Nov/ Dec BoxScore: Welcome New Chairman

A PUBLICATION OF AICC, THE INDEPENDENT PACKAGING ASSOCIATION

November/December 2019 Volume 23, No. 6

WELCOME, AICC CHAIRMAN

JAY CARMAN

Family, opportunity, and bringing a growth mentality to the Association

ALSO INSIDE A Sustainable Crossroads Time to Get Greener AICC’s 2019 Annual Report

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BOXSCORE November/December 2019

TABLE OF CONTENTS November/December 2019 • Volume 23, Issue 6

COLUMNS

40 FEATURES

40

WELCOME, AICC 2019–2020 CHAIRMAN JAY CARMAN Family, opportunity, and bringing a growth mentality to the Association

48

A SUSTAINABLE CROSSROADS

48

TIME TO GET GREENER Greener boxes are driving innovation among glue, coating, and ink manufacturers

58

AICC’S 2019 ANNUAL REPORT

CHAIRMAN’S MESSAGE

4

SCORING BOXES

8

LEGISLATIVE REPORT

12

MEMBERS MEETING

20

ASK TOM

24

SELLING TODAY

28

TACKLING TRENDS

30

ANDRAGOGY

32

LEADERSHIP

62

THE ASSOCIATE ADVANTAGE

64

STRENGTH IN NUMBERS

72

THE FINAL SCORE

DEPARTMENTS

The latest on one company’s encouraging expansion

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10

WELCOME, NEW & RETURNING MEMBERS

37

GOOD FOR BUSINESS

Members’ use of AICC programs grows significantly in FY 2019

58 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. ©2019 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

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OFFICERS Chairman: Jay Carman, Stand Fast Packaging Group, Carol Stream, Illinois First Vice Chairman: Gene Marino, Rusken Packaging Inc., Cullman, Alabama Vice Chairmen: Jana Harris, Harris Packaging/American Carton, Haltom City, Texas Matt Davis, Packaging Express, Colorado Springs, Colorado Gary Brewer, Package Crafters, High Point, North Carolina Immediate Past Chairman: Joseph M. Palmeri, Jamestown Container Cos., Macedonia, Ohio Chairman, Past Chairmen’s Council: Al Hoodwin, Michigan City Paper Box (RB), Michigan City, Indiana President: Michael D’Angelo, AICC Headquarters, Alexandria, Virginia Secretary/General Counsel: David P. Goch, Webster, Chamberlain & Bean, Washington, DC Counsel Emeritus: Paul H. Vishny, Esq., Chicago, Illinois AICC Canada Director: Jana Marmei DIRECTORS West: David DeLine, DeLine Box Co., Denver, Colorado Southwest: Eric Elgin, Oklahoma Interpack, Muscogee, Oklahoma Southeast: Ben DeSollar, Sumter Packaging Corp., Sumter, South Carolina Midwest: Casey Shaw, Batavia Container Inc., Batavia, Illinois Great Lakes: Mike Schaefer,Tavens Packaging & Display, Bedford Heights, Ohio Northeast: Stuart Fenkel, McLean Packaging, Pennsauken, NJ AICC Canada: Terri-Lynn Levesque, Royal Containers Ltd., Brampton, Ontario, Canada AICC México: Pedro Aguirre Martinez, Tecnología de Cartón, Querétaro, México OVERSEAS DIRECTOR Kim Nelson, Royal Containers Ltd., Brampton, Ontario, Canada

DIRECTORS AT LARGE Finn MacDonald, Independent II, Louisville, Kentucky Guy Ockerlund, OxBox, Addison, Illinois Kevin Ausburn, SMC Packaging Group, Springfield, Missouri Nelva Walz, Elegant Packaging (RB), Cicero, Illinois EMERGING LEADER DELEGATES Daniel Brettschneider, CST Systems, Kennesaw, Georgia Cassi Malone, Corrugated Supplies Co., LLC, (SS), Chicago, Illinois ASSOCIATE MEMBER DIRECTORS Chairman: Pat Szany, American Corrugated Machine Corp., Indian Trail, North Carolina Vice Chairman: Joseph Morelli, Huston Patterson Printers, Decatur, Illinois Secretary: Greg Jones, Sun Automation, Glen Arm, Maryland Associate Board Director: Tim Connell, A.G. Stacker Inc., Weyers Cave, Virginia Immediate Past Chairman, Associate Members: David Burgess, JB Machinery, Weston, Connecticut ADVISORS TO THE CHAIRMAN Greg Tucker, Bay Cities, Pico Rivera, California Jerry Frisch, Wasatch Container, North Salt Lake, Utah Pat Szany, American Corrugated Machine Corp., Indian Trail, North Carolina PUBLICATION STAFF Publisher: Michael D'Angelo, mdangelo@aiccbox.org Editor: Virginia Humphrey, vhumphrey@aiccbox.org

SUBMIT EDITORIAL IDEAS, NEWS & LETTERS TO: BoxScore@theYGSgroup.com 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 Patrick Moore, Member Relations Coordinator Taryn Pyle, Director of Education and Leadership Development Alyce Ryan, Marketing Coordinator Steve Young, Ambassador-at-Large Richard M. Flaherty, President, ICPF 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

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 Creative Director: Serena L. Spiezio Art Director: Kurt Halvorsen Account Manager: Brian Hershey

ABOUT AICC We are a growing membership association that serves independent corrugated, folding carton, and rigid box manufacturers and suppliers with education and information in print, in person, and online. AICC membership is for the full company and employees at all locations have access to member benefits. AICC offers free online education to all members to help the individual maximize their potential and the member company maximize its profit.

WHEN YOU INVEST AND ENGAGE, AICC DELIVERS SUCCESS.

Chairman’s Message

Pathway to Growth

M

y name is Jay Carman, and I am president of the StandFast Packaging Group in Carol Stream, Ill. I am pleased to be representing my family’s company as chairman of this great Association, AICC. This is very special for my family and me because my father, John Carman, and his business partner, John Morrice, founded StandFast in 1967. They both were founding members of AICC in 1974, and my father was not only an active member of AICC’s Region 6, he also served for many years on AICC’s national board of directors as a regional director and director at large.

My wonderful wife Terry and I have two children, Samantha and Jake, who worked for the business and will hopefully work for it again in the future. We also have two nephews in the business, Kevin and Gabe Carman, who are showing great promise for our future as a company. Over the past 35 years, each of my brothers—Scott, Keith, and John Jr.—has also contributed to the growth and success of StandFast.

In this day and age, not many family businesses make it to the second generation, let alone the third. My brothers and I feel that we owe our current success to the prudent decisions made by our father and his partner in those early days of StandFast. A look at AICC’s 1981 membership directory shows that StandFast had a slitter, a taper, two flexo folder-gluers, two semiautomatic tapers, a flatbed die cutter, one stitcher, a few bundlers, and a unitizer. It was a typical sheet plant doing what was then typical brown box sheet plant business in about 40,000 square feet of space in Addison, Ill. Today, we are in a 360,000-square-foot facility in Carol Stream, and with our joint venture partners at Atlantic Packaging, we now have a share in our own sheet feeder, Blackhawk Corrugated.

So, how did we get from there to here? Through my father’s decision early on to join AICC and apply what he learned and leverage the contacts he made to grow his company. He and my mother never missed an AICC meeting; they were dedicated to the Association, and they made many friends along the way. Thanks to them, my bothers and I have engaged in our industry associations—AICC, the Fibre Box Association, and TAPPI—and by this, we have learned how to grow our company.

This will be my focus in my year as your chairman: What are the ways the AICC can help your company grow—whether in discovering new markets, expanding your plant capacity and investing in new equipment, or in educating and training your next generation of workers and leaders. AICC is our Association, and when we support it, engage with it, and dedicate time to it, our companies and our industry will grow.

Thank you for this opportunity to serve you in AICC.

Jay Carman President, StandFast Packaging Group Chairman, AICC

BOXSCORE www.aiccbox.org

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Scoring Boxes

Why Box Shipments Don’t Always Match Consumption

BY DICK STORAT

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Nondurable spending has grown at 3.3% during this period, while durable goods consumption has grown at a faster 4.1%.

Let’s zero in on some sectors important to boxmakers. Fresh produce: fruits, vegetables, and tree nuts are packageable agricultural products often protected by corrugated packaging. The long-term outlook for production of these goods is bleak. According to the U.S. Department of Agriculture, the long-term growth outlook for these packageable agricultural products between 2019 and 2028 is no more than a fractional 0.6% per year.

Only the production of tree nuts is expected to produce more than marginal

ooking at U.S. box consumption through the lens of consumption data offers a different view from the usual emphasis on production figures. In this article, we will examine the inflationadjusted average annual percentage growth rates of some box-intensive consumer spending categories. And we will see how those packaging opportunities translate into box shipments for domestic converters.

First, let’s look at overall spending.

Over the past five years, total consumer spending for goods rose by around 3% per year. As the chart below shows, that growth has picked up to 3.5% through the middle of this year.

Consumer Spending Goods

190

4.0% 3.5%

185

3.0%

Index (2009 = 100)

180

2.5% 175 2.0% 170 1.5% 165

1.0%

160

155

0.5% 0.0% Jan 2017

4

Feb

Mar 2018

Apr

May

2019

BOXSCORE November/December 2019

Jun

Jul

Aug

Sep

Oct

Percent change year-to-date

Nov

Dec

Source: BEA

annual increases, with growth projected at 2% per year.

Purchases of goods in grocery stores has grown at an average annual rate of 2.4% per year over the past five years.

Unfortunately, imports have grabbed the lion’s share of this growth, as the trade balance for food products has fallen from a positive $16 billion in 2013 to a negative 0.9 billion at the end of last year.

During the first half of this year, domestic food production has risen by a meager 1.0%, significantly lagging behind the 3.2% growth rate of inflation-adjusted consumption during 2018.

Nondurable goods other than food also account for a significant share of U.S. corrugated consumption: about 20% of all box shipments last year, according to the Fibre Box Association (FBA).

Boxmakers may be surprised to learn that the nondurable goods market sectors that receive these boxes have grown by only 0.6% annually during the past five years and have fallen by 0.6% during the first half of this year. By way of comparison, consumption of nondurable goods has grown at 3.5% during the first half of this year. Again, the growth of imports is the underlying factor in why box shipments into domestic nondurable goods markets have been so poor.

Durable goods are defined as those intended to last for three or more years.

They represent about 37% of total U.S. consumption of goods and a similar amount of total U.S. manufacturing production. In 2018, they accounted for less than 10% of corrugated shipments, according to the FBA. Durable goods consumption has been growing at a rapid annual rate of 6.8% over the past

Scoring Boxes

five years. But again, encroachment of imports has depressed domestic growth opportunities, even more severely than for nondurable goods. Over the past five years, domestic production of the durable goods market sectors into which U.S. boxmakers ship their products has been a paltry 0.4% per year, on average. During the first six months of 2019, these markets have grown by 0.7% per year, on average.

Box shipments direct to retailers have been growing more rapidly than any end use destination, as e-commerce growth disrupts traditional supply channels. By the middle of this year, nonstore retailers accounted for 11.8% of retail sales and were growing at a 10.6% rate, sustaining double-digit growth even as the sector has risen above a 10% share. Notably, e-commerce sales have overtaken the

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BOXSCORE November/December 2019

share of retail spending at general stores, a category that includes department stores and large-format stores such as Walmart.

Also noteworthy is that nonstore retailers are rapidly closing the gap between their sales share and grocery stores’ and restaurants’ shares, each currently having a 12.6% share. At the current pace of growth, nonstore retailers will have the largest share of any retail distribution channel by the end of next year.

Surging shipments direct to e-commerce and other retailers have resulted in lower shipments to manufacturers and wholesalers. Nearly 15% of box shipments go to wholesalers who package manufactured goods for distribution to retail outlets.

Even though wholesalers have some opportunity to benefit from growing imports, their growth has been squeezed

as more goods flow from manufacturers directly to retailers, bypassing wholesale distributors.

Over the past five years, the sectors of the wholesalers’ markets that consume boxes has grown by only 1.3% per year.

During the first half of this year, those shipments to wholesalers have declined by 1.6%, another reason for scant growth in box shipments amid consumer spending that is growing at more than 3% per year on an inflation-adjusted basis.

Dick Storat is president of Richard Storat & Associates.

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

Legislative Report

USMCA: Tell Your Members of Congress to Get Moving!

BY ERIC ELGIN

I

have to be honest and tell you that when the senior editor of BoxScore sent me a note reminding me that my column was due, I asked myself, “What can I possibly write about? How can I write a ‘legislative’ column when so little legislating is being done by our Congress?”

So, I scoured my document archives and found a column I wrote exactly a year ago, this one about the then-recently negotiated United States-Mexico-Canada Agreement, also known as “NAFTA 2.0.”

Remember this? You can be forgiven if you’ve forgotten all about it, as anything that can help our country, our economy, and our manufacturing sector seems to have been also forgotten by our elected legislators and the mainstream media.

A year ago, I urged you to contact your representatives and senators to voice support for this agreement. I acknowledged then, as I do now, that while the principal

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BOXSCORE November/December 2019

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.

At our 2019 Annual Meeting, held in September in Toronto, we were reminded by economist Paul Leclair that the pace of our U.S. manufacturing sector, as expressed by the Institute for Supply Management’s purchasing index, slowed in the first half of the year and dipped below the “50” level for the first time since 2013. Our North American

economy, dependent as it is on $1 trillion in U.S.-Canada-Mexico trade, could therefore certainly benefit by the passage of this trade agreement and give a shot in the arm to our customers and our business in the process.

