, general manager, etc.

BoxScore: So, what do you enjoy about being in this industry?

Palmeri: I like the manufacturing side.

I like the machinery. Everything about it. In fact, yesterday, we were having a meeting in the conference room, and you could hear the die cutter just pounding.

It’s the sound it makes when the cutting die is striking the corrugated sheet against the blanket and thus cutting out the shape. Hearing that pounding means it’s running fast, and fast is fun. Those of us in [the] meeting who had ever worked in the plant just looked at each other and smiled. It’s a fun sound. No matter if it’s a die cutter, flexo folder gluer, or specialty gluer, you don’t get tired of the sound and watching it run. It also brings back memories when you were the one operating it or feeding it or trying to keep up tailing off it. Like I said, fast is fun … and the creative process of the business is rewarding, too. You’re creating something that the consumer uses, and then he or she can recycle it, and then they’ve got to buy a new one. [Laughs.] But, you know, I grew up around all of this. I grew up going to AICC meetings. I’ve been attending them since I was 13 or 14 years old. I’d sit there listening to these guys talking with my dad about cardboard and packaging.

A Husband, a Father, a Leader Palmeri’s career flourished, and he fortunately did well with his personal life as well. Palmeri has been happily married for 31 years; his wife, Dianna, is a real estate agent with Howard Hanna Real Estate Services. They moved to Macedonia in 1997 after Jamestown purchased a sheet plant from Willamette Industries. “That’s when Jamestown Container entered the Ohio market,” Palmeri says. “I was the plant manager back then.”

The Palmeris have four children, most of them grown and all living productive lives. Their daughter Alison, 28, is an attorney in Pittsburgh, working for a regulatory compliance consulting firm. Elliot, 25, is an athletic trainer and currently doing a graduate internship in athletic training at Thiel College. Gabrielle, 22, is a senior at the University of

Dayton, majoring in dietetics. Their son Christopher, 26, is the third generation of Palmeris to work at Jamestown Container, employed as a technical advisor.

Palmeri has been involved with AICC since he was a teenager and a member for quite a number of years, and he’s taken on a number of leadership roles in AICC as well. So, it’s no surprise that he was made the most recent chairman. It was a path he has been on for a long time.

BoxScore: What do you hope to accomplish as the 2018–2019 AICC chairman?

Palmeri: My theme is to continue with the AICC tagline: “When you invest and engage, AICC will deliver success.” No matter what your size, whether you’re a small plant or a mature company that’s been around forever, you aren’t too small or big for the benefits that AICC offers.

But it starts with investing and engaging.

You invest as a member and engage with the things you offer to the people you meet. And when you join these groups and start interacting with everyone in AICC, good things happen.

BoxScore: Is it harder, when the economy is good, to get people to recognize how valuable AICC is? I can imagine some potential members are hearing from people like you and saying, “Well, thanks, but I don’t need your help. Business is on fire. I just don’t have the time to invest and engage.”

Palmeri: Actually, now’s really the time, when things are good, to get involved with AICC. When the economy turns, business conditions turn, and it becomes harder for people then. They say, “I just want to keep my head above water. I don’t want to spend the money or time to be involved with AICC.” Now, I’d make the case that it’s smart to be involved with AICC whatever the economy is doing, but now when things are good, it’s the easiest time to get involved and make things happen and find new opportunities

Hands-on teamwork exemplifies the working environment at Jamestown Container.

The familial culture makes Jamestown Container a special place to work.

Even in company meetings, Palmeri leads with a smile.

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“No matter what your size, whether you’re a small plant or a mature company that’s been around forever, you aren’t too small or big for the benefits that AICC offers. But it starts with investing and engaging.” to help your company grow—rather than when your company is struggling.

Because the reality is, the economy will change at some point. It just does.

BoxScore: What would you say is the biggest challenge facing the industry right now?

Palmeri: I think the biggest challenge— and this goes right now for any industry, in general—is the labor side. Finding people. I think, whether it’s us or in any industry, there are many positions that

people are trying to fill in a very small and difficult labor pool.

BoxScore: How can AICC help businesses with that?

Palmeri: Well, there are things we can do on the education side, offering workshops on growing what you have, taking existing employees and putting them in different roles, and offering workshops on what new equipment is out there; that can help you produce better results with the same amount of people. We’ve offered workshops on what businesses are doing

to connect with the younger generation because they’re definitely growing up in a different way than previous generations.

BoxScore: Absolutely, but in what way are you thinking?

Palmeri: Well, you have to keep them engaged and challenged for as long as you can, because they aren’t necessarily going to stay employed at the same place for 35 years. They’re on much more accelerated career paths these days. It used to be that you worked in the plant, did design, customer service, maybe you were promoted to a supervisor. You might have worked in the second shift or on the sales side and paid your dues that way. There was a natural progression that you followed, but now it’s much more compressed.

BoxScore: As you said, you have to keep people challenged, and in the old days, maybe some people were more content to stay stuck in a job they didn’t like.

Palmeri: I think it’s fine. It’s just different than what it was. Maybe it’s not what we were used to, but a lot of whether somebody is experienced enough, or right for the job, still depends on the individual.

Geoff Williams is a journalist and writer based in Loveland, Ohio.

He can be reached at boxscore@theygsgroup. com.

From left: AICC President Steve Young; AICC Chairman Joseph M. Palmeri; and AICC Vice President Mike D'Angelo.

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Do you want to grow your business year over year?

FREE ONLINE EDUCATION Over 40 courses are available and the catalogue is growing every month!

Courses include: • Build a Visual Workplace with 7S • Communication for Coaches • Corrugated Basics 101, 102, 103 • Flexographic Ink Management • How to Spec a Box • Internal Staff Development Guide • Introduction to Polymers • Keeping Score: How to Read a Financial Statement • Maintenance Mapping • Overall Equipment Effectiveness • Packaging Foundations • Paperboard Cartons • Sustainable Packaging Learn more at www.aiccbox.org/packagingschool.

MEETINGS, WEBINARS, & SEMINARS Check out our calendar for upcoming meetings, webinars, seminars, and summits throughout North America to receive the best industry training and the chance to network with others in the packaging industry. View AICC’s upcoming courses and events at www.aiccbox.org/calendar.

