September 13, 2022
It’s not uncommon for an independent converter to offer various lines of ancillary packaging supplies to its customers. After all, anyone buying custom or stock boxes is probably also buying tape, foam, bubble wrap, stretch film, padded mailers, and the like. Many a keen entrepreneur has recognized the additional sales and service opportunities in offering these items.
What’s less common, though, is for a long-established distributor of these kinds of products to add in-house converting capability—in effect, to become a startup sheet plant. Yet that’s exactly what Bill Larsen, CEO of Larsen Packaging Products in St. Charles, Illinois, did in fall 2019.
‘$1,000 in Inventory’
Larsen Packaging Products was founded as J&M Supply in 1989 by Jim and MarilynLarsen. “They started with $1,000 in inventory,” President and Owner Bill Larsen recalls. “I went to trade school to become a carpenter, so I built some 18-inch-wide racks down one side of the garage. We stacked up his inventory there, and that was the beginning of Larsen Packaging.”
Over time, marketplace confusion forced a reconsideration of the company name. “We were called J&M Supply, but there was JM Supply, Jason Supply, and everybody was getting everybody confused,” Larsen says. “So, we ended up with Larsen Packaging—it’s obviously our name—but I also felt the addition of ‘Packaging’ gave us a better descriptor of what we do.”
Today, Larsen Packaging Products is a $25 million company selling a full line of some 30,000 packaging supply items and maintaining an on-hand inventory of 5,000 stock and custom products. The company operates out of two locations: its 103,000-square-foot distribution and manufacturing headquarters, and a 50,000-square-foot off-site warehouse. Of the 75 full-time employees, 25 are devoted to the corrugated production floor, where they oversee an annual output of 150 million square feet. Like many young sheet plants, its equipment roster includes older but venerable workhorses: a Langston 50 x 110 two-color flexo folder gluer, a Simon 24 x 61 flexo folder gluer, and a Staley 66 x 113 two-color rotary die cutter. Larsen’s more recent machine investments are a Solarco 98 jumbo lineal feed press, a Universal 86 x 185 two-color jumbo printer slotter, a Vega Altair 290 specialty folder gluer, and a Gazella gluer stitcher with two-piece capability. Larsen also plans in the first quarter of next year the addition of an Apstar 47 x 110 three-color flexo folder gluer with die-cut section.
Bill Larsen, CEO of Larsen Packaging Products, and the company’s Grazella gluer-stitcher.
‘Let’s Grow This Thing!’
Larsen’s decision to start a manufacturing operation within his packaging supply distributorship was born out of a long-held desire to better serve the company’s growing customer base. “My dad and I banged heads for 20 years,” he says. “I was just out of high school, and I said, ‘Let’s grow this thing!’”
Around that same time, First American Bank, a Chicago-area commercial lender, was running a series of television ads. One of the ads portrayed a man standing in what appeared to be a corrugated sheet plant and saying, “We make boxes.” Larsen says, “I was tired of telling people we don’t sell boxes. When I saw that ad, I thought, ‘That’s what I want to do. I want to start making boxes.’”
There was a strong business case for Larsen’s thinking. He explains, “The other mass distributors that were popping up around us not only sold bubble wrap, shrink wrap, etc., but they also sold stock boxes. We could buy from them really easily, but buying from them came with a cost: They were going to put on their 20–30 points as well, meaning we couldn’t be as competitive as we’d like.”
Plus, he adds, customers were beginning to ask about custom work. “That stock box thing we were chasing for so long now turned into, ‘Can you get us this box?’ ‘We want this printed.’ ‘Can you do a die-cut?’”
On the Larsen Packaging production floor, workers feed the company’s Staley 66 x 113 two-color rotary die cutter.
For Larsen, this was a great opportunity, but he also admits he was in uncharted waters. “I just didn’t tell people, no. I just told them how much. In a lot of cases, we were buying from somebody I shouldn’t have been buying from, but I didn’t know any better,” he says. “Nobody sat me down in an International Paper conference room and gave me Corrugated 101.”
Though Larsen’s corrugated learning curve was steep, he’s proved himself a fast learner. As his customers’ demand for boxes grew, Larsen built his knowledge of board grades, performance specs, and design. He cites examples of tinkering with box dimensions to achieve up to 20% raw material reduction or redesigning a box for a customer whose product didn’t require a full overlap of the flaps. “We’re always trying to bring things like this to the table,” he says.
Speed and Service
The table Larsen Packaging Products sets for its suburban Chicago market is laden with packaging supplies and related products, as well as a menu of specialized services to support each customer’s unique needs. This diversity of offerings, says Larsen, gives the company a competitive edge and encourages customer loyalty.
As a stocking distributor with 5,000 products in stock, Larsen can fill orders immediately for everyday packaging supplies. The company also offers blanket order fulfillment, allowing customers to purchase items in bulk for a better price, to be held on Larsen’s floor, and then have them delivered on an as-needed basis. Larsen is particularly proud of his company’s vendor-managed inventory program, whereby a customer sets minimums and maximums allowable for all their packaging materials and supplies. Larsen then manages the customer’s inventory on hand so that there is no need for a reorder of any one item. “We put all the items they want us to procure on a spreadsheet,” Larsen explains. “We say, ‘How many do you want on your floor at any one time? Give me a range.’”