So, I reissue the call I made last year: 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 representatives and senators know it. We’ve made it easy for you to do this— scan the QR codes below for the House and Senate directories.

We have an opportunity for a boost to our economy in the final approval of this agreement. Let’s do it!

U.S. Senate Directory

U.S. House Directory

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 & Returning Members

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ATLAS PACKAGING & DISPLAYS CHIP MEISSNER General Manager 13165 NW 38th Ave. Miami, FL 33054 Phone: 305-688-5096 www.atlaspackaginginc.com DEPENDABLE PACKAGING & SOLUTIONS DANIEL PETRUCCI President 5255 NW 159th St. Miami, FL 33014 Phone: 305-624-8338 www.buydps.com BOX EXPRESS MANUFACTURING STEVE WILSON Vice President 8320 Canford St. Pico Rivera, CA 90660 Phone: 305-624-8338 www.boxexpressmfg.com SOUTH COAST PAPER KENNY LOYD President P.O. Box 8053 Columbia, SC 29202 Phone: 803-758-4054 www.southcoastpaper.com CORRUGATOR BELT SERVICE LLC GERALD SABALLUS Service Manager & Founder 6536 Joliet Rd. Countryside, IL 60525 Phone: 708-267-0400 www.corrugator.com

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BOXSCORE November/December 2019

PSL USA 1 LTD GWEN ALMODOVAR Director of Operations 6248 Edgemere Blvd. #654 El Paso, TX 79925 Phone: 915-613-4426 HEADWAY INDUSTRIES LANCE G.F. HEAD President 5421 E. Dewberry Circle Mesa, AZ 85206 Phone: 269-598-0734 PREFERRED PACKAGING SOLUTIONS INC. SHELLEY L. VAN RIPER Senior Vice President 27000 Wick Rd. Taylor, MI 48180 Phone: 248-980-2276 www.preferredpkg.com SGSCO DANIEL FOURNEL Regional Sales Manager 3045 Chastain Meadows Parkway NW Suite 200 Marietta, GA 30067 Phone: 678-354-4800 www.sgsco.com

PAPER BOX AND SPECIALTY CO. JOE VAN DER PUY Operations Manager/Owner 1505 Sibley Court Sheboygan, WI 53081 Phone: 920-459-2440 www.weareboxes.com GREEN PAPER S.A. DE C.V. JOAQUIN ALBA General Manager Calle Vía Ferrocarril a Matamoros Km 7 St. Nicolás de las Garza, NLE 64443 Mexico Phone: +52 81-8158-9000 www.greenpaper.com LATAM PAPERS PATRICIO SEGOVIA Director JB Justo 1045, Torre Bosque, Piso 26 Buenos Aires C1425BVJ Argentina Phone: +54 11-205-8888 www.latampapers.com D ASTUR S.A. DE C.V. GONZALO GALERA TRILLAS Director General Calzada de la Viga 1183 Reforma Iztaccihuatl Ciudad de México, CDMX 08840 Mexico Phone: +52 55-2621-2765 www.kj.com.mx

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Members Meeting

AICC Members See the Future in Toronto

AICC members from around the world came together for the Welcome Reception, sponsored by EFI, during the 2019 Annual Meeting.

A

ICC hosted more than 550 attendees in Toronto, September 16–18, for the 2019 AICC Annual Meeting. The three-day event offered attendees innovative workshops, informative general sessions, five plant tours, and many networking opportunities. Attendees were also able to review entries for the Independent Package Design Competition and vote for the winner of the Innovator of the Year Award.

On Monday, after many had enjoyed a late-night mix-and-mingle the evening before, sponsored by Durst, the meeting kicked off with nearly 100 people taking part in tours of Kruger Packaging and Royal Containers.

While the tours were going on, 21 members participated in the Practical Innovation in Package Design Forum.

The one-day training began with Mike Schaefer, president of Tavens Packaging

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BOXSCORE November/December 2019

& Display Solutions, who began as a designer, sharing the CEO’s perspective on how designers bring value to the company. He explained, “This industry is all about people. … When working with salespeople, remember they are your customer. … Designers can make or break a person’s livelihood, depending on how they act or respond to the projects of your ‘customer.’ ” Later, Brent Lindberg, founder of Fuseneo, an innovative package design firm, and Graham Hough, principal packaging engineer at PCH Innovation Hub, helped attendees design for innovation. Attendees learned how to design for waste reduction and the machine's capability, while balancing innovation and practicality in structural and graphic design. These industry experts challenged attendees to consider new designs, incorporate sustainability in designs, and plan for designs that their

customers are expecting in e-​commerce, retail packaging, and more.

After the tours, 24 AICC Emerging Leaders (ELs), participated in Finding Your Voice & Increasing Your Impact, a session developed specifically for the next generation of leaders to help them gain influence and credibility in the workplace.

The afternoon also brought the focused session Distribution Packaging in an E-commerce World, which brought the following experts to the stage: François Martin, senior communications advisor, Bobst Switzerland; Monica White, associate laboratory director and certified packaging technologist, Advanced Packaging Technology Laboratories; and Paul Chambers, president and co-founder of the Subscription Trade Association and CEO and founder of Core3 Solutions, a parent company to Element5 Digital, Gentleman’s Box, Rocket Effect, Moka Boka, and Unity Management System.

They discussed the challenges faced by consumer packaged goods and e-commerce’s transformation of the role of consumer packaging, e-commerce packaging requirements, and the subscription-box market, as well as what they are looking for from suppliers.

Digital printing was also infused into many of the topics. Martin said, “You need to master digital one way or the other. You decide, or it will be imposed on you.”

Floor plant optimization and frustration-free packing were also hot topics of the day. In the discussion on subscription boxes, which is a $20 million industry, Chambers explained that designing subscription boxes is all about cost and being a one-stop shop.

That evening, new members and first-timers met with their AICC

Members Meeting

Jay Carman (third from left) began his tenure as AICC chairman during the 2019 Annual Meeting. His theme for the year, Grow With AICC, will be reflected at the 2020 Spring Meeting, themed Build a Future of Growth & Success.

ambassadors and the board of directors during a special meet-and-greet gathering before the welcome reception, sponsored

by EFI, which officially kicked off the meeting.

The following two days brought industry experts to the forefront during two general sessions and three two-day workshop sessions, as well as the showcasing of the 146 entries from 32 member companies received for the 2019 Independent Package Design Competition (to see the full list of winners, visit www.aiccbox. org/pdc) and tours of The Central Group’s Central Innovation Centre, Packaging Technologies Inc., and Gerrity Corrugated Paper Products.

During the general sessions, attendees were given the opportunity to vote on the AICC, Board Converting News, and Corrugated Today Innovator of the Year Award. First place was the “In-House English as a Second Language (ESL)

Program” developed by Michigan City Paper Box. Second place was awarded to JB Machinery for their “Fully Comprehensive Control Interface” submission, and the third-place winner was the “Production Scoreboard,” submitted

by EFI. Finalists included Stickle Steam Specialties with their entry “A Steam System Dashboard” and Advantzware with their entry “A Machine-to-Cloud Solution to Assess and Score Resources.”

Finn MacDonald, vice president of operations at Independent II, then presented the inaugural AICC Champion Award to two exceptional members: Ed Gargiulo, executive vice president of Equipment Finance Corp., and Greg Jones, vice president of global sales and aftermarket at SUN Automation, for their outstanding contributions in furthering the Association’s membership.

During the meeting, Tom Skinner, president of Phoenix Packaging Inc., was

honored with the AICC/Fastmarkets/ RISI Hall of Fame Award for his significant contribution to the independent sector of the corrugated packaging industry through active membership in AICC and broad-based involvement in the industry.

Attendees received an update on drupa from Claus Bolza-Schünemann, CEO of Koenig & Bauer AG and committee president of drupa.

Paul Leclair, vice president and chief economist at Numera Analytics, gave an update on global economic trends.

Leclair noted that U.S. manufacturing has been stellar for the past year but is beginning to slow. He continued, “I would suggest U.S. manufacturing is slowing because of the trade wars with China.”

Gregg Lederman, CEO of Brand at Work, energized the crowd and told the audience the three things employees

BOXSCORE www.aiccbox.org

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Members Meeting

Jim Nelson, Great Lakes Packaging Corp./Green Bay Packaging and chairman of the AICC Package Design Competition Committee, announced the 2019 winners.

across all generations crave: respect for what they do, a sense of purpose within the company, and strong relationships with colleagues and managers.

Rick Mercer, comedian and former host of The Rick Mercer Report, who is unapologetically Canadian, also shared stories of his adventures and life after his hit TV show.

AICC governance was also addressed, with AICC President Michael D’Angelo giving a report on the “State of the Association” and the new slate of officers, including new AICC Chairman Jay Carman, president of StandFast Packaging, being approved by acclamation.

Workshops covered U.S. and Canadian HR issues, the cost of printing, and employee engagement.

Christine V. Walters, JD, MAS, SHRM-SCP, SPHR, sole proprietor of FiveL, and Michelle Henry, partner at BLG, discussed Marijuana in the Workplace and Trends Impacting Employee Practices for the United States and Canada, respectively.

Lederman expanded on his keynote presentation to give concrete steps to

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BOXSCORE November/December 2019

increase employee engagement, using just 10 minutes a week and showing the link between employee engagement and a company’s profit. He also gave participants tools to define a company’s brand and explained how to align the workforce behind it.

Scott Ellis, principal of Working Well LLC, led the True Cost of Print workshop, which provided a cost-based logic for print and print equipment choices. The actual costs of production, as reported by experienced producers of lithographic, flexographic, and digital print, were compared and analyzed in an advocacy-​f ree environment.

During the meeting, there were a variety of networking opportunities, including ax-throwing for the AICC ELs, the awards luncheon sponsored

by Cascades, a night at the theater to see Come From Away, a networking reception sponsored by Equipment Finance Corp., and a folding carton and rigid box dinner sponsored by Alliance Machine Systems International LLC, Baumer HHS, Emmeci, and PPCTS. AICC thanks our meeting sponsors, who help make the meeting possible:

• Premier Gold: Poteet Printing Systems • Premier Silver: HP • Premier Bronze: SUN Automation Group • Welcome Reception: EFI • Networking Reception: Equipment Finance Corp.

• Networking Lunch: Cascades • Technology: Mitsubishi Heavy Industries • Mobile App: Baumer HHS • Welcome Refreshments: A.G. Stacker • Late Night Mix & Mingle: Durst • Folding Carton & Rigid Box Dinner: • Alliance Machine Systems International • Baumer HHS • Emmeci • PPCTS • Hotel Key Cards: Koenig & Bauer • Lanyards & Bags: Stafford Corrugated • Room Drop: Bay Cities • Program Guide: Huston Patterson • Closing Keynote: AICC Canada Members are encouraged to save the date for the upcoming 2020 AICC Spring Meeting and the 7th Annual Independents’ Cup Charity Golf Tournament, April 1–3, at the Omni La Costa Resort & Spa in Carlsbad, Calif.

Registration will open in mid-December.

Questions about the 2019 Annual Meeting and the value a well-connected workforce brings to a company can be directed to Cindy Huber, AICC director of conventions and meetings, at 703-8362422 or chuber@aiccbox.org, or Laura Mihalick, senior meeting manager, at 703-836-2422 or lmihalick@aiccbox.org.

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Members Meeting CONGRATULATIONS, INDEPENDENT PACKAGE DESIGN COMPETITION WINNERS! Since 1981, AICC has been proud to recognize, showcase, and reward those independents that have met and exceeded their customers’ expectations of their packaging designs and displays. In conjunction with the 2019 Annual Meeting, AICC held its 2019 Independent Package Design Competition.

This biennial competition received 146 entries from 32 member companies. The competition featured 42 corrugated, folding carton, and rigid box categories. Additionally, the coveted Judges’ Choice Awards were bestowed upon the top picks for corrugated structure and graphics, folding carton, and rigid box. The final award was given for the People’s Choice, the best overall as selected by the attendees.

Judges for the competition included: Cordes Porcher, Check Five Productions SARL; Chris Heusch, ARCH Inc.; Ben Dolezal, University of Texas at Arlington; Juan Martorell Climent, Color in Lab; Rick Putch, National Steel Rule; Gary Cooke, Stafford Cutting Dies; Rick Reinsch, Digital Recollections; Dan Malenke, PKGPRO, LLC; and Robert Meisner, UW Stout.

AICC offers special thanks to Jim Nelson, Great Lakes Packaging Corp./Green Bay Packaging and chairman of the AICC Package Design Competition Committee for his leadership and oversight of the competition.

Here are the winners:

First Place: Spinz BB – Pragati Pack India Second Place: Lakmé Absolute – Pragati Pack India

First Place: UPB Customer Folder – Utah PaperBox

Category 3: Confections First Place: Turtles 300g Lid & Base – Master Packaging

Category 8: Hybrid Packaging (combination packages)

Second Place: Dandelion Chocolate Advent Calendar – Capital Corrugated & Carton

First Place: Better to Know – Ray Products Inc.