ASK THE EXPERTS - Ralph Young, Corrugated Technical Advisor - Tom Weber, Folding Carton Technical Advisor - Doug Friel, Safety & Risk management Advisor Start asking your industry questions today at www.aiccexperts.org.

When you invest and engage, AICC will deliver success.

SIMPLY PRODUCTIVE Becoming a better company starts with becoming a better leader

By Scott Ellis, Ed.D.

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o build a highly productive company, all that is required is a humble, yet inspirational leader who attracts and cultivates a diverse group of effective managers who agree on, model, train, and consistently monitor best practices to grow and perpetuate a culture that, at once, encourages employee flexibility and innovation while delivering the highest quality in the shortest lead time at the lowest operating cost. That is the secret connection between leadership and productivity, but the editor requires that articles exceed 64 words, so I must elaborate.

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Honestly, if all of this description were required to be in place on a daily basis, most of us would be out of business.

What is required is an environment where people know that we are genuinely becoming a company that is always learning and improving. To show the path to productivity, I will draw from practical sources. Jack Stack built a thriving group of companies from the ashes of an International Harvester site.

Jim Collins researches the commonalities of companies that outperformed the market by a factor of three or more.

Gene Marks tracks political, economic,

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and technological trends that affect our companies; he recently spoke to AICC members about hiring and retaining great employees. Lastly, I will draw on my own experience in shaping cultures through leading, training, and coaching leadership and process improvement.

In Good to Great, and later in How the Mighty Fall, Collins defined the common traits of great company leaders.

He described the characteristics common to “Level Five” leaders: humility, will, ferocious resolve, and the tendency to give credit to others while assigning blame to themselves. His research concludes that

those who strive for this style of leadership find it easier to get the right people on board and to develop consistency in delivery of goods and services. It is a worthy goal; as he said, “Our own lives and all that we touch will be the better for making the effort.” I spoke with Gene Marks, who described one such leader. This CEO left his corner office to do his work in the cubicles of customer service, accounting, shipping, and other departments. This required the discipline to abstain from micromanagement by not allowing himself to get sucked into the interactions around him. Proximity allowed him to keep a finger on the actual systems in place and the resultant culture.

When young Jack Stack and his co-workers were about to lose their jobs due to a factory closing, they cobbled together a 10 percent down payment and purchased the business. They developed a system of employee education and clear productivity measurement that encouraged people to act like—and eventually to become—owners. The results include a number of thriving businesses known as SRC Remanufacturing, a system we know as open-book management, and a book titled The Great Game of Business. I have had the privilege of witnessing the company’s midweek huddle, in which everyone gathers and team members close to the process report the productivity numbers including parts produced, material spend, and labor cost. This is so practical and motivating to the employees that we developed an AICC course to explore the principles involved. In Management by Numbers, we study SRC and Southern Missouri Container (SMC), where the principles have been applied to a packaging company. The gist of the

To develop a habit of winning, every department or team must continually improve its processes and procedures.

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system is that regardless of the scope of responsibility (e.g., this machine, this company) the process can be gamified.

To play well, we must: 1. understand the rules of the game; 2. simplify keeping score; 3. reward winning outcomes; and 4. improve strategy and deployment.

Understand the Rules of the Game For the leader, understanding the rules includes those that are published by management as well as the tribal knowledge that has been developed over time. The cubicle-hopping boss described above was a good example of that. We say that we want employees who act like owners.

Stack says that informed, involved, and engaged employees are educated as to how the business works and what’s critical to its success. In many privately held companies, this involves education on the methods of performing, measuring, and improving the job at hand. It should also include the benefits to the individual and

the company when this is done well. In an open-book company, this includes all the aspects of the company financials (though wages are reported as variances). You don’t have to understand all of the rules to enjoy watching baseball, but if you are going to play well, you need to learn the infield fly rule. This will require a deeper commitment to training—in-house training at the process and department level, and ongoing training as processes change and technologies advance. Many resources for packaging education, process improvement, and people skills are a free resource at AICC’s Packaging School.

Simplify Scorekeeping Vince Lombardi is credited with saying, “If you are not keeping score, you are just practicing.” Stack teaches people to understand and follow the numbers to keep score and to drive improvement.

It has been my habit to ask people everywhere in the business, “How do you know how you’re doing?” I believe every

process can and should be measured and improved. The result is a scorecard that states clearly how we are doing against our standards for meeting customer requirements. For example, a customer service scorecard might include accuracy and timeliness of data to production, or lead time to production handoff. The effective scorecard is displayed to the customer (production), as well as being used within the department.

Also involved in keeping score is the measurement of employee performance.

Gene Marks reports that millennials now comprise more than half of the workforce. He suggests that we move beyond measuring by hours alone, and keep score

based on achievement of objectives. He cites the employees’ most valued benefit as health care, and millennials’ No. 1 attractant as paid time off. They seek flexibility and work-life balance. I would add that given the amount of screen time experience by age 25, they put in the hours by being available and responsive at all hours. In my experience, they get the work done. While goal achievement is a more difficult metric to capture than work hours, for this workforce, it may be more effective.

Reward Winning Outcomes Rewards come in many forms, from a simple thank-you to a stake in the

company. Stack’s point is that employees who “directly participate in strengthening the company likely do so because they have some form of a stake in the outcome.

They come to work to win, because they know their work will result in significant reward, recognition, and ownership in the outcome.” A company may recognize and praise innovation and other ownership behavior, they may develop a gainsharing plan tied to productivity, or they may become an employee-owned company like SMC or Bay Cities. The point is that people have a stake in the outcome and see the connection between ownership behavior and getting more of what they value from their employment.

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Productive companies do not solve the same problems repeatedly; they practice root cause analysis and prevention.

Improve Strategy and Deployment To develop a habit of winning, every department or team must continually improve its processes and procedures.

Stack says, “Ultimately, The Game makes companies more agile and better equipped to overcome challenges and champion opportunities in the marketplace.” Gene Marks agrees that improvement is essential. He says, “You have got to put your money where your mouth is by investing in technology, education, innovative incentives, and even creature comforts.” He cites companies that set aside time for education in technology and collaborative skills, and that invest in building improvements that make it an easier place to work.

One company has gone beyond tuition reimbursement for ongoing training and makes yearly contributions to reducing student loan debt. All of these factors help attract and retain employees who improve the business.

