By AICC Staff
November 9, 2022
Due to the impact of the COVID-19 pandemic—affecting everything from consumer shopping habits to the global supply chain—the past two years have been chaotic for the corrugated industry. For some, business boomed as never before. For others, particularly those focusing on in-store packaging and displays, the drop in retail traffic was devastating.
Now, as the world slowly but hopefully moves into a post-pandemic phase, manufacturers are stepping back, assessing recent history, and looking ahead to how they can embrace the opportunities and address the challenges they expect to face in 2023.
Building for the Future
“I built my company with extremely hardworking, very talented, production-oriented people,” says John Potocsnak, owner of Corrugated Supplies Co. He plans to continue that trend into the new year. “Looking ahead at 2023 and beyond, I’m going to be adding a lot of brainpower. I’m building for the future.”
Potocsnak is working toward building what he calls “a deeper bench” among his leadership teams. “Each of my general managers will be getting a degreed engineer and a degreed manager,” he says. “I’m looking specifically at bringing in people who work to improve themselves. I’m trying to complement the skill sets that already exist within the company with skill sets that aren’t necessarily achieved in the street.”
While adding managers may not be surprising, adding engineers is a less common approach to business building. “I need engineers because I have a lot of factories,” Potocsnak explains. “I want engineers from a variety of disciplines—industrial engineers, electrical engineers, mechanical engineers. They’re there to complement the people who got me where I am today.”
Ultimately, these new hires will expand the company’s talent base while helping to ease the workload for current employees. “What I’ve got right now are a bunch of highly motivated individuals who work way too much,” Potocsnak says. “My goal is to become a more ‘normal’ business. Ideally, I’d like to go to 24/7 shifts in all my facilities and have people work four-day weeks. But I can’t do that yet.”
At StandFast Group, “our main goal in 2023 is to increase capacity to meet expected increases in demand from our existing customer base and new business growth,” says President and CEO Jay Carman. “We have plans in place to automate some of our production lines through investments in bundle breakers and extra-takeoff conveyors. Additionally, we may add another specialty folder-gluer. With improved throughput and additional capacity, we’re going to get back to providing service levels our customers have come to expect from us.”
Carman notes that, like many other companies in the industry, StandFast is also proactively seeking solutions to the manufacturing labor shortage. For one thing, he says, “we are looking at various ways to reduce our dependency on temporary labor. We’re consolidating the amount of temp agencies we work with and increasing hourly pay for production staff. Furthermore, we’re providing increased training throughout our organization.”
At Bay Cities, the company is already into its official year 2023 and already facing some significant headwinds, including ongoing supply chain and inflation, according to Chair and CEO Greg Tucker. “Obviously, Bay Cities cannot control these things,” he acknowledges.
However, the company can control its response to the situation. “We have set a course to continue to drive profitable business for our employee-owners,” Tucker says. “We have worked diligently on building our bench and training them to understand and be most excellent at our processes to completely delight our clients. Our goal this year is a healthy increase in gross sales by 15% to 20% while moving margin upward.”
Growing and Innovating
To aid the company in reaching its goals for the new year, Bay Cities is investing in a range of new equipment, including the purchase of a second high-speed digital press.
In addition, Tucker says, “to complement our die cutting, we installed a 135-inch, 5-color die cutter with inside and outside print capabilities to address redundancy and enhance operational efficiencies through the manufacturing plant and the pack-out facilities. We are bringing in a desperately needed replacement flexo for our aging mini with die cutting abilities.
“We are adding a laser cutter to complement our digital world. The digital facility will have the most advanced weaponry in the market. Our goal is high speed-to-market digital printing, no setup costs, variable-print ability, and no tooling for cutting to help our customers win on shelf and online.”
It isn’t just about new hardware, though. “We are employing software innovations that have removed keystrokes by humans and will soon reduce the amount of human decision-making required to run orders,” Tucker says, “with hyperefficiencies unmatched
in our environment through the utilization of AI [artificial intelligence] and innovative software solutions. We have no desire to sit back while the world passes us by. Instead, we are following the example of our peers in Silicon Valley to drive real speed to market here.”
The company is also launching three new client-facing services. BC360 will help to manage sales and analytics and bring clients into retail, Tucker says. BCL is a logistics company, and BC Creative is a full-line creative services group. “We also will be helping clients reduce costs by utilizing our ISTA lab, which we use to performance-test every display we design,” he adds.
Growth is on Potocsnak’s mind as well. “We’ve been very blessed with a lot of growth recently,” he says. “But there is a limited amount of capacity or consumption available in this country. Going forward, I’m going to be looking at becoming more involved in the converting side. I think there are opportunities in big-volume, personalized boxmaking, and I believe we have the equipment and infrastructure to pull it off.” A recently purchased boxmaking plant will help the company to explore this new market.
Carman says StandFast has no plans at present for major expansions or major equipment purchases. The focus, instead, is on improved customer service and introducing new capabilities to the marketplace. “In terms of innovation,” he adds, “we would like to see better aggregation of our manufacturing data to enable our production staff to reduce setup times and enhance quality. We’re in the process of implementing new software on our corrugator to provide better communication and visibility of orders to our sheet plant operation.”
Despite the determination and renewed commitment resulting from the past few years, manufacturers continue to be concerned about the industry and what the future may hold.
In its 2022 Manufacturing Industry Outlook, research firm Deloitte surveyed more than 500 U.S. executives and senior leaders regarding the current and future state of manufacturing. “Workforce shortages and supply chain instability are reducing operational efficiency and margins,” respondents noted. “Job openings—at more than twice the gap to reach pre-pandemic employment levels—hover near all-time highs. … Sourcing bottlenecks and global logistics logjams are likely to remain challenges … along with cost pressure and inflation risk. … Adding to this mix are risks from COVID-19 variants, cyberattacks, environmental challenges, and higher corporate tax rates. The industry can expect elevated uncertainty from a range of potential disruptors globally.”
As if these concerns were not enough, a third-quarter 2022 Deloitte survey of U.S. chief financial officers revealed that 46% of those surveyed expect the North American economy to be in a recession by the new year, while 39% expect the economy to enter a period of stagflation.
Yet despite that relatively negative picture, the majority of business leaders surveyed continue to focus more on the opportunities than the obstructions. “Eighty-six percent of manufacturing executives we surveyed report they are somewhat or very positive on business,” the Manufacturing Industry Outlook revealed.
The situation is similar for the boxmakers we spoke to: As they look ahead to 2023, they are generally positive, even as they proactively prepare for the challenges that will certainly come. “I’m excited about the future,” Potocsnak says. “But at the same time, I have to say this: We make our own opportunities. There’s not going to be a lot of low-hanging fruit, to be honest.
“I can focus more on big-picture growth and innovation because I’ve got people who are devoted to staying on top of what’s happening at the shop floor level. I’ve been very fortunate in that way. But that didn’t just happen; I built the company that way from the very beginning. My advice to other boxmakers is to bring in the best people you can, equip them to do the best work they can, and then push hard for your vision for the company, which may not always match what the industry says or even what your advisors say.”
“We see tremendous growth in a changing atmosphere focused on innovation, process management, and having the best skilled employee-owners on the planet,” Tucker says. His 2023 advice for boxmakers is simple: “Keep steady your course, and let us continue to be the very proud industry that we deserve to be.”
Robert Bittner is a Michigan-based freelance journalist and a frequent BoxScore contributor.