Category 11: Family of Packages Category 4: Retail Food & Beverages & Alcohol Packaging First Place: Harken Coffee Box – Great Little Box Company Second Place: Hexagonal Cookbook – Grupo Gondi Third Place: High Liner Smoked Applewood Salmon – Master Packaging Honorable Mention: The Hillcart Tales: Blood Orange Tea Bags – Pragati Pack India Honorable Mention: Super Mix – Grupo Gondi

Category 1: Pharmaceuticals & Nonpharmaceutical & Medical Devices

Category 5: Hardware, Automotive, Marine, Household, & Recreation

First Place: SkinLite Cream – Pragati Pack India

First Place: Uncle Mike’s Holster – Utah PaperBox

Second Place: Sorafenat – Pragati Pack India

Second Place: Gold Tip Arrow Boxes – Utah PaperBox

BOXSCORE November/December 2019

Category 7: Company SelfPromotion, Advertising, Promotional, Product Promotion, & Collector’s Items

Second Place: Ink-Proof Folder – Utah PaperBox

FOLDING CARTON CATEGORIES

Third Place: Merit Blue Fire Monitor – Utah PaperBox

16

Category 2: Women & Men’s Cosmetics

Third Place: Smith 4D Mag – Utah PaperBox

First Place: Pennyback Mixers – Ray Products Inc. Second Place: ZHOU Family: Peptides & Keto – Utah PaperBox Third Place: Scotties 110 Count – Master Packaging Inc. Third Place: Royale 126 Count – Master Packaging Inc. Third Place: Royale 88 Count – Master Packaging Inc.

Category 13: Online Packaging Only First Place: Scentsy Sola Flower – Utah PaperBox

Category 14: Folding Carton Art & Design First Place: Scentsy Aladdin Box – Utah PaperBox Second Place: Semanario Hexagono: Caja Para Espagueti 6 pack – Grupo Gondi

Members Meeting

Third Place: James Avery – Michigan City Paper Box Co.

Category 8: Family of Packages

Category 4: Confections

Second Place: Nashville Towers – Michigan City Paper Box Co.

First Place: Jelly Belly 20-pc. Gift – Utah PaperBox Second Place: Applause Box – Ray Products Inc.

RIGID BOX CATEGORIES Category 1: Pharmaceuticals & Health Care Products/ Nonpharmaceutical & Medical Devices First Place: Farmacopia Farms: Grow Better, Eat Better, Live Better – Michigan City Paper Box Co.

Third Place: Garrett Popcorn Gift Set – Michigan City Paper Box Co.

Category 5: Technology, Electronics, Computer Products, and Toys, Games, Hobbies, & Crafts

First Place: Alex & Ani Family – Michigan City Paper Box Co.

Third Place: Enstrom 2-lb. Family – Utah PaperBox

Category 9: Alcohol Packaging First Place: Black & White Hipster – Pragati Pack India Second Place: Glenfiddich Gift Box – Pragati Pack India

First Place: Prosomnus – Utah PaperBox Second Place: Daily Kit CO2 Oil – Michigan City Paper Box Co. Third Place: Byju’s K3 Box – Pragati Pack India

Second Place: Vault Health – Ray Products Inc. Third Place: MicroVue Quidel – Utah PaperBox

Category 2: Women & Men’s Cosmetics First Place: Nivea Gift Pack – Pragati Pack India

Category 3: Personal Accessories, Jewelry, and Eyewear First Place: Alex & Ani – Michigan City Paper Box Co. Second Place: Jewelry Television – Michigan City Paper Box Co.

Category 6: Paper Products, Stationery, Office Supplies, & Retail Store First Place: Matrix Slipcase – Ray Products Inc.

Category 7: Company Self Promotion, Advertising, Promotional, Product Promotion, & Collectors’ Items First Place: Play Ball! Ticket Pack – Central Package & Display Second Place: Over 100 Years of Partnering With the Local Community – Michigan City Paper Box Co.

Category 10: Combination Rigid Set Box First Place: Nutrien Ag Solutions – Ray Products Inc. Second Place: Na Pali – Utah PaperBox

Category 11: Rigid Box Art & Design First Place: Cambria Promo – Central Package & Display Second Place: Enstrom Holiday – Utah PaperBox

BOXSCORE www.aiccbox.org

17

Members Meeting

CORRUGATED CATEGORIES Category 1: Innovative Structural Design, Consumer & Industrial Focus First Place: Liquidity Winery 4-Bottle Wine Carrier – Great Little Box Company First Place: 2-Pack Gift Pack Plus – BoxMaster Third Place: Soccer Ball Pack – Bennett Packaging of Kansas City Honorable Mention: Atlantic Mariculture Seaweed Flakes – Master Packaging

18

Honorable Mention: JMN BBQ Scraper – Master Packaging

Category 5: Flexo Print on Combined Board – Line Work & Nonprocess Screen

Category 3a: Floor Displays, Standees

First Place: Enstrom’s SM Gift Pack – Wasatch Container

First Place: Día de Los Muertos Flexo Wall (Day of the Dead) – Royal Containers

Second Place: McNeil Health Equity Shipper – Wasatch Container

Category 3b: Floor Displays

Third Place: Mailer for Candy Bar Samples – Tavens Packaging

First Place: Game of Thrones WOW Display – Bay Cities

Honorable Mention: TerrePURE: Quarter Horse Rye – Sumter Packaging

Second Place: Bumble Bee WOW Display – Bay Cities Third Place: Ryobi Days Train – Peachtree Packaging & Display Honorable Mention: Humpty Dumpty HD Weekender – Master Packaging

Category 4a: Direct Printing on Combined Brown Board – Line Work

Category 6a: Flexo Print on Combined Board – Standard or Modified Process Colors Used in the Reproduction of Built Color Images – Cartoon Art or Computer Art First Place: Zingerman’s Babka Box – Dynamic Dies Inc.

First Place: Beer Carrier – Gerrity Corrugated Paper Products

Second Place: Brooklyn Brewery East IPA Carton – Buckeye Corrugated, Rochester Division

Second Place: Secret Sauce Carton – Buckeye Corrugated, Tennessee Division

Third Place: Wilson AntOut – Royal Containers

Second Place: Oxford Pennant Carton – Buckeye Corrugated, Rochester Division

Category 6b: Flexo Print on Combined Board – Standard or Modified Process Colors Used in the Reproduction of Photographs or Original Art Continuous Tone Images

Category 2: Counter, Shelf, Power Wing, and PDQ Displays

Honorable Mention: 3Form RETF – Wasatch Container

First Place: True Bloom Anti-Wrinkle Moisturizer Box – Green Bay Packaging, Great Lakes Division

Category 4b: Direct Printing on Combined Brown Board – Line/Screen Combination

Second Place: EZ Garden – Green Bay Packaging, Great Lakes Division

First Place: Chairmans New Orleans 20″ – Master Packaging

First Place: Seagram’s 24-pk. Variety – Buckeye Corrugated, Rochester Division

Third Place: MoBowl Counter Display – Sumter Packaging

Second Place: PSU Bakery – Dynamic Dies Inc.

Second Place: Wilson Total WipeOut – Royal Containers

BOXSCORE November/December 2019

Members Meeting

Category 7: Best Application of Spot or Full Label With or Without Direct Print First Place: Juniper Mesa III – Wasatch Container Second Place: MoBowl Counter Display – Sumter Packaging Third Place: Jefferson’s Ocean Aged at Sea Wheated Bourbon – Royal Containers Honorable Mention: Lakeside Produce Costco USA Corrugated Master Shipping Tray, Peppers – Royal Containers

Category 10: Best Corrugated Self-Promotion First Place: Sealrite Cohesive Blister – Packrite Second Place: Snowman Holiday Gift/Promo – Abbott-Action Inc. Third Place: Christmas Wine Box – Gerrity Corrugated Paper Products Honorable Mention: Holiday Reindeer Promotional Gift – Tavens Packaging & Display

Category 11: Best Use of Corrugated Replacing Other Substrates

Category 8a: Digital Printing on Combined Board

First Place: Black Box Coffin – Peachtree Packaging & Display

First Place: Spiderman Club/Grocery Pallet Skirt – Bennett Packaging of Kansas City

Second Place: Corrugated Strawberry Quart – Moore Packaging

Second Place: WM Game Endcap – Bennett Packaging of Kansas City

Third Place: Aquarite Board – Packrite

Third Place: Hexagonal Dum Bin 2 Level w/ Header – Corrugados y Especialidades Honorable Mention: Boulevard 12-Pack – Bennett Packaging of Kansas City

Category 9: Form and Function: Using Corrugated Outside of Packaging and Displays First Place: Soccer Ball – Grupo Gondi Second Place: SMC Bee Foster – SMC Packaging Group

Corrugated Structure: Great Little Box Company – Liquidity Winery 4-Bottle Wine Carrier Folding Carton: Great Little Box Company – Harken Coffee Box Rigid Box: Pragati Pack India – Black & White Hipster

PEOPLE’S CHOICE Sumter Packaging – Employee Appreciation Plinko

Honorable Mention: Digirite Board – Packrite

Category 13: Corrugated Art & Design First Place: Employee Appreciation Plinko – Sumter Packaging Second Place: Tie Fighter – SMC Packaging Group Third Place: Game of Thrones Chair – Corrugados y Especialidades Honorable Mention: Airplane Models – BoxMaster

Third Place: Creations & Libations Easel Box – Sumter Packaging

JUDGES’ CHOICE

Honorable Mention: Boxes for Happiness, A Modular Cat Condo – Reliable Container

Corrugated Graphics: Wasatch Container – Enstrom’s SM Gift Pack

The next Independent Package Design Competition will take place September 13–15, 2021, at the AICC 2021 Annual Meeting in Chicago.

Thank iytoours!

Compet BOXSCORE www.aiccbox.org

19

Ask Tom

Your 2020 Priorities

BY TOM WEBER

C

onsider these three items priorities for 2020, then keep reading: • Higher productivity • More engaged team members • Lower employee turnover I present to you a solution below that makes your business better, faster, and smarter than you ever thought was possible.

Pursuit of Purpose Did you know that feeling connected to a sense of purpose is the largest contributor to overall employee well-​being, according to a study published by Gallup, titled Are Your Star Employees Slipping Away? Only a fraction of the U.S. labor market reports that they would use “career” and “purpose” interchangeably. Many employees do not feel their job is meaningful; instead, they view their job as a means to an end.

So, what’s wrong with showing up and collecting a paycheck? According to The Engagement Institute in a 2017 Conference Board study, disengaged employees cost organizations between $450 billion and $550 billion annually.

Feeling connected to a sense of purpose does more than boost overall well-being.

It can also create more loyalty and increase engagement and productivity.

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BOXSCORE November/December 2019

Some careers naturally lend themselves to making an easy connection to meaning and purpose. Teaching, caring for the sick or elderly, working with children and shaping the future, saving the environment, and public service are examples of careers in which employees may have felt inspired to serve the greater good. Finding the meaning or inspiration in feeding machines, mopping floors, running a forklift, or catching cartons off a gluer may pose a much greater challenge.

Finding Purpose and Meaning Here are my top five key points for your urgent consideration with your team(s): 1. Communicate your company’s mission statement and purpose more effectively. According to IBM, even if your company is not a nonprofit or purpose-driven organization such as an elder care facility, school for the blind, or disaster recovery service, this task may not be difficult. Even employees who play more of a supporting role or contribute behind the scenes can pride themselves on being a part of something bigger than themselves. Think of ways you can highlight serving others, relationships, customer experience,

and your company mission statement, vision, and values.

2. Recognize that not all employees find their sense of purpose through their career. Find ways to celebrate, recognize, and support personal accomplishments such as life events, hobbies, and employee aspirations to further professional and personal development. Launch an employee spotlight program, or highlight milestones and accomplishments in a company newsletter. You can also task your managers with finding out unique hobbies or interests from their employees and showing interest.

3. Create opportunities for employees to connect to their sense of purpose in the workplace. Wellness, leadership, event planning, and mentorship are all relevant tasks that can lend a platform for employees to tap into hidden talents and passions. Even though employees may not feel passionate about their actual job, giving them a platform to tap into other skills and interests can generate passion for their company and fulfillment from their job.

Powerful art deserves an extraordinary canvas.

Backed by the industry’s leading technical sales support and supply chain expertise, we offer a complete line of high-impact graphics grades. Created to the highest industry standards, each paper solution delivers award-winning quality and consistency for all your printing needs. Our DiamondTop™ substrates have earned five 2018 Excellence in Flexography Awards. Whether you need brightness, strength, durability or flexibility across printers, we can help.

Contact your WestRock containerboard representative.

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4. Acknowledge that some employees are meant to be with you for just a season. Some employees may be on a mission to pursue their passion, and while their interests and desires may not meet the needs of the company long-term, it can be helpful to maximize the enthusiasm and spirit of these employees by supporting their goals and encouraging transparency.

high level of social responsibility.

Lead by example when it comes to getting involved in your community, and encourage employees to do the same through company-sponsored events, paid time off to volunteer, and matching charity donations.

Employees who feel connected to the community where they live, work, and play have an overall higher level of well-being.

5. Be a purposeful organization.

Regardless of the industry, employees are drawn to companies with a sense of corporate social responsibility; 85% of employees said they were likely to stay with an employer longer if the employer showed a

If increasing employee engagement, loyalty, and job performance aren’t enough, consider the impact on the mental health of your employees. Having meaning in your life and feeling connected to a sense of purpose has a positive effect on mental health.

Become intentional about creating a culture that prioritizes purpose. Contact your AICC team of internal and external consultants as needed. Let us help you to develop your specific strategy that promotes purpose and increases engagement, loyalty, and productivity for 2020 and many more years to come.

Here’s to 2020 and an even greater purpose within your company, leading to enhanced customer and employee satisfaction!

Tom Weber is president of WeberSource LLC and is AICC's folding carton and rigid box techinical advisor.

Contact Tom directly at asktom@aiccbox.org.