Our scorecards, noncompliance reports, and customer feedback all fuel improvement efforts. Productive companies do not solve the same problems repeatedly; they practice root cause analysis and

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prevention. They intentionally learn from their wins and losses to improve the way they play the game.

When employees are involved in analysis of a quality problem that reached the customer—when we are asking why it happened rather than who did it— involvement in continuous improvement projects teaches people to think like owners. When we celebrate a win and then talk though what happened that led to our scores, people learn how to replicate that behavior. In the process, they learn to use judgment. They stop accepting simple solutions and ask why until they can find and eliminate a problem’s root cause. They may even start acting like they own the place.

Simply Helpful I am relieved that charisma is not a leadership requirement. If you have the will and the drive for your goals, then life will teach ongoing lessons in humility. I can practice recognition and praise in pursuit of Level Five leader status. To work on the business and to engage and equip others to improve productivity simplifies things

if you see it as a game. That’s the job: making it simple, making it easy to do things well. I will close with a reward I received recently. A rising star in our industry attended my Benchmarking and Buy-In course.

During a break, he said that the tools we were discussing were simple, but really helpful. When he saw my reaction, he thought I had taken offense, but the opposite was true. I thanked him for the high complement and added, “You have no idea how much work went into making it simple.”

Scott Ellis, Ed.D., 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. He can be reached at 425-985-8508 or scott@workingwell.bz.

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STRATEGIC SUCCESS Long-term partnerships can open doors to resources, enhanced customer service, and growth

By Robert Bittner

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or many independent converters and boxmakers, strategic partnerships have always been a way to get business done. Don’t have a digital printer?

Partner with a company that does. The customer’s budget doesn’t stretch far enough to cover cross-country fulfillment? Partner with a plant in that region to run the job locally. These relationships provide a way to meet specific needs at specific times, as they arise.

An increasing number of converters are exploring a different approach. They emphasize the “strategic” nature of such partnerships by basing much of their business model on a partnership approach grounded in shared resources (both financial and operational), reduced costs, and mutually beneficial product development. As a result, these companies make strategic partnerships a vital part of their growth strategy.

“We do more than $10 million of business outside our four walls,” says Greg Tucker, chairman and CEO of Bay Cities, noting the success of his company’s partnerships. “And that is growing by

“Strategic partnerships are a fantastic way to drive business for any company, if you are willing to work together.”

— Greg Tucker, chairman and CEO, Bay Cities

leaps and bounds. Strategic partnerships are a fantastic way to drive business for any company, if you are willing to work together.”

Future-Focused At their heart, these kinds of partnerships are similar to their one-time or as-needed counterparts, which are more common: One or more parties agree to share skills, equipment, services, and so on with another party, for the mutual benefit of everyone involved. The difference? These partnering companies are weighing benefits that extend far beyond any current job.

Jay Carman, president and CEO of Illinois-based StandFast Packaging Products Inc., recalls that his strategic

partnership with a Canadian company grew out of several intersecting needs.

“Our previous plant was in Addison,” he says. “We had 90,000 square feet, gluers, die cutters. We were pretty well-equipped for printing four-color, graphics, multi­ pass work. We had brown, flexo work, and a lot of two-pass work, with rotary die-cut and specialty glue. But we were landlocked in Addison. We were getting to the point where that was going to limit our growth.

“Because of the consolidation we’ve been seeing throughout the industry, we also were interested in strategically partnering with a corrugator, so we could have a more consistent, long-term source for our materials.”

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“Many times people figure out that someone’s a bad partner after two years, when they could have known from the beginning, if only they had asked the right questions.”

— John Perullo, president and CEO, Corrugated Synergies International

Toronto’s Atlantic Packaging came calling, looking for partners of their own.

“They’re one of the larger corrugated companies in Canada,” Carman explains, “with paper mills, box plants, and partnerships in Québec. They have about 30 percent of the Canadian market and were looking for growth in the States through corrugated partnerships.

“We’re always open to opportunities like that. As we’ve grown, we’ve tried to acquire companies ourselves, so when they called, I knew what it was like to be on the other side of that conversation.”

StandFast decided to partner 50-50 with Atlantic Packaging. “We formed a joint venture and bought a building in Carol Stream [Ill.] to install a corrugator and move our sheet plant,” Carman says.

“Atlantic runs the corrugator as a separate entity called Blackhawk Corrugated.

“We’d never been involved directly with a corrugator, so this was a step in vertical integration. We thought it was a good service model, having a full-service sheeter next to a well-equipped converter plant. It enables us to do more of what

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BOXSCORE November/December 2018

we’ve been doing, but on a larger scale and with increased capabilities.”

StandFast’s enhanced scale has translated into improved customer relationships. “Atlantic has given us the wherewithal to sell to larger companies than we had in the past. And our customers perceive that we’re larger and have more resources.”

Other factors helped to make the partnership an easy call for Carman’s team. “Atlantic was an especially good fit for us because they had paper mills, so we had the benefit of a mill behind us. Also, our cultures are similar. They’re privately held, and the founder and owner is very entrepreneurial. From a cultural standpoint, we’re a good fit.”

Going Vertical John Perullo, president and CEO of Corrugated Synergies International (CSI), has built a company on the benefits of pinpointing and establishing such “good fits” across multiple companies.

“CSI’s always believed that strategic partnerships mean more opportunity,”

Perullo says. “Our business model was built around managing strategic partnerships and building them into strong vertical-integration companies.”

As an example, he points to one of CSI’s early successes, which eventually became MidCorr Packaging.

“Back in 1996–97, there were a number of sheet plants”—spread across Wisconsin, Illinois, Michigan, and Ohio—“who knew each other and had a working relationship. We brought these plants together to integrate themselves and then built a facility to supply them with the materials they were buying on the open market.”

Soon other groups sought CSI’s expertise. “They asked if we could do for them what we had done in other locations” with companies such as MidCorr, Perullo says. “If [their situation] appeared to have merits, we’d put together a business model, a list of needed equipment, labor, etc. The resulting pro forma told us whether we had enough volume for a partnership to make sense. If not, we would work to find additional local members required for a profitable partnership.”

