News


OUTLOOK AND INSIGHTS

Our paper industry faces forces such as logistics, on-going globalization, emerging technologies, and sustainable packaging.  These issues will challenge us.  But, remember the "doom and gloom" of last winter , when we had Budget-bursting mortgage payment, high oil and gas prices.

"The macro forces get the headlines, but the micro are in the fine print.  Employees look to their employers for a sense of understanding and confidence in economic and ethical details. Here, some doubts have surfaced."

"The recent U.S. economic expansion without significant job or wage growth is puzzling.  Though the American economy overall is stable, individual industries increasingly are unstable.  Softwood lumber prices and production are falling.  The financial turmoil and continued bleeding of Government spending, entitlement and taxes— these all reflect uncertainty."

"Overall, there are plenty of positives.  Global sourcing is driving down prices.  Bankers are fighting over 'fat-wallet' companies that have significant savings.  Mill overcapacities and operating rates continue to be balanced.  Tough pricing environments will continue driving up operational costs, which raise sales dollars, but not necessarily sales volume."

"Container board's sales go to those who deal creatively with challenges.  Innovations in fast service, packaging design, and M2M (Machine to Machine) technology lead to opportunities.  Unfortunately, in our mature industry, most technical innovations come from suppliers' research and development and not from the R&D of integrated, who accounted for about 80 percent of U.S. corrugated shipments."

"Technical vendors have beaten the wireless and software drums more loudly than ever.  Even though it is difficult to identify the most useful products to implement lean and responsive management and products systems, we are not deterred from searching for improvements and solutions.  We are, however, concerned that new equipment with its greater output or better capability has too often been used as a way to 'get the order' rather than improve profits. Any wonder that poor return on investments is one of the real weaknesses of our industry."

"In spite of these concerns and threats of more paper increases in the industry, as well as the rise of protectionism.  CB Group will keep the cylinders of its organizations turning, with more efficiencies and cost controls.  The adage, 'failing to plan is planning to fail.' is not the way we do business."

In addition, our facilities and strategies are being updated.  Why?  To be the best managed entrepreneurship, we need to work with the best possible associates, leaders and suppliers, as well as the most demanding customers.

Indeed, to meet and exceed our goals and the needs of our customers, the Cal Box group is committed to four strategic elements:

  • Work with top-quality and printing suppliers.
  • Aim for niche market leadership.
  • Be a provider of high value at competitive prices - no late orders and no mistakes.
  • Become a sales service champion with the help of an increasingly skilled workforce.

"This year will be the year when we 'run with the foxes, and hunt with the hounds'. The journey will be a bit like a scripted chase in process. We are not sure yet where it's exactly going, but it should be interesting."

Converters Outlook for 2012-2013 by John Widera

Guarded Optimism Plus, New Investment Equals Success

Today's new opportunities for innovation and growth, fueled by the optimism that experience tells us, can be all too fleeting.  Insights and challenges of some of our industry's independent converters, experienced growth - albeit mod­est:  While the consensus among converters suggests guarded optimism, there is a sense that forces outside their control - the European and domestic economies, government regulation and not least, consolidation by the integrated paper mills, will likely dictate the degree to which they achieve their goals and objectives.  Here, then, in his own words, is BCN's converters' out­look for this year:

California Box

Santa Fe Springs, California: John Widera reports,

"The principle of limited government is now so com­pelling, it provokes local, state, and federal govern­ments to penalize the responsible and reward the irre­sponsible.  These abysmal stewards have mismanaged until, as clever as they've become at it, even they are now hard pressed to feed the beast they have created.  The ever-growing commands for more taxes, fees, and building codes are a hint of what's to come".

"The mandatory sharing or sale of your information, liberty, and wealth reminds one of the person who stole your watch and then charges you to tell the time.  Unfortunately, the proliferation of data collection and regulations will further suffocate our entrepreneurial ,spirit.  In 2010, for example, the number of U.S. entre­preneurs closing down their businesses was second highest among innovation-driven nations."