XtendÂł New solutions for increased productivity

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BOXSCORE November/December 2019

01.04.19 15:03

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Leipa linerboard is the ideal, sustainable solution for flexographic printing digital printing point-of-purchase packaging

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Selling Today

3 Tips to Increase Your Inbound Marketing ROI

BY TODD M. ZIELINSKI AND LISA BENSON

Y

ou’ve probably read statistics that B2B buyers are well into the buying journey before they engage a potential solution provider. The statistics vary by study and company sampling; however, what appears to be evident is that self-research before engaging with a salesperson is common. More than 42% of B2B buyers surveyed for the 2018 Buyer Preferences Study (CSO Insights) said they wait until they have identified the solution to meet their needs before engaging a seller. This means that they have been doing research and shortlisting companies based on the information they are finding online.

Inbound marketing, which involves drawing customers to your website using content marketing, search engine optimization (SEO), social media, and digital advertising, can be a successful tool for capturing prospects early in the buying cycle. However, in the same study mentioned above, it was reported that 70% of buyers are waiting until they have a clear understanding of their needs before engaging. It becomes imperative that the content you are sharing through various marketing channels addresses the specific end customers’ needs and the value your company will bring over the competition.

This puts you in a position to help buyers evaluate and prioritize their needs.

‘Leads’ Are Coming In—Now What?

Many companies have engaged in what likely could be considered a successful inbound marketing campaign. People are coming to their website, they are filling out forms to get information or to download media, and the company now has a

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BOXSCORE November/December 2019

long list of “leads” to pursue. However, how qualified and successful are they if they don’t turn into sales—or even the right type of sales opportunity?

Once “leads” start flowing in through inbound efforts, they are usually handed off directly to the sales team. Some sales teams can become overwhelmed by the sheer volume, and therefore, many of the “leads” never go anywhere. It’s not the fault of the salesperson or team; they either don’t have time to follow up, or there isn’t a process in place to handle the flow. If the “leads” don’t convert, it hurts your ROI. The word “leads” is in quotation marks because it is casually tossed around by many in sales and marketing circles as a metric for success. The problem is when they don’t differentiate between marketing qualified leads (MQLs) and sales qualified leads (SQLs). There is a big difference, so let us define each.

When discussing inbound marketing, MQLs are those leads that you have lured to your site who have taken the bait and

filled out a form or requested contact.

Some of these people may buy from you, and some will never buy from you—e.g., not a good fit, competitor, researcher, curious person, etc.

Conversely, SQLs are prospects that have raised their hands and are ready to engage in conversation. They have likely filled out a contact-us form or otherwise have asked to be contacted by a salesperson, they present specific needs your company can fulfill, they have the right volumes, they are a decision-maker, and they have shared a specific time frame to buy (so, qualified). The challenge is that most inbound leads arrive in the MQL stage and need to be converted into SQLs. Here are three tips to help you turn more MQLs into SQLs. Target Market Profiling Allows You to Focus The appeal of inbound marketing programs is typically both the number of leads (volume) estimated and that people are coming to your site (so, the

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assumption that these leads are in the ready-to-buy stage). However, more isn’t always better, particularly if the leads fall into the not-the-right-fit bucket.

They just become noise and can actually negatively impact sales productivity (salespeople spending time on following up with leads that don’t fit the defined qualified status).

While you can never eliminate them completely, you can minimize the number of companies that aren’t a good fit by developing a target market profile or buyer persona. You may need to create more than one if you are in different industries.

Look at your current best customers and decide what makes them great.

Some attributes to include are: • Industries and applications in which you excel—and why you excel (e.g., solving a specific problem, issue, or need that is common to these segments).

• Type of sale (commodity versus specialty).

• Geography.

• Company size.

• Annual and lifetime spend (keep in mind a small startup today could turn into a large customer tomorrow).

• Annual/month spend and volumes.

• Contact titles—decision-makers and influencers.

All of your inbound marketing initiatives (website, SEO, blogs, white papers, social posts, etc.) should speak directly to the profiles you have created and should address their specific needs. This should help eliminate some companies that aren’t great fits from becoming MQLs. Having fewer targeted MQLs is better than having more ill-defined leads.

You can then whittle down the list of MQLs further by removing any that don’t fall within the parameters of your

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BOXSCORE November/December 2019

target market profile or buyer persona.

You may have to invest in a resource who can prescreen the companies on the list to determine whether they are a good fit.

Follow Up and Nurture Remaining MQLs and SQLs Following up and nurturing leads are essential steps in conversion. To do them efficiently and effectively, you need to have a process. We suggest following up immediately with any MQLs and SQLs you receive. Having a process in place will help you screen and manage opportunities to make sure they are fully qualified before hitting the sales team’s active pipeline.

Your process should include a way to monitor and track the progress. We recommend using a customer relationship management (CRM) system and marketing automation tools (MAT) that provide you with the technology, automation, and analytics required to measure the impact. Immediate follow-up (meaning within minutes of receiving the inquiry) will have a significant positive impact on your conversion rates. If the prospects are not followed up quickly, they will simply move on to the next provider, so speed of response is highly important to conversion.

MQLs that fit your target market profile should be placed in automated drip or nurturing programs. Email drip campaigns send out emails at specific intervals designed to educate MQLs, keep your brand in front of them, and provide news. An email nurture campaign is an automated campaign sent based on the MQL lead’s behavior, or because they responded as having interest at a future date and time (e.g., downloaded white paper, read case study, attended a specific webinar), and it is designed to guide the lead down the sales funnel to an SQL conversion.

In addition to the automated emails, the MQL should receive periodic follow-up within an agreed-upon time.

This means someone will need to call them and find out what their needs are and when they might be ready to buy.

Ask when you can call on them again.

Check in periodically, but don’t be a nuisance. In the meantime, drip and nurture email campaigns will keep your company name in front of them.

Track, Measure, Monitor You’ll never know your return on investment (ROI) if you aren’t tracking, measuring, and monitoring performance targets for your inbound marketing initiatives. If you have an inbound program, you are probably already measuring website visitors, bounce rates and time on site, website and landing page conversion rates, engagement, and possibly sales. It is very important prior to entering into an inbound program that your program implementor defines specific estimated goals for MQLs and SQLs. If your inbound provider does not define or will not define estimated goals, be very cautious in how you proceed, as we highly suggest these program estimates are a requirement for any inbound (or outbound) program.

To determine your true ROI, you will also need to track, measure, and monitor some sales elements. It is important to know how many MQLs will convert to SQLs and the move through your sales cycle and historical conversion rates in order to reach your desired sales goals. You can do this by identifying the stages in your sales cycle and associated conversion rates.

The stages in the sales cycle will depend on your business and may include MQL, SQL, initial meeting, site tour, RFP/RFQ/RFI, negotiate, and close. Knowing historical conversion rates specific to new account

STAGE

CONVERSION

STEP 1

MQL

15%

STEP 2

SQL

75%

STEP 3

On-site meeting, webcast, or conference call

40%

STEP 4

Scoping, proposed design solution

60%

STEP 5

Formal proposal, RFP, or RFQ

50%

STEP 6

Negotiate

95%

STEP 7

Close

development will help you know what type of flow you need in order to achieve your sales goals. Work backward from how many closures you need in order to reach sales goals, and using conversion rates, you can calculate the number of leads you need at each stage.

If you haven’t measured these, you can start with an educated guess. See the table above for an example.

Inbound marketing is a great way to reach potential customers early in the buying cycle and puts you in an excellent position to help them evaluate their

needs, hopefully converting them to a sale. However, without the right people and processes in place to follow up with MQLs and convert them to sales, you may be throwing your money away.

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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BOXSCORE www.aiccbox.org

27

Tackling Trends

More Better

Photo courtesy of Wikimedia Commons.

BY JOHN CLARK

T

he 1962 New York Mets baseball team set a record for futility that still stands today. They lost 120 of 162 games and usually lost by lopsided scores.

When asked by the press what he wanted for the next season, more players or better players, Mets Manager Casey Stengel replied, “More better players.”

Simple wisdom from the legendary Stengel—simple and correct. More better is what every business should strive for.

More better workers, more better systems, more better strategies, more better execution, more better customers, and more better bottom lines.

More Better People American entrepreneur Ross Perot coined a phrase about personnel recruiting that still resonates today: Eagles don’t flock.

You have to find them one at a time.

Your people are your most precious resource. From the person who answers the telephone to the driver who delivers the finished products to your customers and every step in between, the investment

28

BOXSCORE November/December 2019

you make in your staff is the most critical investment you make.

More Better Vision Baseball players tend to have visual acuity around 20/12, meaning that a baseball player can see from 20 feet away what the average person can see from only 12.

Being able to see what is coming is key to moving your business in the right direction at the right time, because you know you are going to see a lot of curveballs along your path to success.

More Better Processes The packaging industry is driven by processes and workflows that work to keep schedules up to date and customers happy. As lead times shrink, stronger and leaner processes must come to bear to keep quality, schedules, and deliveries in sync.

More Better Machinery Modern machinery provides improvements in make-ready time per order and

run speed throughput. Every minute that is reduced during make-ready creates a new time slot to actually make boxes and make money.

More Better Vendors As your business grows technically, so does your dependence on your vendors and suppliers.

More Better Customers Metrics to measure the value of a customer need to become part of your lexicon.

More Better Results And what became of those lowly Mets of 1962? Seven years later, they won the World Series. The franchise is now worth $2.3 billion.

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

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Andragogy

The Future of Packaging Needs You

BY R. ANDREW HURLEY, PH.D.

A

dweek recently posted an article that overviewed the two-year process PepsiCo invested in the September 2019 redesign of Lay’s potato chip bag graphics, which hadn’t been changed in 12 years. Even with 20-plus flavor varieties to manage, two years still seems to be a long time for that project.

Still, I’ve seen the redesign process take upwards of five years or as little as six weeks. That got me wondering not only about the process of redesign in different companies but whether professionals such as yourselves would be willing to share their process so I could, in turn, present them to my students. Many of our graduates are employed in your businesses, at your buyers’ offices, and across the supply chain; it could only be beneficial, for them and for you, if they had a better idea of what to expect in their new jobs.

30

BOXSCORE November/December 2019

Clemson University presents packaging knowledge to more than 1,000 students each year. One of the subjects covered is that of design analysis: What makes a design successful, what are its weaknesses, how can it be strengthened, and what impact does a redesign have on the product itself, as well as on the products sharing the shelf space? This design theory course helps students understand not only the huge impact that packaging has on consumer interest, but also how to invite consumer interaction. The longer consumers interact with a package, the more likely it is they will choose to purchase that item. I walk my students through 60-plus topics in human factors psychology and discuss how each one impacts the relationship between a consumer and a package. I also take them through other topics that affect consumers—directly or indirectly—including sustainability, color

theory, and brainstorming. Throughout the semester, they’re tasked with individual pieces of a design assessment report to ultimately prepare them to execute a package redesign.

In my course, we take 15 weeks to assess and redesign a package—significantly less time than the Lay’s redesign.

And that takes me back to my original question: How do you, packaging industry professionals, make your decisions about packaging designs? If I had a better understanding of how these kinds of decisions are made in your world, I could do a better job of helping my students understand what kind of processes they can expect to encounter in the workplace.

To that end, I would love to speak with you about your package assessment strategy. What techniques do you employ to make changes or updates? How long does it take? Who does the research and makes the decisions?

Are you open to sharing how you assess your client’s packaging and suggest improvements? If so, please reach out to me via email, and we can set up a time to chat about the questions above, or we can do an email back-and-forth.

Whatever your preference, I would love to hear from you. If you’re reading this, you have value to share. Help me relay it to the next generation by emailing me@ drandrewhurley.com, with the subject line “Next-Gen Improvement.”

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

Leadership

Counting the Costs

BY SCOTT ELLIS, ED.D.

W

hat does it cost to make a box by use of various print methods?

This is the question that Steve Young, AICC’s ambassador-​at-large, asked me to study. As a print method agnostic and an experienced researcher, I was pleased to create a white paper and present it at AICC’s Annual Meeting. The comparative study includes data provided by more than 50 packaging manufacturers and suppliers as it pertains to the cost to produce one exemplary box by various methods.

The results contribute to a data-driven discussion based on time and money required to manufacture. Recommendations are included for decision-making based on target markets, order sizes, and sales strategies. The resulting white paper, Costs of Corrugated Packaging Production Across Print Technologies; Comparing Apples to Hand Grenades, is available through AICC’s website.

Digital print technologies developed for packaging have dominated the discussion in the last few years, and the equipment manufacturers of conventional print methods have responded with innovation as well. For a few years, I have heard emerging digital print methods disqualified: “The cost of ink is too high!”

My consistent response has been to ask what the current spend is on ink. After some speculative accounting, the answer is usually “I don’t know.” One of the outcomes is the presentation of a template for comparison of real (i.e., all-in) costs.

I will refer the reader to the white paper for the full discussion and will focus on one example here—the failure to calculate the whole cost of ink. Based on the study, it is my opinion that ink cost will not be the deciding factor for anyone making a purchase decision on these technologies

32

BOXSCORE November/December 2019

Flexographic Ink Cost Example INK DELIVERY LABOR

$7.00

JOB COVERAGE ($4/MSF)

$76

INK LOST IN PRESS AND 10% BUFFER ($2/MSF)

$38

ADD 2 MINUTES OF SETUP

$7.53 $128.53

PLUS: PRORATED INK KITCHEN COST—INK COST DIFFERENTIAL

?

QUALITY VARIANCES RELATED TO INK MANAGEMENT ON PRESS

?

when it is offset by savings in tooling costs and response time. The deciding factors will be image quality and the market niche being targeted. However, ink cost has been an anchor bias for endless discussion.