CSI’s partnership arrangements were, essentially, “a risk mitigator for each of the smaller partners that otherwise couldn’t justify buying corrugated equipment they needed,” explains Perullo. “I think many times that’s where partnerships make the most sense.”

Preparing for Partnership Of course, not every potential strategic partnership will make sense. “Partnership is a lot like a marriage,” Perullo notes.

“Sometimes divorce is the best solution.”

To avoid ending up with regrets, it pays to prepare.

For Tucker, the best first step is to partner with people you already know. “Once we know we need a strategic partnership within a certain location, we have chosen our partners based on friendships first and skills second. Our cultures have to fit.

Just like our clients, people do business with people they like.”

That existing relationship is vital because “trust is key,” Tucker believes.

“We can’t ram things down others’ throats.

We need to find a way to get folks to understand what is required of them upfront. At the same time, you also

have to remember that a partnership is a two-way street. The goal is to meld your two cultures and find the middle ground, so you can do some really great things together.”

Be aware, however, that a previous relationship can also be a stumbling block, leading to assumptions about the future based on shared past experiences.

“I know it’s obvious, but ask many questions at the beginning,” Perullo advises. “Many times, people figure out that someone’s a bad partner after two years, when they could have known from

the beginning, if only they had asked the right questions.” He adds, “The more you can define legally what could potentially happen in the future—and solve for it ahead of time—the better off you are. You can’t anticipate and legally define for every possible situation, so you have to build mechanisms [into your documentation] to allow for things you can’t anticipate.”

The best-laid partnership agreements still may not prepare you for every eventuality. If the partnership proves untenable, Perullo says, “Plan in your

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“If your mindset is to grow—to get better, secure a source of supply, increase integration, show that you’re a bigger presence in the market — partnerships are key.”

— Jay Carman, president and CEO, StandFast Packaging Products Inc.

documentation for an easy, seamless way to end the partnership if it isn’t working.”

Working Through the Kinks Of course, even the most successful strategic partnerships face challenges.

“Speed to market is a pillar of ours,” Tucker points out, “so our suppliers and partners need to be very fast. Our clients are some of the most demanding creatures on the planet. If we can’t react, we lose business.”

It has sometimes been a challenge to bring Bay Cities’ partners on board.

“Honestly, changing the mindset of our partners—who have had to develop processes that can turn on a dime—has not been an easy task. They are formidable companies, yet they’ve had to learn how to become much faster.”

Perullo adds, “One challenge for us—and I can see this extending out to any converters that are trying to manage partnerships—is that you’re dealing with multiple entrepreneurs. Lots of these businesses were launched by people who had a strong vision and pushed to bring

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that vision to life. So, they’re used to being in control. With multiple partners, you end up with more people than you need who want to control the situation.”

He advises building in solutions for this when creating the partnership.

When challenges do arise, seek solutions together.

“Many years ago, we were working with a large cosmetics company here on the West Coast,” Tucker recalls. “They were launching over two to three new products a week, and we were jumping through hoops to design, manufacture, and ship everything on time. It was the perfect account for us, as we really are built for this kind of speed. But we needed some help with distribution across the country, so we worked to find a like-minded partner. We chose a company that was spot-on with their equipment mix, quality standards, location, and costs. However, when it came to processing orders quickly and managing production, it all fell apart.

We ended up being late on the first few jobs, which did not go over well with our client.

“We could have just stepped away from our partner at that point; after all, they didn’t live up to their side of the agreement. We didn’t do that. We all took a deep breath and then figured out how to work together to share best practices and set our expectations together. We ended up running the heck out of that business.”

Bringing Out the Best Sharing best practices, while driving one another on to improved performance, will help deliver the full benefits of long-term strategic partnerships. “Strategic partnerships force you to get better and to learn,” Carman says. “They give you a fresh perspective and expose you to a wider variety of experiences. As a result, you learn how to do things better—everything from hiring to streamlining your processes.

“If your mindset is to grow—to get better, secure a source of supply, increase integration, show that you’re a bigger presence in the market—partnerships are key,” he says.

“I think these kinds of partnerships are only going to grow. Companies like ours should partner more. Look at the cost of equipment, real-estate costs, land. Partnerships may enable you to share resources, design, production. You have to really consider them. In fact, I recommend that you consider them. With the right partner, you can open a lot more doors.”

Robert Bittner is a Michigan-based freelance journalist and a frequent contributor to BoxScore.

He can be reached at boxscore@theygsgroup. com.

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2018 ANNUAL REPORT

Investment, engagement, and value highlight AICC’s 2018 fiscal year 66

BOXSCORE November/December 2018

A

ICC’s 2018 fiscal year ended on June 30, and it was during this year that participation in and access to AICC programs tripled and online content doubled, making 2018 the “Year of Member Engagement.” Following 2017, when AICC’s board of directors “doubled down” on emphasizing training and education by making all online offerings free of charge to members, AICC’s 2018 fiscal year saw the harvest of that effort in a most dramatic increase in the level of member participation. By all measures—new members joining, companies participating, and individuals attending—engagement in the Association’s programs, courses, and events is at an all-time high.

BOXSCORE www.aiccbox.org

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AICC Members by Company Type Associate (Suppliers) Rigid Box

180

192 9

23 14

Folding Carton Sheet Suppliers Corrugator Plants Sheet Plants

77

AICC Members by Geographic Distribution 7

(General & Associate)

Overseas

62

Mexico Canada

49

USA

439

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BOXSCORE November/December 2018

Membership Despite continued consolidation in the industry, AICC welcomed 28 new general members into the Association and 37 new Associate members. Dues revenues totaled $1,516,087 in FY 2018, up from $1,282,467 the prior year. The Association’s membership retention rate of 94 percent is at the top of manufacturing trade association retention standards, according to the Council of Manufacturing Associations’ recent manufacturing association membership study. The total number of corporate entities, both general and Associate members, is 527, up from 490 the previous year.

Education and Training AICC’s industry-specific education and training programs brought in $557,052 in revenue in the 2018 fiscal year. This was up from $427,153 in FY 2017, an increase of 30 percent. The increases were fueled in large part by the healthy attendance at on-site programs and the introduction of new courses such as Digital Print Fundamentals, a hands-on digital print technology course hosted in March 2018

by SUN Automation Group in Glen Arm, Md. In addition, several AICC Associate member companies signed on as our first group of “Education Investors” in fiscal 2018, and they are: Fosber America; SUN Automation Group; JB Machinery; Pamarco; Absolute Engineering; BCM Inks; Printron; EFI; Kruger; and Bobst North America. Through their financial support and in providing technical content, these companies support AICC’s growing catalog of online education and training programs.