"The governments keep deciding more winners and losers.  It’s like putting the DMV in charge of medical insurance. What is created are `artificial' entrepreneurs.  They are the imitating, reverse-engineering, evolution­ary innovators, employed usually by risk-avoiding bureaucratic large organizations."

"In contrast, I am a leader in a small enterprise, which by its very nature, is a risk taker. quoting from my new book, Entrepreneurs of the 21st Century - Principles, `Entrepreneurship is a life concept.  Instead of painting by numbers, I start with a blank canvas in hopes of getting a masterpiece.  True entrepreneurs are revolutionary thinkers who have become the most successful job creators."

"So, what's the blueprint for this year to increase sales, thereby increasing jobs?  Yet, it is frustrating that many experts say that education is the answer to the unemployment crisis.  But I’ve never known so many highly educated people that are unable to find the right jobs, especially in the manufacturing industry.  I also believe, a commodity product, the containerboard industry's paradigm for a century, has limited solutions.  A better answer is not more integration, but more demand.  That begs the question: how is that possible?  In the past downturns, American consumers have pulled the economy back from the abyss. In 2013, con­sumers and their `suppliers,' before they spend or invest, have to start seeing opportunities instead of uncertainty and no confidence."

"Most Americans don't like dramatic value changes if forced upon them, even by another free-spending U.S. President and his media.  Power and money are the `sauces' for law-making politicians, as surely as for leaders of industry.  Both sell their souls to make cer­tain views palatable, though their costly policies repeatedly fail.  The 89,526 state and local govern­ments in the U.S. for example, seem oblivious to the real consequences of their actions.  And 81,405 pages of new rules were added in 2010 to the Federal Register.  The cost of enforcing these laws will take dollars, thereby depriving a wounded economy of the 'medicine' needed to revive it."

'Why invest now? Our three-year-old business plan says that, with austerity and advanced tech­nology, we can handle the risk, "even though the iron in the fire is of an undetermined temperature."

"Now, imagine you are a California business owner with cash in the bank, but unsure whether the govern­ment will sock you with never-ending taxes and health care costs, dressed-up in this election year as 'reforms'.  Would you invest and hire additional workers?"

"That is exactly what we did last year and will com­plete the investment in January...but in Mesa, (Phoenix) Arizona, ten minutes from Scottsdale."

"We are spending $15 million for a 150,000 square-foot building with a new 98-inch BHS corrugator, material handling, some new converting equipment, trucks, computers, etc."

"We have also purchased our third Baumer inte­grated gluing system for our new flexo folder gluers.  One system will include a camera inspection system for perfect quality control of each box.  To add value, Cal Box I has just installed its own Gerber laser die making machine.  All of our cutting dies will be preci­sion laser cut, insuring offset printing accuracy.

"Our primary strategy in Arizona is not to compete with the long-run oriented integrated corrugators.  As in California, we are modern sheet plants that dictate to big slitter- scores called corrugators, operating on only one shift.

"Why invest now?  Our three-year-old business plan says that, with austerity and advanced technology, we can handle the risk, 'even though the iron in the fire is of an undetermined temperature. Or, put another way, it's not the total cost of the capital expenditure project, but the cost of time and value of money to achieve the break-even point."

"In 2014, we see ourselves like determined entre­preneurs right on top of a springboard about to jump into a pool because the water is again to our liking.

" Why this optimism?   Most companies drive by looking in the rear-view mirror. They look at what worked in the past, and they extrapolate from old trends.  This works fine for stable, predictable markets, but it can be disastrous for capturing new or changing markets.  Instead companies like ours, use vigorous entrepreneurial process for conceiving and implementing what can remain or become possible."

"For me, print will always have a place in communications in all aspects of my life, personal and professional.  It is the silent box salesperson.  Print's traditional strengths: tangibility, permanence, convenience, ease of use- are still true and relevant."

Reprinted from January 2, 2013 • Board Converting News • Vol 28, No. 1

 • NV Business Publishers • www.nvpublications.com