With digital print, the liters of ink are added to the machine, and no additional ink-related labor is required across jobs (print heads notwithstanding). If there is additional adjustment, handling, stoppage, or delay related to ink, then it should be considered as part of the total ink cost. In this study, it was reported that digital ink cost averaged $79/MSF ($1,469 for the example). I was told by some who do have horses in this race that my number may be high by 25%, but this is the collected data. In order to demonstrate the logic for considering the all-in cost, we will use this number. Certainly, the cost of maintaining filtered and/or temperature-controlled air in a digital print environment is one factor that would need to be weighed against its benefits, not the least of which would be avoiding the use of four printing plates ($4,800).

To consider the comparative cost of ink alone in digital and flexographic printing, one would study the entire value stream of procurement, preparation, and delivery to

the machine, as well as waste of product.

The all-in cost in such a study might include the cost in time, maintaining and staffing an ink kitchen, labor and delays incurred in getting materials to the machine, and adjustments and variability introduced by the crews’ discipline in maintenance of the ink.

The comparison would also consider wasted inks due to all of the above and two additional factors. It is common practice to deliver full kits of ink to the machine regardless of the amount required for the job and the optimal ink characteristics for the given machine. If the kit is new, it is delivered at the manufacturer’s pH and viscosity. If the kit is used, it is likely in the same condition that it was when it left the previous machine. Solutions for cost reduction and increased productivity will include investment in expertise, personnel, and accountability to ensure: • That the amount of ink delivered to the machine accounts for the required coverage, a calculated buffer amount, and enough ink to compensate for the loss in a particular print station (as determined by a consumption log).

• That used inks are checked, adjusted, and relabeled (as required) to instill

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Leadership

crew confidence in these otherwise suspect materials.

• That new and used inks are adjusted for the particular machine prior to delivery.

• That checking and measured adjustment of inks on press be completed hourly and logged consistently.

• That if the machine has the capability to set up or clean up a print station during a press run, that capability is used to its full extent.

Using the data gathered for the sample job in the white paper, the cost of flexographic ink may be extrapolated. Two values are not available at the time of this writing, one being an hourly machine cost for the ink kitchen and the other being the amount of time and material wasted through poor ink management

practices of the crew. What can be known is the labor involved in delivery of ink to the press ($7), the ink applied to the job ($4.11/MSF per color), the additional time during the setup dedicated to ink cleanup (two minutes) multiplied by the machine time ($226/hour). The result shown in the table on page 32 may appear negligible until it is multiplied by the number of jobs completed over time.

If business decisions are to be made, then use of this method will help manufacturers move beyond the dismissive social media-style conversation to one that is rational and data-based.

Flexographic Printing: Raising the Standard January 29–30, 2020 Clemson, S.C.

This interactive seminar was created for those eager to become properly equipped to serve customers with a better understanding of flexography.

Learn more: www.aiccbox.org/calendar.

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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BOXSCORE TIPS, TRICKS, AND SOLUTIONS TO BETTER BUSINESS

AICC Toolbox

New Free Online Courses Available in Spanish

A

ICC has released Reducciรณn de configuraciรณn (Setup Reduction), Cรณmo especificar una caja (How to Spec a Box), and La Eficiencia General del Equipo en la Industria del Empaque (Overall Equipment Effectiveness), three new free online courses available in Spanish to AICC members.

Lean manufacturing techniques are explained in Setup Reduction, also available in English, to help eliminate waste in the changeover time between jobs. The waste reduction tool TIMWOOD is used by all the participants to identify seven types of waste. A video of a 10-minute setup shows the operators tracked using a spaghetti diagram, then the process of prioritizing and leveling the work is described. The duties, as well as the time it takes to accomplish them, are analyzed, and the necessary training is completed. Most often this results in a setup time reduced by half.

How to Spec a Box, also available in English, explains how to determine what type of box is being measured, determining the box construction material, preparing the box for accurate measurement, and finally, determining the inside length and width of the carton.

In Overall Equipment Effectiveness (OEE), a course also available in English, OEE is defined and shown to be a balanced and practical measurement for productivity. Scott Heilmann walks us through the steps to gather baseline measures, calculate OEE, quantify related savings, compensate for the changeover effect, and set motivating production goals.

AICC thanks Marco Ferrara and his team at Cajas de Cartรณn Sultana S.A. de C.V., and Juan Javier Gonzalez and Samuel Garcia Gonzalez of Cartrรณ S.A.P.I. de C.V., for their support in the translation of this valuable course.

AICC will soon release Spanish translations of Optimizing the Flexo Printing Process, created and translated with the support of AICC Education Investors J.B. Machinery, Absolute, Pamarco, and Printron, as well as Essential Principles of Water-Based Flexo Inks, created and translated with the support of AICC Education Investor BCM Inks.

The catalog of free online courses to AICC members is now over 60, with more added each month. More information about these courses and all AICC online education can be found at www.aiccbox.org/packagingschool.

BOXSCORE www.aiccbox.org

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Good for Business

AICC nnovation

Image courtesy of NAM.

A Cure for High Health Care Costs

A

ICC members now have access to National Association of Manufacturers (NAM) Health Care: a new benefits offering that simplifies the health care experience for both you and your employees through a convenient, easy-to-use web-based platform. Because NAM Health Care is offered within an association, we are able to join other manufacturing companies to purchase and manage coverages together, meaning more flexible options and quicker enrollment

previously available to only the largest manufacturers.

With NAM Health Care you have access to health care coverage and flexible benefit options for dental, vision, and life insurance.

Advantages include: • Access to more competitive product bundles.

• Full Affordable Care Act (ACA) compliance.

• Quicker and easier-to-use online enrollment process.

• Simple and convenient ongoing benefits management and administration.

• Reduced administrative costs.

Learn more at aicc.namhealthcare.com or 855-463-8856.

NAM Health Care is fully ACAcompliant, administered by Mercer, and sponsored by the NAM, of which AICC is a member. Plans are not available to member employers in all states, and all companies taking advantage of the plan must be in NAICS codes 31, 32, or 33.

Program administered by Mercer Health & Benefits Administration LLC AR Insurance License #100102691 | CA Insurance License #0G39709 In CA d/b/a Mercer Health & Benefits Insurance Services LLC

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BOXSCORE November/December 2019

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BOXSCORE November/December 2019

Welcome, AICC 2019–2020 Chairman

JAY CARMAN

Family, opportunity, and bringing a growth mentality to the Association

By Geoff Williams

I

f his father had liked his sales management job a little more, Jay Carman almost certainly wouldn’t be the new AICC chairman.

Carman definitely wouldn’t be the CEO of StandFast Group LLC, a Carol Stream, Ill.-based manufacturer of corrugated packaging and things such as retail displays, retail packaging, and graphic packaging.

But as fate would have it, in 1967, John Carman, a sales manager at Georgia-Pacific—the pulp and paper conglomerate—and another sales manager, John Morrice, were growing weary of their jobs. So they hatched the idea to start their own company, StandFast Packaging, which was initially located in Morrice’s basement in Lombard, Ill., a hop, skip, and—in today’s traffic—about a 41-minute drive from downtown Chicago.

They started with a band saw worth about $50 or $100—recollections differ—and they got to work creating and designing corrugated packaging and boxes. It was a bold move and a giant leap into the unknown. Both men had young families, but they obviously felt that they had what it took to start a company. Given that StandFast is now a second-generation business, they were clearly right.

BOXSCORE www.aiccbox.org

41

Jay Carman’s initiative to work with a positive mindset is paramount to StandFast’s admirable culture.

In fact, the company started growing right from the beginning. Not long after moving into Morrice’s basement, the two men moved out and into a 5,000-squarefoot building with a shipping dock. From there, as Jay Carman puts it, “they moved into another place and another place.” By 1975, his father and Morrice had bought a new 25,000-square-foot facility.

As we do every year when a new chairman takes the reins, we spoke to Jay Carman about the past—how he got into the industry—and about the future,

particularly what he hopes to accomplish while overseeing AICC. BoxScore: So, why did your father leave a perfectly good job with GeorgiaPacific to start a new company?

Carman: My dad was very focused on taking care of the customer, and he was a good salesman. I remember him talking about how he would get frustrated with certain things and would sometimes go with the truck driver to make sure that a delivery got made. I don’t know if he actually drove the truck, but he was very service-oriented. Also, he got frustrated

“My dad always made the business sound attractive and exciting, because he was constantly looking to grow. That’s why I came to StandFast.”

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BOXSCORE November/December 2019

with some of the bureaucracy, which sometimes got in the way of providing the best service to the customer. That’s how I remember it.

BoxScore: Did you know from the get-go that you would be working in the family business?

Carman: No, but at the same time, in my mind, it seems like the seeds were planted for a long time. Part of it is that my dad was very passionate about the business. He was always talking about it at home; he would take us to the plant on Saturdays, and we’d cut the grass. We were exposed to it ever since he started the company. He never explicitly said, “You’re going to be in the business,” but the idea of me being in the business was always there. It was in the fabric, if you will, of our lives. It wasn’t expected, but it was always in the back of my mind.

BoxScore: And you didn’t start out working for your dad’s business?

Carman: I started working straight out of college at Evergreen Marine Corp., an ocean freight carrier. I had an inkling that I would someday work in the family business, but I didn’t expect that to happen for at least another 10 years. My goal at that time was to first get my feet planted and work for a company outside of the family business. I wanted to get as much experience as I possibly could and be successful, on my own, then join my dad at StandFast. But two years later, when things were starting to click at Evergreen, he suddenly asked me if I would consider joining him at StandFast. That took me by surprise. I made a decision to join StandFast about a year later—a lot sooner than I had expected.

BoxScore: Maybe he asked you to start working at his company because things were clicking at Evergreen.

Carman: That may be.

BoxScore: So, was it an adjustment, going from a big ocean freight carrier corporation to your father and his partner’s business?

Carman: It was. At Evergreen, I was calling on mostly large companies, Fortune 500 companies. We would make appointments, and I never really made cold calls. So it was sales-driven, but it was more of a management trainee thing.

I remember my first day at StandFast, out on the road with John Morrice, my dad’s partner. He would wear a fedora, and we’d start making cold calls in an industrial area. It was a bit of a culture shock. At Evergreen, I had been in a nice office in Oak Brook, and all I could think was, “Whoa, this is quite different.” But once I got through the initial cold calling and adjusted to that, I realized that at the end of the day, sales are sales, and while it was a different approach than I was used to, your market was wider. You had a wider net to cast.

StandFast Began to Grow Fast John Carman knew what he was doing.

His company was doing well, making a very respectable $3.5 million in sales, but the company was getting close to celebrating 20 years in the business, and John and Morrice knew that they would likely retire sooner rather than later. And so Jay came to work for him in 1985, and not long after, John brought in his other three sons as well—Scott, Keith, and John Jr. Another son, Jeff, the youngest in the family, is working in New Jersey.

Kristin, Jay’s younger sister, has her Ph.D. and works in Washington, D.C., at the Patient-Centered Outcomes Research Institute as the director of public and patient engagement.

In 1992, just seven years after Jay started working for the company, John allowed his four sons to buy him out.

Morrice had taken the same offer a little earlier. He passed away in 2018. John is now 89 years old.

The 2000s saw a lot of growth for StandFast. For a time, it was seeing revenue growth of 25% or more a year.

In 2003, StandFast started employing continuous improvement methodologies, resulting in rapid growth, and with that growth came some growing pains. By 2004, the company had 90 employees and annual sales of $18 million. Carman recalls, “We were growing fast and struggling to keep pace.”

In 2006, the company was making $25 million, and it was then that the Carman brothers implemented strong leadership training to help their next stage of growth.

Will StandFast someday be a third-generation company? You never know. Carman’s son, Jake, worked at StandFast as a training and development specialist for 3½ years and then was bitten by the “entrepreneurial bug,” starting his own consulting business.

Staying focused on each and every project allows Carman to better measure StandFast's success.

Carman takes the necessary time to meet with his employees to stay on a path of growth.

Working closely with his teams, Carman ensures StandFast delivers for its customers with care and efficiency.

BOXSCORE www.aiccbox.org

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“I was exposed to some of the legends of our industry at the AICC meetings. It was interesting to get that experience, to see and observe some of the old guard up close.”

Carman’s daughter, Samantha, is a food stylist, crafting the look of burgers, chicken, and other delectable delights for Wendy’s commercials. She is happy with her career, but Carman thinks she may someday join the company. Carman’s wife, Terry, is a retired nurse.

Meanwhile, StandFast currently makes $55 million in annual sales and has 120 employees. In other words, it is doing very well, and AICC feels fortunate to have another experienced CEO at the helm.

Looking Toward the Future BoxScore: So, how long have you been involved with AICC? Carman: I attended my first AICC national meeting in Boston 31 years ago. At that time, my parents, who were founding members of AICC, were going to every national meeting as well as taking on active roles in the Association.

As my brothers came into the business several years after me, we took turns attending the meetings with my parents.

I became the Region 6 director in 2010

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BOXSCORE November/December 2019

Carman's commitment to open communication makes him an effective leader.

and continued to stay active on the executive board.

BoxScore: What do you remember of those first meetings?

Carman: My first regional meeting was very interesting because my competitors were there—who I had competed with in the local market. I thought to myself, “I’ve been quoting against this guy, and now we’re at this meeting together? How does this work?” But then you start figuring out that everyone who comes to

these meetings is trying to learn and grow.

I was exposed to some of the legends of our industry at the AICC meetings. It was interesting to get that experience, to see and observe some of the old guard up close.

BoxScore: What do you enjoy about being involved with AICC? Carman: The relationships you build are really wonderful. As I became director of Region 6, I started to get to know people better and started to create many

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lifelong relationships, where you really get to know people on a personal level. And that helps you professionally, of course.