The major driver of the surge in AICC’s education and training program was the inclusion of all online education free of charge as part of AICC’s membership value. This transition from pay-asyou-go to “all-included” was directed by AICC’s board of directors the prior fiscal year, and is made possible by a unique partnership with The Packaging School in Greenville, S.C., a leading online educational platform for the material handling, packaging, and processing industry.

At the end of the 2018 fiscal year, the partnership between The Packaging School and AICC provided members with more than 50 online courses free of charge in disciplines covering production, sales, design, and general leadership and management topics. By June 30, AICC online course completions had topped 1,000 after only 18 months.

In addition, all current course offerings are scheduled to be translated into Spanish, with AICC México’s board of directors setting priorities on which courses are to be completed first.

National Meetings, Regional Summits, and Special Events Attendance at AICC’s national meetings, summits, and other events topped 1,900 people in the fiscal year ending June 30. The 2017 Annual Meeting and Independent Packaging Design Competition in Las Vegas saw 633 attendees, while AICC’s 2018 Spring Meeting in Phoenix drew 602.

AICC summits grew in FY 2018, with 12 events held domestically and internationally. The U.S. summits were attended by 577 members and guests, while multiple events in Canada and Mexico

AICC Education & Training In-Person & Online Course Completion FY 2018

1,000 900 800 700 600 500 400 300 200 100 0

Number of Companies

Participation Goal

Courses Completed

Actual

AICC Online Training Participation 7/1/17 – 6/30/18

2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0

t r r ep ug Jul Oc -Nov 1-Dec 1-Jan 8-Feb 1-Ma 0-Ap -May 0-Jun 31- 31-A 30-S 313 2 3 3 3 3 30 31

BOXSCORE www.aiccbox.org

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attracted 679 members, spouses, and guests. AICC’s annual Print & Packaging Legislative Summit, co-sponsored by Fibre Box Association (FBA) and joined

by Printing Industries of America (PIA), the Association for Print Technologies (APT), Idealliance, and the Specialty Graphic Imaging Association (SGIA), attracted 110 members from the print and packaging industries to meet with their legislators to advocate on behalf of economic and regulatory policies beneficial to the manufacturing sector.

Combined income from AICC’s U.S. national meetings, summits, and the Print & Packaging Legislative Summit was $1,495,613.* AICC’s fifth annual Independents’ Cup Charity Golf Tournament, held in conjunction with the 2018 Spring Meeting in Phoenix, raised a combined $40,000 for the J. Richard Troll Memorial Scholarship, Three Precious Miracles, and The American Red Cross Disaster Relief. *Revenue quoted does not include AICC Canada or AICC México.

Publications and Advertising AICC’s publications and advertising contributed positively to AICC’s steady growth in FY 2018, bringing in a combined $339,241, down 4 percent from the previous year’s $354,135. The 2018 fiscal year total was made up of $314,340 in website and print (BoxScore) advertising, and $24,861 in publication sales.

AICC Canada AICC Canada encompasses Ontario, Québec, and the Maritime Provinces.

It is run by an independent board of directors chaired by President Stephen

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BOXSCORE November/December 2018

AICC National, Regional, and International Attendance FY 2018

AICC México

215 AICC México

489

AICC Canada

633

Regional Summits Print & Packaging Legislative Summit

2017 Annual Meeting, Las Vegas

2018 Spring Meeting, Las Vegas

AICC Canada

577 Regional Summits

602

2017 Annual Meeting, Phoenix

2018 Spring Meeting, Phoenix

110

zMoore of Moore Packaging. AICC Canada hosts a number of events annually and provides various services to its members locally. In 2017–18, events included general member meetings, an annual Christmas party with 140 attendees, and the winter President’s Luncheon, where this year, attendees enjoyed a comical look at the world of sportscasting with Rod Black.

Completing the year was the highly attended golf tournament co-hosted with CCCA, in which up to 135 golfers participated. AICC Canada publishes its own regional membership directory and biennial salary survey. Terri-Lynn Levesque of Royal Containers Ltd. serves as regional director on the AICC

Print & Packaging Legislative Summit

board of directors. Upcoming for 2019: 20/20 Vision Progress in Packaging, Conference & Trade Show, April 24–25. For more information on the activities of AICC Canada, contact Jana Marmei, administrative director, at 905-727-9405 or jm@aiccbox.ca, or visit www.aiccbox.ca.

AICC México In 2018, AICC México hired its first full-time executive director in Mexico to manage the affairs of the Association there. Sergio Farfan, formerly executive director of the Asociación Nacional de Fabricantes de Empaques Corrugados (ANFEC), began working full time for AICC México in January 2018. Mexico’s

membership grew substantially in the six-month period from January 1 to June 30, due largely to his efforts at recruiting and establishing dedicated programs for AICC México members.

The first AICC México Emerging Leaders meeting was held in conjunction with AICC México’s annual meeting, May 16–18, in Guadalajara. Founded in 2001, the region continues to be a vital part and growing part of AICC’s international family, now with more than 50 members. AICC México is represented on AICC’s board of directors by Pedro

Aguierre of Tecnología de Cartón in Gómez Palacio, Durango, Mexico.

Executive and Governance AICC’s board of directors in September 2017 approved changes in AICC’s bylaws to consolidate the number of regions represented by regional directors.

The effect of this action will reduce, in the 2019 membership year, the number of regional directors on AICC’s board from 10 to six. Notably in FY 2018, AICC’s board of directors unanimously approved a staff leadership succession

Making shortrun better since 1979

whereby Michael D’Angelo will succeed AICC President Steve Young beginning July 1, 2019. Young will step down and assume a consulting “ambassador” role with the Association on that date.

AICC continued its traditional collaboration with related industry trade associations, including TAPPI, the FBA, Flexographic Technical Association (FTA), and others. Internationally, AICC maintains membership in the ICCA, where we are represented on its board of directors by AICC Overseas Director Kim Nelson, who is CEO of

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Driven by efficiency | Fueled by innovation t: 1 630 877 6642 e: kb@bcscorrugated.com w: www.bcscorrugated.com

BOXSCORE www.aiccbox.org

71

Royal Containers Ltd. in Brampton, Ontario. In the past year, AICC participated in and was represented at FEFCO’s biennial Congress in Stockholm, as well as the ICCA’s board of directors meeting, held concurrently. AICC also attended the annual convention of ACCCSA, the association for corrugated manufacturers in the Caribbean and

Central and South America, held in Lima, Peru.

Financial Results AICC’s operations in FY 2018 brought in $4,173,736 in revenues and realized expenses of $3,919,933. This resulted in a net operating income of $253,803.

This income, plus ($90,738) in nonoperating income from changes in AICC

regional activities, resulted in a total net income of $165,065. AICC’s auditors are Mullins, PC, of Bethesda, Md. AICC members who wish to receive a copy of AICC’s audited financial statement should send a request in writing to Steve Young, President, AICC, PO Box 25708, Alexandria, VA 22313, or email syoung@aiccbox.org.

Balance Sheet Year Ending June 30, 2018

2018 4,248,416 508,773 88,385 4,845,574 1,209,739 89,321 1,299,060 3,546,514 4,845,574

2017 4,143,638 561,225 73,818 4,778,681 1,320,478 74,754 1,395,232 3,383,449 4,778,681

TOTAL REVENUE Operating Expenses—Program Operating Expenses—Management

2018 4,173,736 3,723,646 196,287

TOTAL EXPENSE OPERATING INCOME NONOPERATING INCOME TOTAL INCOME

3,919,933 253,803 (90,738) 163,065

2017 4,672,472 3,321,368 272,066 3,593,434 1,079,038 36,058 1,115,096

Current Assets Property & Equipment Other Assets TOTAL ASSETS Current Liabilities Long-Term Liabilities TOTAL LIABILITIES Unrestricted Net Assets TOTAL LIABILITIES & NET ASSETS

Income Statement Year Ending June 30, 2018

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BOXSCORE November/December 2018

The Associate Advantage

Welcome, Greg, and Thank You, Ed

BY PAT SZANY PAT SZANY

American Corrugated Machine Corp.

Vice Chairman pszany@acm-corp.com

DAVE BURGESS

JB Machinery Chairman dburgess@jbmachinery.com

JOE MORELLI

Huston Patterson Printers Secretary jmorelli@hustonpatterson.com

GREG JONES

SUN Automation Group Director greg.jones@sunautomation.com

ED GARGIULO

Equipment Finance corp.

Immediate Past Chairman egargiulo@efc-finance.com

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BOXSCORE November/December 2018

T

he governance of AICC includes the Associate Board. Five Associates serve on this board, offering ideas, support, and counsel to the AICC Board of Directors and staff. This past year, Ed Gargiulo, executive vice president of Equipment Finance Corp., served as Associate Board chair. Under his leadership, the Associate Board and other Associate members have become more active in recruiting AICC members and have encouraged AICC to grow participation at summits by reorganizing the planning and scheduling process, and he has helped AICC outline new benefits for Associate members. Ed will continue on the Associate Board for another year as the immediate past chairman.

Every year during the fall meeting, a new director is voted onto the board by a majority vote of AICC Associate members. The current Associate Board is: Dave Burgess, JB Machinery, Associate Board Chairman Dave began his career with Pamarco Global Graphics in 1984. In 2008, he joined Flexo Concepts as vice president of sales, focusing on the global distribution chains for their Doctor Blade and anilox leaning equipment lines. Dave is very active with TAPPI, AICC, and FTA, having authored and presented many technical papers over the last 20 years.

In 2011, Dave joined JB Machinery and now serves as the North and Central American sales director. He was elected to the Associate Board in 2015.

Pat Szany, American Corrugated Machine Corp., Associate Board Vice Chairman For more than 30 years, I have been a member of AICC, participating on both a regional and an international level. I serve on the Memberships & Marketing Committee and, since its inception, on the AICC Independents Cup Committee. In 1985, I started American Corrugated Machine Corp.

(ACM), located in Indian Trail, N.C. ACM is a national broker of used and new equipment to the corrugated box industry. I was elected to the Associate Board in 2016.

Joe Morelli, Huston Patterson Printers, Associate Board Secretary Joe joined Huston Patterson, North America’s longest-standing privately owned package printer, in 2010, as a client services manager responsible for managing Huston Patterson’s book of business in Arkansas, Arizona, California, Louisiana, New Mexico, Oklahoma, and Texas.

In 2013, Joe was appointed vice president of sales and marketing at Huston Patterson, overseeing sales, project management, customer service, and all aspects of Huston Patterson’s brand management. A member of AICC’s inaugural Emerging Leader class, Joe has been an active member of AICC since joining the industry. Joe was elected to the Associate Board in 2017.

The Associate Advantage

Greg Jones, SUN Automation Group, Associate Board Director Greg has spent nearly two decades in the manufacturing and packaging sector, and he currently serves as the vice president of global sales and aftermarket for SUN Automation Group.

He oversees SUN’s international sales teams as well as operations of its Guangzhou, China, and Bristol, U.K., locations. With a pulse on corrugated market demands, Greg also sits on the board for SUN Automation Group, is a member of the AICC Marketing & Membership Committee, and has been an active and enthusiastic member of AICC since 2012, when Greg joined SUN Automation Group as the North

America sales manager. Within three years, he was promoted to director of sales and marketing before rising to his current position in early 2018.

Ed Gargiulo, Equipment Finance Corp., Associate Board Immediate Past Chairman After managing the Heidelberg Press portfolio at CIT Corp., Ed held several senior management positions in credit, operations, and direct sales at Phoenixcor Inc., from 1980 to 1993.

In 1993, Ed helped form Equipment Finance Corp., a full-service lending operation providing machinery financing to the corrugated, folding carton, and printing industries. Ed is the executive

vice president and manages all sales, marketing, and product development functions at Equipment Finance Corp.

Ed was elected to the AICC Associate Board in 2014 and serves on the Membership & Marketing Committee.