We all have a lot in common, even if our markets are different or our companies are of different sizes. We can learn from each other. I’ve always enjoyed AICC for the personal connections you make, but I also think AICC is really good at understanding who you are and how to get you and your company the support that you need. You don’t feel alone when you’re a member of AICC. BoxScore: What do you hope to accomplish as the 2019–2020 AICC chairman?

Carman: My theme this year is about having a growth mindset and how AICC can help your company grow. My dad, as you can see, started small, but my dad

always thought big. That was a major difference between him and his partner.

His partner was a great guy. He would be happy in a 20,000-square-foot facility, and that’s great. There’s nothing wrong with that, if that’s what you want. But because of AICC, my dad saw what was out there. That’s why he moved into a new plant, and that’s why he got a flexo folder-​ gluer. He saw how other companies in AICC grew their businesses by purchasing new machinery. They helped him see that “hey, there’s a big world out there, and there’s opportunity.” My dad always made the business sound attractive and exciting because he was constantly looking to grow. That’s why I came to StandFast.

We continued to buy equipment over the years and kept growing the company. My brothers and I have certainly kept up that

“You don’t feel alone when you’re a member of AICC.” family tradition. So, I’d like to encourage my fellow AICC members who want that same path of company growth to get involved in AICC and take advantage of the many networking and resourcing opportunities that are available to them through AICC. Geoff Williams is a journalist and writer based in Loveland, Ohio. He can be reached at boxscore@ theYGSgroup.com.

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BOXSCORE November/December 2019

A SUSTAINABLE CROSSROADS The latest on one company’s encouraging expansion

By Ralph Young

A

Photos courtesy of Crossroads Paper.

n important announcement was made on July 10 regarding an independent greenfield containerboard mill to be built in the United States Intermountain West. AICC Ambassador-at-Large Steve Young, AICC President Michael D’Angelo, and I had the opportunity to talk with the three principals in early August. From sustainability and responsibility to growing within an evolving market, we learned why Crossroads Paper will be a fixture for decades to come.

Years in the Making While the official Crossroads Paper announcement occurred in July, the project began more than three years before. Visits, opinions, and advice started in 2016, three years before this article was written. We often see these announcements and think it was an overnight vision. For one, it’s seldom been that a recycling firm integrates forward with the building of a mill, but given the current conditions in China and Indonesia on imports of OCC/DLK/MOW, it’s a better play to stay close to the sources at home. The investigation began with conversations with the global suppliers of papermaking machinery and five specialty engineering firms. Next came the sending of project team leaders to mills, manufacturers, and engineering facilities across the U.S., Europe, Asia, and Latin America. The leadership team now believes they have the skills and knowledge to create a successful endeavor.

Who would have ever imagined a greenfield paper mill (not a repurposed or converted operation) in the Intermountain West region, so far removed from trees? Well, Pratt did a similar investment concept successfully in New York City many years ago, and so did McKinley/ Biopappel in Prewitt, New Mexico; Schwarz Partners has ownership in the Port Hueneme, California, and Ontario, Canada, mills, having purchased them outright. This Crossroads Paper venture has an updated vision and focus on the end user, whether retail or e-commerce.

Yes, end-user-driven! And in this new world where plastic is a dirty word, it is exciting to think there may continue to be unknown opportunities for paper-based packaging redesign.

What’s in a name? This one seems well chosen, as the Salt Lake City area is seen as a growing hub for transportation and logistics operations. It is the intersection of interstates 15 and 80, hence the

BOXSCORE www.aiccbox.org

49

In this new world where plastic is a dirty word, it is exciting to think there may continue to be unknown opportunities for paper-based packaging redesign. name. It is centrally located to the three fastest-growing states in the U.S.—Nevada, Idaho, and Utah. While populations are smaller than those of coastal metropolitan areas, manufacturing is growing, and this new mill is envisioned to have a good shipping circle.

Press releases from several local and national agencies picked up on the uniqueness of this venture, seeing it not just as another mill announcement. One article mentioned that the members of the entrepreneurial group were not incumbent players in the containerboard market and have not operated papermaking entities.

Well, that might be refreshing! Conceived from a view of near-term and future needs of retailing and e-commerce, it will not be a producer of the heavier-weight virgin fiber linerboard that makes its way into the produce, meat, and seafood markets that dominate the West Coast.

The Sasine Brothers John Sasine, CEO of Crossroads Paper, has a 30-year track record of successful entrepreneurship in the recycling industry.

As founding partner of Rocky Mountain Recycling, he has created the largest independent recycling company in the Intermountain West. Prior to founding the company in 1999, he worked in municipal recycling in California and Utah and was an executive with BFI and Waste

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BOXSCORE November/December 2019

Management. Under John’s leadership, Rocky Mountain Recycling has been recognized with Best of State Utah awards five times.

Ron Sasine, project development head of Crossroads Paper, has a 29-year career in containerboard and packaging manufacturing. He joined Westvaco (predecessor of WestRock) in 1990 at the company’s recycled-paper mill in Valinhos, Brazil. He then went on to lead sales of containerboard from Westvaco’s Charleston, S.C., mill to customers throughout Central and South America. Ron again relocated to Brazil in 1995, where he oversaw company strategy, M&A, and project development for the Valinhos and Três Barras mills.

Upon returning to New York City in 2002, Ron led global sales integration for the packaging division of MeadWestvaco before accepting a role to head up Walmart’s internal packaging development and strategy.

While at Walmart, Ron led the implementation of the company’s shelf-ready packaging program, working with corrugating companies and brand owners across the country.

Now a private consultant to leading packaging manufacturers, Ron is a frequent speaker on the packaging and corrugated box industry, having addressed SuperCorrExpo, AICC, Bank of America Merrill Lynch Global

Agriculture and Materials Conference, TAPPI, and other industry events.

Moving Forward Paul Busnardo, division president at CellMark Packaging Co., an Associate member of AICC, will lead the effort in the sales and marketing of the mill’s output. CellMark is a global supply chain service company providing products, services, and solutions to customers and suppliers all over the world. They facilitate trade and business development across multiple industries using a vast network of local offices and professional expertise.

Design features of the Valmet containerboard machine they will be running have not been revealed yet, but the choice of the front-end stock cleaning and preparation technology is critical in order to engineer world-class test liners and test mediums focused on low substances. It may be, from the design concept at this time, that it will be a modular concept in which upgrades and additional equipment can be added as necessary going forward. There must be a focus on being in the low-cost fourth-quarter performers domestically, and there should be a make-it-or-break-it decision criterion moving forward.

Here are some statements and statistics from various press releases: • 342,000 tons per year.

• Recover fiber supplied by an affiliated partner.

• 220-inch Valmet machine (that’s two 110-inch rolls).

• Cost of $320 million.

• They have stated the mill’s use of recovered/recycled water is only 10% of that of a virgin mill system.

Photos courtesy of Crossroads Paper.

• Greenhouse gas reductions are expected at the manufacturing site and in transportation.

• Fits the circular economy and sustainability issues.

• Designed to combine various amounts of MOW. • A low-end linerboard substance target of 19#–21#; while this is not the lowest weight made in North America and certainly not as low as Europe’s 13#, it certainly provides for corrugated redesign for a region that has been starved for these opportunities.

• A small 80-acre footprint.

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BOXSCORE November/December 2019

• 110 employees.

• No burning of nonfibrous containments.

• Credit Suisse is the financial advisor and will lead in the financing of the construction and the startup phases, including seeking other equity partners.

While the project is still in the engineering phases, as there has been no press announcement of the specifics of the paper machine design, we can look forward to more insights regarding the following:

• Choice of the forming section, cleaning and screening systems, press size, testing protocols, physical properties, etc.

• Those that they will partner with downstream.

OCC/DLK/mixed-fiber machines today swing fiber content back and forth, depending on recovered-fiber pricing.

While one mill system in North America is built around 75% mixed office waste as their main furnish, that is not the concept at Crossroads Paper. At the time of this writing, in their projected startup

year of 2022, they will be the only truly independent paper mill in the region without downstream converting.

Shipping lanes to West Coast converters are probably a little farther than to other new or converted mills, but local converters will have significant freight advantages.

In addition, backhaul opportunities exist for recovered fiber because of the owners’ businesses. With their initial vision, how far out will they reach (deliver roll stock and backhaul recovered papers)? There is only one other mill in that area, and McKinley Paper/Biopappel has announced that they plan—even with their two transformed newsprint machines in Port Angeles, Washington—to be completely integrated by 2020. So that probably removes Crossroad Paper’s closest competitor for low-grammage test containerboards.

Efforts will continue to investigate and partner with chosen combiners, converters, and packaging designers to maximize the strength and print characteristics of Crossroad Paper’s materials.

They should be well positioned to tackle the Amazon Packaging Support and Supplier Network initiatives that took effect in August.

Final details will be communicated in early 2020. The global impacts of Asia may not have a direct effect, since Crossroads Paper will operate in a somewhat secluded region of the country. They are in the fastest-growing states as people continue to leave the three West Coast states to move east. Manufacturing will follow. Look for the company’s principals at AICC national meetings and summits. The mill’s location has good universities and engineering programs, although not with a papermaking focus. Labor is available, and a metropolitan city with outdoor recreation

activities is a drawing card. Local support has coalesced around the project’s clean water and air initiative.

Ralph Young is the principal of Alternative Paper Solutions and is AICC’s technical advisor.

Contact Ralph directly about technical issues that impact our industry at askralph@aiccbox.org.

Who would have ever imagined a greenfield paper mill in the Intermountain West region, so far removed from trees?

BOXSCORE www.aiccbox.org

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BOXSCORE November/December 2019

TIME TO GET GREENER More eco-friendly boxes are driving innovation among glue, coating, and ink manufacturers

By Robert Bittner

I

n discussions of current market trends— what’s hot, what’s not—one topic stands out: “Within the boxmaking industry, there is a huge emphasis on and push toward eco-friendly, biodegradable, and compostable packaging,” says Maria Ceschan, digital marketing manager for LD Davis Glues & Gelatins. “Many of the calls we receive are from companies that are reevaluating their raw materials to accomplish a truly eco-friendly finished product.”

The situation is similar for manufacturers of coatings and inks, three important but sometimes overlooked ingredients in a successful box.

As boxmakers push the envelope to provide innovative products for changing needs, so do the manufacturers of the glues, coatings, and inks that help to create a complete package. Although each is used in relatively small quantities compared with chipboard or corrugated, their contributions can be critical. As Ceschan notes, “If the glue fails, the entire package fails.” That’s equally true for coatings and inks.

The Power of Protein LD Davis specializes in gelatin-based protein glues. And currently, “our protein glue line for rigid box is our most popular adhesive product,” says Kelly Benjamin, the company’s inside technical sales manager.

Protein glues, despite their superiority for many applications, had fallen out of favor due to their past dependence on animal-​derived gelatins. They are returning to the “hot spot” now, as a result of being both highly biodegradable and developed from nonanimal protein sources. “[Some] boxmakers have been using adhesives that are not necessarily considered eco-friendly or biodegradable,” Ceschan says. “Now, companies are rethinking all of their raw materials and how they affect recyclability.

“Our protein glues are not being made from animals,” she continues. “We purchase gelatin from the pharmaceutical/ nutraceutical industry. Before LD Davis started formulating glues with this raw material, it would have ended up in

landfills. We’re able to recycle this material and formulate it into an eco-friendly and biodegradable adhesive.”

Protein glues play a critical role, particularly in folding carton and rigid box production.

“Gelatin-based glues are an excellent option for boxmakers,” Ceschan says, “but they are inherently different when it comes to adhesive open times, required compression, and application equipment.

Protein glues can take up to 10 seconds to set, while hot-melt glue”—the main alternative—“bonds in a second. Still, we’re always looking to push ourselves to improve our formulas and the raw materials, so that may improve in time.”

Traditionally, hot-melt glues are polymer-based, and most waxes used in them are petroleum-based—meaning many of them cannot be dispersed in water, making them difficult to recycle.

“Hot-melt glues have fallen out of favor with the shift toward more eco-friendly packaging,” Ceschan notes.

That situation may change as manufacturers continue to innovate. “I think we’re

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“[Some] boxmakers have been using adhesives that are not necessarily considered eco-friendly or biodegradable. Now, companies are rethinking all of their raw materials and how they affect recyclability.”

— Maria Ceschan, digital marketing manager, LD Davis Glues & Gelatins

going to see a lot of large manufacturers push for an eco-friendly hot-melt option,” Ceschan says. “Boxmakers either need to move away from hot-melt if they want a compostable product, or adhesive manufacturers need to reformulate their hot-melt glues for the industry, so they are eco-friendly.”

“Typically, different equipment is needed for applying the two different kinds of glues,” adds Benjamin. “But recently, some companies have been testing our protein glues to see if they can replace their hot-melt glues in certain kinds of equipment.”

She points out that if manufacturers can find a way for protein glue to work within a hot-melt environment, it would become more cost-effective for companies to make the switch to the more environmentally friendly product. “Currently, several hot-melt equipment manufacturers are retrofitting their equipment to be compatible with our lower-temperature gelatin-based glue. It’s a great alternative to hot-melt glue, since no solvents are required for purging and cleanup.”

Protect and Serve At Astral Adhesives & Coatings, the focus is on developing barrier coatings for the box industry that protect against water, oil, grease, and abrasion or enhance bake-in functionality. “We’re a liquid supplier,” says President Vikas Singhal. “All we do is develop and sell proprietary chemical formulations.

Customers apply the coating, mostly in an offline operation, to linerboard,

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BOXSCORE November/December 2019

which is then shipped to corrugators and converters.”

Like LD Davis, Astral Coatings is hearing from customers concerned about greener boxes. It is a message the company has been advocating for years.