The Associate Board is to be the voice of Associate members with the AICC Board of Directors. If you have thoughts, concerns, or ideas about AICC and how the Association can best serve you, I encourage you to reach out to one of us so your voice can be heard.

Pat Szany is president of American Corrugated Machine Corp. and vice chairman of AICC’s Associate Board.

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Strength in Numbers

Throughput and Velocity: The Key Predictors of Profitability

BY MITCH KLINGHER

F

rom a financial perspective, throughput is defined as the revenues generated by a production process, minus all completely variable expenses incurred by that process. In most cases, the only completely variable expenses are direct materials and sales commissions.

Given that only the true direct costs of the order are used, throughput dollars tend to be quite high.

Manufacturing velocity is defined as a measure of how fast the materials under process are moving toward a finished state—usually measured in units per hour or minute.

One can certainly argue that the way to increase profitability in a manufacturing or converting environment is to increase either or both on every order. There you have it, BoxScore readers, the holy grail of manufacturing profitability. The other method that is guaranteed to work is to reduce fixed costs, but most of you find that fixed costs increase each year, unless you can take very drastic action such as closing a plant or eliminating a shift.

Now that you know the secret, let’s talk about how to make this actionable in your operating environment.

An order with high throughput that has very low velocity may be profitable, but low velocity means that it is clogging up your plant and not allowing you to take additional orders. Conversely, an order with high velocity and low throughput may look to be unprofitable on the surface, but could absolutely be a good order for you to take because it generates a good amount of throughput dollars. To make this decision, you need to evaluate the results against time. Time is the ultimate

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BOXSCORE November/December 2018

equalizer because, due to the laws of physics, it cannot be altered. You have only 24 hours in a day and 60 minutes in an hour.

So, you need to plot your throughput divided by your velocity against time to make a meaningful decision.

At the end of the day, your most finite resource is machine hours, and most converters have embarked on initiatives geared toward maximizing the availability (uptime) of their equipment and minimizing defect loss. This is certainly a major factor in improving velocity, but certainly not the only one. Converters must evaluate whatever is slowing down (constraining) their overall processes so that the time from quote to cash is as small as possible and the overall number of units that the plant can convert is as high as possible. A large part of this results from being more selective in the order acceptance process and considering how an individual order can affect overall plant and machine capacities.

The primary obstacle preventing most converters from achieving far more of their true profit potential is the widely held belief that product unit margins fairly reflect the relative profitability of the various products that they make. The assumption is that ranking products by margin per unit ($/msf, contribution percent, fully loaded implied ROS) will ultimately translate into more total profit and better shareholder returns. This is a myth—an incredibly costly myth.

Ranking products based solely on their margin per unit assumes that units of all products are equivalent (a ton is a ton), and that their primary difference is their relative margin dollars. In fact, margin per unit overlooks a crucial product attribute that drives that product’s ability to generate asset profitability: its production speed or flow rate (i.e., velocity). Most converters measure and record machine efficiency data. However, it is rare to find a converter who goes the extra mile of

Strength in Numbers

relating this data on an order-by-order basis to the throughput generated by the order.

Converters have large sums of money invested in their productive assets, yet they don’t look at their profitability as a function of return on those assets. Asset profitability is the result of both cash per unit and the unit flow rate. Together, these determine the profit velocity of each product, its ROA. Unless both margin and velocity are considered, profit analysis is skewed and leads to choices that cut dollars from the bottom line. With the metric of profit velocity, companies can identify their “hidden winners,” and instead of ignoring or rejecting lowmargin (but high-PV) orders, management can start taking that business from the competition. By preferentially loading their machine capacity with these

“hidden winners”—using price reductions and other techniques—plant utilization and profit can rise despite those price reductions. Additionally, management teams can also identify products that have high unit margins, but are so slow through the equipment that they have a low-profit velocity, also known as “false profits.” Instead of pursuing more volume from these high-margin/low-profit velocity items, management can rethink their approach.

To be able to see their previously invisible profit-gain opportunities, manufacturers need to measure the profit generated per hour for every order as it moves through production. Simply put, management teams must look beyond traditional cost-cutting and productivity-​ improvement programs to achieve and sustain superior shareholder returns. In

today’s challenging economy, success depends on the ability to identify and capture hidden opportunities to extract greater profit from existing assets. So, consider changing your definition of contribution to one closer to the concept of throughput, and develop a system to accurately compare this to machine hours on a regular and systematic basis, and you will have a decided advantage over your competitors who continue to cling to the more traditional measurements.

Mitch Klingher is a partner at Klingher Nadler LLP. He can be reached at 201-731-3025 or mitch@ klinghernadler.com.

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International Corrugated Packaging Foundation I N T E R N AT I O N A L

PACKAGING

CORRUGATED

F O U N D AT I O N

ICPF to Introduce Corrugated Packaging & Careers to Additional 500 Students

Photos courtesy of Dennis Young.

O

n February 21, ICPF will conduct its annual Teleconference on the Business of Corrugated Packaging & Displays and the Career Opportunities. As in past years, 400–500 packaging, graphic design, marketing and sales, supply chain management, business, engineering, and other students and faculty from 18–20 college campuses are expected to participate. This annual event is not a webcast, but a live video conference utilizing professional WKAR TV personnel and TV broadcast equipment at Central Michigan’s Public Broadcast System television studios for two-way interactivity.

After their presentation, industry panel speakers Jeff Chalovich (president, corrugated packaging, WestRock) and Greg Hall (CEO, Smurfit Kappa North America), and student moderator Taylor Jensen (Michigan State packaging science, class of ’19, and student intern at Landaal Packaging), will address live questions from students on each of the 18–20 participating campuses.

Campuses that are planning to participate include Appalachian State University, Bowling Green State University, California Polytechnic State University,

ICPF’s annual Teleconference on the Business of Corrugated Packaging & Displays introduces corrugated packaging careers to hundreds of new college students each year.

Clemson University, Dunwoody College of Technology, Indiana State University, Illinois State University, Lewis-Clark State College, Michigan State University, Millersville University, North Carolina A&T University, North Carolina State University, Pittsburg State University, Rochester Institute of Technology, Rutgers University, University of Florida, University of Texas at Arlington, University of Wisconsin–Stout, Virginia Tech, and Western Michigan University.

The teleconference’s grand finale will include ICPF’s annual Best of the Best, Student Design Presentation Competition.

Student teams that earlier placed in AICC’s 2018 design competition will be competing for cash prizes. Student teams from Appalachian State, Cal Poly, and University of Texas at Arlington will be tasked to show, tell, and sell their winning entries by explaining the objective, the research conducted, design, and other background.

Students to Receive Travel Grants to Attend ICPF Student Dialogue Dinner

T

wenty-five top students from ICPF’s partner universities around the country will join visiting corrugated packaging executives on Feb. 20 for ICPF’s student dialogue dinner on corrugated packaging careers in East Lansing, Mich. Ten or more of the

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BOXSCORE November/December 2018

students who have demonstrated an interest in a corrugated packaging career upon graduation will receive ICPF travel grants to participate along with up to 15 top Michigan State University (MSU) packaging students. The next day, they also will join the 100 or more MSU

packaging students in the public television broadcast auditorium to view ICPF’s teleconference and other 18–20 remote campuses via interactive connection.

For more information on participation, contact info@icpfbox.org.

International Corrugated Packaging Foundation I N T E R N AT I O N A L

PACKAGING

CORRUGATED

F O U N D AT I O N

Recruit 2019 Summer Student Interns and Graduates Through ICPF Now!

T

hroughout the year, ICPF has more than 700 students and upcoming graduates from 40 or more universities in its corrugated packaging network who wish to enter the industry. They rely on ICPF to alert them to specific openings in the industry.

ICPF’s Career Portal and Résumé Bank offer unique opportunities to fill your entry-level and student internship needs.

Over the past eight years, each entry-level position and student internship posted on ICPF’s Career Portal, or promoted through ICPF’s corrugated packaging career network, has attracted an average of seven qualified applicants. And ICPF’s searchable Résumé Bank always has over 200 current résumés for your review.

Students and upcoming 2019 graduates have already begun seeking positions for

next spring and summer. Do not delay on promoting your anticipated openings for packaging design, graphic design, sales, customer service, supply chain management, engineering, or business. For more information on using ICPF recruiting resources, contact info@icpfbox.org, or call ICPF at 703-549-8580.

ICPF Holiday Weekend in New York – Waiting List Now Available

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ith more than 110 registered for ICPF’s Holiday Weekend in New York, scheduled for December 7–9, we have another “sellout” for the weekend. However, you can be the first to sign up for the waiting list or determine if there is a new opening by emailing register@icpfbox.org.

ICPF wishes to thank its 2018 holiday weekend sponsors that include Pratt Industries, BW Papersystems, Fosber America, Bobst North America, Gerber Technology, and Greif.

Corporate supporters that are sending executives, their spouses, and guests to ICPF’s 2018 Holiday Weekend include Amtech/Futura, Arden Software, Atlas Container, Bobst North America, Buckeye Corrugated Inc., B W Papersystems, Cascades Containerboard Packaging, CEL Chemical, Corrugated Replacements Inc., Dicar Inc., DiTech York, EFI, Fosber America, Gerber Technology, Goepfert Maschinen, Green Bay Packaging, Greif, Harris Packaging, Huston Patterson, Jamestown Container, JB Machinery, JM Fry Printing Inks,

Kiwiplan, Kruger, Landaal Packaging, Mid-Atlantic Packaging, Pratt Industries, PXI Digital Solutions, Signode, Smurfit Kappa, Sumter Packaging, Testing Machines Inc., U.S. Corrugated Inc., Viking Paper Corp., WestRock, AICC, and the Fibre Box Association (FBA).

An additional thank-you to Smurfit Kappa, which provided weekend event promotion designs and materials. AICC, FBA, TAPPI, BCN, Container-Board. com, Corrugated Today, NV Publications, PPI Publications, and RISI additionally provided promotional assistance at meetings, in publications, and on websites throughout the year.

To learn more about the weekend events, visit www.careersincorrugated.org.

It will be another fun weekend where executives, with their spouses or guests, can support ICPF while socializing and enjoying the best of New York City during the holiday season.

Richard Flaherty is president of the International Corrugated Packaging Foundation.

BOXSCORE www.aiccbox.org

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The Final Score

The Annual Report: Beyond the Numbers

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t’s annual report time, and in this issue of BoxScore, you will find AICC’s 2018 Annual Report to the Membership (see Page 66). As with most annual reports you might read throughout the year, ours is a recapitulation of our financial results, membership numbers, program attendance, and meeting participation by you, our members. This is the stuff of annual reports.

This year, I want to highlight some nonquantifiable qualities behind AICC’s successful performance and influence in our industry. These reveal the real strength of your Association beyond revenue, expenses, and the health of our balance sheet.

The first of these is the incredible quality and character of AICC’s leadership structure, as seen in its board of directors. From the start of this Association, its founding fathers crafted a most sustainable leadership succession path, through which member volunteers serve in measured terms defined by orderly progression to higher levels. Those who step into the “chairs,” as we say, are five in number, providing a long-term view of the Association’s leadership direction. I commend you to BoxScore’s masthead page, where your current board of directors is listed.

Second on my list is the wonderful influx of enthusiasm and energy provided by our Emerging Leaders. When Mark Mathes of Vanguard Packaging served as chairman of the Association in 2013–2014, he made it his first priority to establish this group to help us focus on the future of our industry. “Too much gray hair in the room,” he said then. Now in its fifth-anniversary year, AICC’s Emerging Leader program has brought more than 150 young and future executives together to learn, share, and network, all for the betterment of their companies and the future of our industry.

Third, I want to give a deserved shoutout to AICC’s dedicated professional staff here in our offices in Alexandria, Va. What impresses me most about this group is their long-term loyalty to you, our members, through their service on AICC’s staff. Taking me out of the mix because I skew the numbers, the average tenure of your Association’s staff is more than 10 years, ranging from 20-plus down to two years. In a town where there’s an association of some kind or another on every corner, our staff’s loyalty to our industry is exemplary.

I know you will see in this year’s 2018 Annual Report to the Membership the quantifiable strengths of your Association. I hope you will understand the qualitative strengths, too, in your board leadership, our future Emerging Leaders, and our dedicated AICC staff.

Thank you for your continuing support.

Steve Young President, AICC

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BOXSCORE November/December 2018

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