“Not only must a coating be recyclable and compostable, every coating we sell is FDA-compliant, even if it isn’t being used on food,” Singhal explains.

“Our customers don’t want to have to maintain multiple different coatings in inventory.”

For example, he points to window manufacturers. “Everything that ships goes into a corrugated container with an anti-abrasive coating on the inside. End customers don’t want scratches or buffs on their windows. Food packaging uses a similar coating. When you ship cheese bags in a corrugated box, they tend to move in the box. They can abrade. If the bag wears too much, you lose the inert atmosphere in the bag that is helping to keep the cheese fresh.

“A lot of corrugated packaging requires certain levels of oil or water/grease resistance, from basic produce to packaged meat or seafood,” he continues. “You need a water barrier on the inside of the box to prevent the box from degrading.”

Boxes in the past might have relied on paraffin-based wax coatings to protect the contents. The move toward more recyclable boxes has led to wax waning in the marketplace—a marketplace poised for continued growth. “One segment we’re starting to feel excited about is in folding carton, the takeout

food container,” Singhal says. “Most have a polyethylene film on the inside that’s laminated to chipboard or SBS substrate. But that makes it nonrecyclable. We’re hearing that there’s a big push from retailers and grocers concerned about the environment”—think Whole Foods, Trader Joe’s, etc.—“to have a coated substrate that would make that container recyclable and pulpable.”

Singhal believes that segment represents his company’s largest growth opportunity.

Printing Green At BCM Inks, the focus is on developing inks for flexo printing. “Our primary product line includes water-based inks, overprint varnishes, and additives,” says Darl Jones, chemist and quality-​ assurance manager for BCM Inks USA. “We break our inks down into families based on different varnish formulations designed to maximize performance based on the type of press, type of paper, and so on.”

The growing popularity of digital printing in the industry is leading the company to explore innovative ways to improve finished digital products while maintaining the benefits that come with water-based chemistry. “Recyclability is very important to us,” Jones says.

“All of our products are designed to be eco-friendly. And we constantly work to develop formulation variations and explore new materials and new technologies to give a boost to what we currently do, and to eliminate problems.”

“Not only must a coating be recyclable and compostable, every coating we sell is FDA-compliant, even if it isn’t being used on food.”

— Vikas Singhal, president, Astral Adhesives & Coatings

For example, he says, “Right now, we’re designing a family of digital primers that enable digital inks to adhere better to substrates and enhance their physical properties.”

He has also been at work on an eco-friendly UV coating. “Some UV coatings out there claim to be recyclable,

but I question that, based on their chemistry. I’m now developing a waterbased UV coating to get away from the problems that come with conventional UV coatings, which have some issues regarding the safety of the chemicals, disposal, and cleanup.

“The system I’m designing is meant to be more green,” he adds. “It was designed for people using flexo so they could use their current equipment, including their existing dryers for curing. It has the same rub resistance as UV coatings do.” However, he says, “It can’t quite meet the gloss levels yet.

We are currently at 60%–70% of the gloss capability of UV coatings.” He is confident his lab will solve that issue.

“We are constantly working to stay competitive,” Jones says. “We started on this project about a year ago and are currently conducting press tests. We have several customers who would love to move toward a water-based product, so we’re ordering enough materials to be able to test for several different

THE INK DEBATE Darl Jones, chemist and QA manager at BCM Inks USA, notes that he’s not aware of any inks that have fallen out of favor in recent years. He is aware, however, of the continuing growth potential for digital UV-cured inks.

Digital printing presents a special challenge for boxmakers when it comes to ink choices. Digital printing allows for fast turnaround and a more economical approach to small print runs. Yet the process relies almost exclusively on polymer-based, UV-cured inks, which are not recyclable.

Therein lies the dilemma. UV-curable digital inks are known for their quick drying and curing times, their adaptability to a wide range of print surfaces, and their ability to maintain vibrant color and contrast as a result of the curing process, which transforms the ink into a durable, waterproof polymer film. Speed, color, and

companies. I’m hopeful that the first formula will be finalized and ready to go to market by the end of this year.”

Trending to the Tipping Point The ongoing trend toward greener products is leading boxmakers to innovative products and new solutions to old challenges. But it doesn’t come without costs—costs that have likely helped slow this trend in the past.

“There’s a premium for these more recyclable, environmentally responsible products, at least in the initial phases,” says Singhal. “A lot of these conversions have to take place when the market is ready—and ready to accept that some of these positive changes will come with an increased cost.”

For many, it seems that time has come.

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

precision are highly desirable. For many customers, though, so are recyclability and compostability—areas in which digital inks suffer precisely because of their polymer component.

Water-based inks—while not always necessarily recyclable, compostable, and nontoxic—could serve as the better option for boxmakers desiring greener products. Downsides include extended drying time, incompatibility with some substrates— which could lead to a reduction in quality—and the possible need for presses specifically designed to handle water-based inks.

Jones suggests that the chemistry is so different between UV-cured inks and water-based inks that it would be a major undertaking for an ink manufacturer to transition from one to the other. BCM Inks will continue to explore new strategic solutions while remaining committed to its core customers. Even so, he acknowledges, “Things are moving more toward the digital side for the flexibility and the ability to do more intensive graphics work than conventional flexographic presses allow.”

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2019 ANNUAL REPORT Members’ use of AICC programs grows significantly in FY 2019

A

ICC’s 2019 fiscal year (FY 2019) ended June 30. AICC grew its success in penetrating deeper into member companies at all levels with relevant and accessible programs that drove big numbers in terms of member utilization. Online education content continued to expand, spurred by the growth of Education Investor-driven course content along with multiple softskills courses. Member participation in all AICC education programming exploded with online logins at all-time highs and course completions approaching 2,000 as the fiscal year ended. AICC’s Digital Xperience held in Charlotte, N.C., in February needed to expand its space five times in order to accommodate what ultimately were more than 220 attendees.

Studies show that investing in employees is one of the keys to retaining employees and that employees consider training to be a critical investment in their growth in the organization. Beyond retention, AICC added an important program to assist members with their other big challenge, finding qualified people for their manufacturing operations. AICC partnered with JobPath, a unique online platform created by veterans for veterans

and their family members seeking jobs in manufacturing. AICC members can post jobs and find candidates at no cost to them. JobPath takes military résumés and puts them into “civilian speak” and, conversely, takes job postings and puts them into military parlance to allow both sides to understand expectations and talents.

Membership Consolidation of the industry continues, yet AICC welcomed 17 new general members into the Association and 23 new Associate members. Dues revenues totaled $1,574,502 in FY 2019, up from $1,516,087 the prior year. The Association’s membership retention rate was 92% and continues to be at the top of manufacturing trade association retention standards, according to the Council of Manufacturing Associations’ recent membership study. The total number of AICC member corporate entities, national and international, general and associate members, is 496. General members are boxmaking members. Associate members are suppliers of machinery, materials, ancillary equipment, and services to boxmakers.

Associate 214

General 282

Education and Training AICC’s industry-specific education and training programs brought in $462,256 in revenue in FY 2019. This was driven in large part by the success of several seminars during the year, particularly the Digital Xperience. AICC Education Investors deserve mention again here, as volunteers from these companies worked closely with AICC’s partner The Packaging School to finalize several courses. That list of companies includes Fosber America, BCM Inks, SUN Automation Group, JB Machinery, Pamarco, Absolute Engineering, Printron, EFI, Kruger, Bobst, and HP. Through their financial support and in providing technical content, these companies support AICC’s growing catalog of online education and training programs.

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Meetings & Summits

2018 FALL MEETING, CORRUGATED WEEK, INDIANAPOLIS

2019 SPRING MEETING, MIAMI

FY 2019 SUMMIT ATTENDANCE

TOTAL MEETING REVENUE

Total Attendance: 1,726

Total Attendance: 658 • 54% boxmaker companies • 46% Associate companies

7 Events Total Attendance: 635

$1,534,781

First-Timer Attendance Increase: 84 Boxmaker Attendance Increase: 11%

Members’ increasing utilization of AICC’s online education justifies the decision made by AICC’s board of directors in 2017 to make access to the courses for all AICC member company employees included with membership.

As FY 2019 closed, AICC signed a new contract with The Packaging School, a leading online educational platform for the material handling, packaging, and processing industry based in Greenville, S.C., to continue the relationship. At the end of FY 2019, The Packaging School and AICC partnership provided members with 64 online courses at no additional cost in disciplines covering production, sales, design, and general leadership and management topics. As of

June 30, AICC online course completions exceeded 1,800. AICC’s board of directors, at the last strategic planning meeting, agreed to accelerate the program of Spanish translation for online content. At the close of the fiscal year, 10 of the 64 courses had been translated.

Another 10 will be completed in the new fiscal year. This program receives robust oversight from the AICC México board of directors in terms of prioritization of which courses to translate. AICC has engaged translation services in Mexico City to ensure proper dialect for the widest appeal, and AICC México converter members graciously review the translated courses for technical accuracy before they are posted online.

*Revenue does not include AICC Canada or AICC México.

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National Meetings, Regional Summits, and Special Events Attendance at AICC’s national meetings, summits, and other events topped 3,000 in FY 2019. The 2018 Annual Meeting and Corrugated Week in Indianapolis saw 1,726 attendees, while AICC’s 2019 Spring Meeting in Miami drew 658.

AICC ran seven summits in FY 2019, along with multiple events in Canada and Mexico. The U.S. summits were attended by 635 members and guests, while events in Canada and Mexico attracted 690 members and guests.

Combined revenue from AICC’s U.S. national meetings, summits, and Corrugated Week was $1,534,781.* AICC’s sixth annual Independents’ Cup Charity Golf Tournament, held in conjunction with the 2019 Spring Meeting in Miami, raised a combined $40,000 for the J. Richard Troll Memorial Scholarship, Branches, and St. Jude Children’s Research Hospital.

Publications and Advertising AICC’s publications and advertising contributed positively to AICC in FY 2019, bringing in a combined $364,343, up slightly from the previous year’s $339,000.

FY 2019’s total was made up of $345,888 in website and print (BoxScore) advertising, and $18,455 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 Moore of Moore Packaging. AICC Canada hosts a number of events annually and provides various services to its members locally. In 2018–19, events included general member meetings, an annual Christmas party with 140 attendees, the winter President’s Luncheon, and the Vision 2020 trade fair in April, which had 54 exhibitors and 245 attendees. Completing the year was the always well-attended golf tournament

co-hosted with Canadian Corrugated & Containerboard Association. AICC Canada publishes its own regional membership directory and biennial salary survey. Terri-Lynn Levesque, vice president of administration at Royal Containers Ltd., serves as regional director on the AICC board of directors.

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 2019, AICC México programming grew. The AICC México Annual Meeting and Trade Fair was held in Querétaro, Mexico, and drew 185 attendees. The Emerging Leaders program in Mexico continues to grow, as does the general membership, totaling more than 50. As mentioned earlier in this article, AICC México members are playing a vital role in the translations of AICC online education materials into Spanish. Founded in 2001, the region continues to be a vital and growing part of AICC’s international family. AICC México is represented on AICC’s board of directors by Pedro Aguirre of Tecnología de Cartón in Gómez Palacio, in Durango, Mexico.

Executive and Governance During FY 2019, AICC and TAPPI agreed to extend their partnership in Corrugated Week and SuperCorrExpo by contract extension to 2030 and 2032, respectively. As the fiscal year drew to a close, so, too, did the successful transition of AICC staff leadership whereby Michael D’Angelo succeeded AICC President Steve Young as of July 1. Young remains on staff and a vital contributor as ambassador-at-large.

AICC continued its traditional collaboration with related industry trade associations, including TAPPI (see preceding paragraph), the Fibre Box Association, the Flexographic

Technical Association (FTA), and others.

In May, Michael D’Angelo co-chaired the corrugated session at the FTA Spring Meeting, which saw the involvement of several members’ companies in a successful program. Internationally, AICC maintains membership in the International Corrugated Case Association (ICCA), in which we are represented on its board of directors by AICC Overseas Director Kim Nelson, who is CEO of Royal Containers Ltd. This year’s ICCA meeting was held in Palm Beach, Fla., and while there, AICC leadership met with the leadership of several corrugated-related associations from various regions, including Europe, Canada, Japan, Chinese Taipei, and Sri Lanka. AICC sent a delegation to the U.K. Sheet Plant Association meeting in Liverpool, England, in June. AICC also attended the annual convention of ACCCSA, the association for corrugated manufacturers in the Caribbean and Central and South America, held in Miami Beach, Fla.

At its meeting in September 2018 in Indianapolis, AICC’s board of directors identified the creation and maintenance of closer overseas ties with related organizations as a Destination Model goal.

Financial Results AICC’s operations in FY 2019 brought in $4,058,009 in revenues and realized expenses of $3,733,210. This resulted in a net operating income of $324,799.

This income, along with ($55,492) in nonoperating income from the writing off of obsolete inventory, predominantly obsolete-format publications, resulted in a total net income of $269,307. 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: Michael D’Angelo, President, AICC, PO Box 25708, Alexandria, VA, 22313, or email mdangelo@aiccbox.org.

Balance Sheet Year Ending June 30, 2019

2019

2018

4,704,455

4,248,574

Property & Equipment

486,505

508,773

Other Assets

113,408

88,385

5,304,368

4,845,574

1,374,203

1,209,739

Current Assets

TOTAL ASSETS Current Liabilities Long-Term Liabilities TOTAL LIABILITIES

114,344

89,321

1,488,547

1,299,060

Unrestricted/Restricted Net Assets

3,815,821

3,546,514

TOTAL LIABILITIES & NET ASSETS

5,304,368

4,845,574

Income Statement Year Ending June 30, 2019

2019

2018

TOTAL REVENUE

4,058,009

4,182.746

Operating Expenses—Program

3,434,823

3,732,656

Operating Expenses—Management

298,387

196,287

3,733,210

3,928,943

OPERATING INCOME

324,799

253,803

NONOPERATING INCOME

(55,492)

(90,738)

TOTAL INCOME

269,307

163,065

TOTAL EXPENSE

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The Associate Advantage

How Can We Help You Succeed?

BY JOE MORELLI JOE MORELLI HUSTON PATTERSON PRINTERS VICE CHAIRMAN JMORELLI@HUSTONPATTERSON.COM

PAT SZANY AMERICAN CORRUGATED MACHINE CORP. CHAIRMAN PSZANY@ACM-CORP.COM

GREG JONES SUN AUTOMATION GROUP SECRETARY GREG.JONES@SUNAUTOMATION.COM

TIM CONNELL A.G. STACKER INC. DIRECTOR TCONNELL@AGSTACKER.COM

DAVE BURGESS JB MACHINERY IMMEDIATE PAST CHAIRMAN DBURGESS@JBMACHINERY.COM

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I

n the most basic sense, we are all in business for one reason: to make money. So at its very core, the question “What do you need?” can be answered by business owners in a few simple responses: “I need to improve profitability” or “I need to increase revenue.” Instead of telling business owners what they need, a better approach is to ask ourselves—as suppliers to the paper-based packaging industry— how we can help our partners answer the question for themselves.

During the Associate member meeting at the AICC Spring Meeting in Miami, we held a Q&A session with Stuart Fenkel, president of the corrugated division at McLean Packaging Corp. The conversation was fascinating on several different levels, but what stood out to me was the raw access to what a highly regarded high-level executive like Fenkel is looking for from his suppliers. His response to that question is exactly what every supplier in the industry should strive to do, which is to provide innovative solutions, ideas, and value and to act as an extension of his business in order for him to become more profitable.

I recall early in my career bringing doughnuts to a client early in the day. As I dropped them off, I really had nothing else to bring to the table, and what they said to me next was something that probably changed the way I looked at sales: “Don’t just bring me doughnuts, bring me ideas.” I could not have been further from what people were looking for in a supplier.

As a former Emerging Leader (EL) and a relatively fresh face in the industry, I often get asked by the current group of

ELs what helped me find success early in my career. The answer is simple: I dedicated myself to understanding my business, my clients’ businesses, and what solutions I could offer that would help them succeed. I take every opportunity to learn, even today. Whether it is through AICC’s education programs, plant tours, or listening to the more experienced people around me, every piece of information I gather is meant to provide value to my clients.

Value is something more than just doughnuts, price, or asking someone how their family is doing when you visit with them. Bringing value to someone is what all business owners need in order to succeed. Rather than asking the “What do you need?” question, I think it is more appropriate for us as suppliers to ask, “How can we help you succeed?”

Joe Morelli is vice president of sales and marketing for Huston Patterson Printers and is vice chairman of AICC’s Associate board.

Strength in Numbers

Time for Your Annual Checkup

BY MITCH KLINGHER

T

his is the time of year when most of you are pondering your future and looking at your budget for the new year. You are thinking about updating your estimating system and contemplating plant upgrades, new equipment, improved personnel, new software, upgraded systems, and infrastructure improvement. You need it all, don’t you? And if you had unlimited capital reserves, you might try to do it all. But first, it’s time to get out the blood pressure cuffs, the EKG, the proctoscope, and all the other nasty and invasive devices, because Dr. Klingher (honorary doctor of converting finance) recommends you take your annual financial physical.

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First, we need to prepare by gathering some information and adjusting your financial statements. Generally accepted accounting principles in the United States force you to record your assets at historical cost and make you clutter up your balance sheet with intangible assets and deferred charges that have no real tangible value. In addition, rent expense is shown on a straight-line basis, so there may be an asset or liability on the balance sheet created from this calculation. Starting in 2020, this is going to get a lot worse, since the Financial Accounting Standards Board (FASB) is going to require all of you to show all of your leases that are greater than one year in duration as a capitalized asset

and a hypothetical liability if you want to say that you are in compliance with generally accepted accounting principles.

So, in preparation for your company’s annual physical, do the following: • Calculate your fair market value tangible net worth by taking total equity and subtracting out all of the intangible assets (including the straight-line rent calculation), any deferred taxes, or other deferred charges.

• Adjust this tangible net worth to fair market value by subtracting out the depreciated value of all of your fixed assets and adding back a conservative fair market value.

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Strength in Numbers

• Gather the following information as of the date of your most recent financial statements (presumably the nine months that ended Sept.

30)—MSF produced, MSF shipped, total direct labor hours, total major machine hours (setup and run), depreciation and amortization expense, and an estimate of personal expenses, excessive salaries, and other family “perks” that the business is paying for.

The following are Dr. Klingher’s prescribed tests to evaluate the relative health of your business: 1. Leverage ratio – Compare your total liabilities to your adjusted fair market value equity. This is your debt-to-tangible-equity ratio, which shows how much leverage you are employing in your operation. A ratio of 1:1 is conservative, and a ratio of higher than 3:1 indicates high leverage.

The higher this ratio is, the greater the chance that your business may fail. Bankers look at this ratio religiously, and so should you.

2. Cash-flow coverage – Take net income plus depreciation plus interest expense, and compare this to the current portion of your long-term debt. This is your cashflow coverage ratio. If it’s less than 1:1, you are in danger of running out of money, because you are not generating enough money to pay off your bank debt. This is another one that all bankers look at.

3. Current ratio and your quick ratio – The current ratio is total current assets divided by total current liabilities. A strong

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company will have a current ratio of 1.5:1 or better. If this number is less than 1:1, you are in danger of insolvency. The quick ratio is generally cash plus cash equivalents plus accounts receivable divided by total current liabilities. If this number is 1:1 or better, you have excellent liquidity, and if it is less than 0.75:1, then you may be having issues paying your bills. Many people feel that since inventory turns very quickly for converters, that inventory should be added to the numerator. However, many of you carry a lot of finished goods inventory that is not covered by contracts, so for most of you, I would exclude it.

4. Return on equity – Take your net income plus the estimated amount of family perks, and divide it by the tangible equity calculated above. This is your return on equity. Shareholders must decide whether employing their capital in a risky investment like a small closely held company is smarter than employing it in other investment vehicles. You can probably get a fairly risk-free pretax return investing in publicly available investment vehicles of 3.5%, so one might argue that if you are getting less than two times that (7%), you might be better off selling the asset and investing in fairly risk-free investments.

5. Return on sales – Take your net income plus the estimated amount of family perks, and divide by sales. The best independent converters are showing close to 15%, just to give you a sense

of what is possible. How do you compare to the best?

6. EBITDA (earnings before interest, taxes, depreciation, and amortization) as a percentage of sales – Add EBITDA plus family perks, and divide by sales. There are companies exceeding 20% in this category.

7. Plant labor productivity – Divide SF produced (SF shipped if you are a sheet plant and don’t have the produced figure) by direct labor hours for each month of the year and the prior year. This one is hard to benchmark from company to company, because it is a function of the setup and run speeds of your equipment and your mix of sales. Obviously, the plants with more up-to-date equipment that have longer runs and fewer multimachine operations will have a higher productivity number. If this statistic is improving and the trend line is pointed up, you are moving in the right direction. If it is moving down, you need to take action.

8. Material margin (or contribution) dollars per major machine hour – Sales less all materials (or all variable costs) divided by the number of major machine hours for the period. Since machine hours are generally your most finite resource, how much margin you generate per machine hour is extremely important. If you have five major machines running one shift, and your average margin per hour is $250 and your uptime percentage is 75%, then on

average, each machine is generating $375,000 of margin. It is doubtful that you could run a company and pay for the equipment at this level.

Ultimately, you need to break this down as best you can by machine as at least a sanity check for how you are pricing your business.

More mechanized plants with newer equipment will have a much higher number than plants with older equipment. This is another figure that you need to benchmark against yourself to see whether it is improving or not. Remember, understanding what a machine hour is worth is more important

than what you perceive its fully loaded cost is.

9. Fixed costs per shipping day – Add all of your cost buckets (factory overhead, selling, general and administrative, and any other cost that is below the contribution line in your business), and divide by the number of shipping days. This gives you the amount of fixed costs that you need to cover with margin dollars on a daily, weekly, or monthly basis. You can calculate a minimum hourly charge by dividing the total fixed charges by the number of machine hours.

If you are sure that you aren’t employing too much leverage, have good liquidity and cash flow, are making reasonable returns on assets and equity, are getting good productivity from your employees, and are pricing business at levels that yield a good hourly rate at the machines, then you are cleared to invest heavily. If not, you need to be more cautious in your capital spending and focus on the areas that will yield the most improvement.

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

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

BOXSCORE November/December 2019

e c n e i r e p ITY L A E R E NEW

TH

EARLY BIRD DEADLINE THURSDAY, DECEMBER 19

E-Commerce Xperience

Feb. 18-20, 2020 Irving, Texas

AICCbox.org/ecommerce

INTERNATIONAL CORRUGATED PACKAGING FOUNDATION’S

2019 Friday, December 13 6:00 p.m. - 8:00 p.m.

ICPF Opening Reception at Barbetta

321 West 46th Street, New York, NY Sponsored by Pratt Industries | Suit/Cocktail Attire

8:00 p.m.

Free Evening for Dinner in New York

Saturday, December 14 Open Morning 2:00 p.m. - 4:30 p.m.

Matinee Performance of Ain’t Too Proud - The Life & Times of The Temptations Imperial Theatre, 249 W. 45th Street, New York, NY

To ensure entry, arrive 30 - 45 minutes before 2:00 p.m.

Sponsored by BW Papersystems

6:45 p.m. - 7:30 p.m.

Reception at Chazz Palminteri

30 West 46th Street, New York, NY Sponsored by Fosber America | Suit/Cocktail Attire

7:30 p.m. - 9:30 p.m.

Dinner at Chazz Palminteri Sponsored by Bobst North America

Sunday, December 15 Open Morning and Afternoon Additional Weekend Sponsors

Gerber Technology, Greif, Packaging Corporation of America, and Smurfit Kappa Host Hotel:

The Muse New York 130 West 46th Street, New York, NY Thank you for Supporting ICPF!

Amtech / Futura Arden Software Atlas Container Balemaster Bobst North America Buckeye Corrugated, Inc. BW Papersystems Cascades Container Corrugated Replacements Inc. DiTech York EAM-Mosca EFI Fosber America Gerber Technology Göpfert Maschinen Green Bay Packaging Greif Hood Container JB Machinery Kiwiplan Kruger Landaal Packaging Packaging Corporation of America Pratt Industries President Container Signode Smurfit Kappa StandFast Group Sumter Packaging Testing Machines Inc. Wasatch Container WestRock AICC FBA

Designed by Breanne Speer, Smurfit Kappa San Antonio

PARTICIPANTS

Thank You Emerging Leader Supporters These companies are contributing to the future of the industry through the AICC Emerging Leader Program.

Thank You to the Sponsors of the 2019 Emerging Leader Field Trip

For more information, contact Scott Ellis at leaders@aiccbox.org.

AICCbox.org/Leader

When You Invest & Engage, AICC Delivers Success.

The Final Score

Be Exponential “The best way to predict the future is to create it yourself.”

I

recently came across the above quote from Peter Diamandis, whom Fortune recently named as one of the “World’s 50 Greatest Leaders.” His words immediately struck me as completely descriptive of what so many AICC members and their preceding generations have done. In each AICC member company’s DNA, there was a risk taken, a decision made, and certainly a future created. That is the telltale of the independent.

When I looked into Diamandis more, I discovered that he gave a keynote address at Singularity University’s 2019 Global Summit, where he identified 10 metatrends: 1. Increasing global abundance.

2. Accelerating demonetization and democratization.

3. Everyone, everywhere connected at gigabit speeds.

4. Everything, everywhere is connected.

5. You can know anything, anytime, anywhere.

6. Autonomous, personalized transport (fast and cheap).

7. Increasing human intelligence.

8. Increasing human longevity.

9. Capital abundance: access to capital everywhere.

10. Globally abundant cheap, renewable energy.

As an example of the truth behind point No. 5, I went to the internet to check the definition of metatrends. Within five seconds, I learned that a metatrend runs deeper, powering more specific trends, like a tidal force that drives waves to the shore.

While at the AICC Annual Meeting in September in Toronto, I was thinking how so much of the content there exemplifies how AICC and your businesses are constantly evolving along trends and creating them. Sometimes I think we are so close to our businesses, our customers, and our daily activities that we don’t recognize the role the paper-based packaging industry plays in the meta- and megatrends of things.

Whichever direction global trends may take us, AICC will continue to evolve to be indispensable to its membership. Diamandis points out that 40% of today’s Fortune 500 companies are predicted to disappear within 10 years. But the competition to these companies is not the large multinational, but rather the entrepreneur. Diamandis is referring, of course, to disruptors—Uber, Airbnb, Space X, Amazon, and the like.

I say that it is a matter of scale. Many exceptional companies in our industry change practices, create a new normal, redefine a market or product, and grow in the process.

Grow with AICC is Chairman Jay Carman’s theme for the 2019–2020 year. He tells the story of his family’s business, StandFast Packaging Group, its participation in AICC, and its growth through the years. The StandFast story is not a lone volume in the AICC library. It is part of a collection of great stories that each relate a member’s journey and a member’s growth. What’s next?

Be exponential.

Michael D’Angelo AICC President

72

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