The levels provided by the customer are then logged in and maintained at that level by Larsen. “These are tailor-made for each individual end user,” he says. “We want to fly under the radar. Once we get somebody on a vendor-managed inventory program, I don’t ever want them thinking about us. There should never be a reason for them to call us, to say, ‘There are too few of this,’ or ‘There are too many of that.’ It’s vendor-managed, and it’s on us.”
Larsen Packaging’s vendor-managed inventory program gives his company a “stickiness” for those customers on it. “Once we get these programs in play, when they’re called on by a competitor, they say, ‘We got a guy.’ These service levels that we get people on, it’s hard for a manufacturer that does not distribute what they make to do that.”
Larsen Packaging keeps 10 salespeople actively busy, and speed and service are the lead-offs in the sales pitch. The company’s recent move to manufacturing has reopened doors that in the past had been closed, and this, says Larsen, is fertile ground for new business. “It was not easy as a distributor,” he recalls. “We’d go in and say we’re a distributor that stocks material, and that was sour to a lot of people. They’d say, ‘I want to buy from the manufacturer.’”
Larsen remembers those closed doors. “I just took notes for 20 years on who it was who wanted to buy from the manufacturer,” he says. “The minute we were the manufacturer, I went back immediately and overturned 20 years’ worth of bodies that were buried. We knew where they were, and we went out and plucked them one after another.”
In the current climate, still reeling with supply chain disruptions, Larsen has an added advantage. “Right here, right now, we have never been less aggressive, because this is low-hanging fruit for us,” he says. “All the integrateds that have these extended lead times—I talked to a guy the other day who told me one of their presses was out six weeks!”
In the competitive world of packaging supply distribution, the transactional nature of the sale makes the business vulnerable to poaching by competitors. Larsen and his sales team, therefore, take nothing for granted when it comes to getting the order and keeping the business. “I go back to my dad’s sales tactics,” Larsen says. “You get a customer, you call him, you go see him once a month. You want them to know you care about their business; you appreciate their business. Over time, you’re asking them questions that show you care: ‘How was that last order? Was the driver courteous? Was the invoice OK?’”
Larsen also counsels his sales team to start small. “If a box buyer’s buying 250 box sizes, you’re the last guy he wants to talk to,” he says. “Do you have any idea how much work that is for him to change vendors for stuff like that?”
Larsen’s approach in this case is to pick two or three items. “Get them on the phone and say, ‘Look, I don’t want to quote you on 85 different things. I want to quote you on two.’ If I’m good on those two, I’ll be good on everything.”
‘Completely Different Companies’
Bill Larsen’s never afraid of a challenge, and the main challenge he’s faced in recent years is melding a stocking distributor culture with a manufacturing one. “I’ll say now that where this company was pre-pandemic and where it is now are two completely different companies. Doing the same thing but completely different ways of operating,” he explains.
His first priority is finding and hiring professional upper managers who understand the converting side of his business. Enter Rob Reece, chief financial officer, who joined Larsen in April. Reece came to Larsen Packaging with more than 30 years of manufacturing, distribution, and financial experience. He has held general manager positions with several Midwest manufacturing and industrial supply distributors. As Larsen explains, Reece’s first job is to create a leadership structure so that all day-to-day decisions don’t end up in the CEO’s lap. “I can’t look for equipment or consider acquisitions or other growth options if people are coming to me saying, ‘Hey, I need a price on this,’” says Larsen.
Reece, for his part, says that educating the workforce on the manufacturing side of the business will also be a critical part of his job. “Distribution is different from manufacturing,” he says. “To remain competitive, customer service and the sales force have to become more acclimated and familiar with estimating and with our machine capabilities.”
While Larsen describes the importance of building his management bench, he also praises the loyalty of his team and the work they’ve done to build the business to where it is today. “Experience is what we’re truly looking for in the upcoming months, but we have really good people who work here,” he says. “They’re loyal. The longest employees have been here 20-plus years. I’ve got good, loyal people.”
Reece agrees. “They’ll bend over backwards for Bill,” he says.
‘100% About Growth’
So, where will Larsen Packaging Products be in, say, five years? “The hard part for us is behind us—starting a plant, building a plant,” Larsen says. “The plant’s built; we’re ready to rock and roll. I will always say we are a brown box company. We are not a POP display house; we are not high-end graphics; we’re not litho laminating. We don’t do any of that stuff—yet.”
Larsen envisions this for his company, though: “Now that’s stuff I want to grow into. That’s the direction I want to go.”
Larsen sees new equipment as part of this specialization and growth. The three-color Apstar flexo folder gluer, due next year, is part of that plan. He is also eyeing adding another Vega specialty gluer as well as a five-color Apstar with inside-print capability. Larsen sees growth opportunity in food packaging, and he’s currently working on obtaining Food and Drug Administration and other food-related certifications.
Larsen also plans to move the distribution side of his business out of its current location. “Our current location will be manufacturing exclusively,” he says. “We’re trying to separate manufacturing from distribution; they just don’t work well together.”
Geographic expansion is also in Larsen’s sights, and he sees acquisitions of smaller sheet plants as a way to accomplish that. “I’m looking to make acquisitions up and down Interstate 65,” he says. “I’d like to buy somebody in Indy; I would like to buy somebody in or around Nashville.”
Larsen sees the advantage of further distribution points for his packaging supplies business, and the equipment he acquires in these plants will supplement his growing converting capabilities. “Depending on what equipment people have, I am open to just about anything,” he says.
From his early days in the company, telling his father, “Let’s grow this thing,” Bill Larsen has built a successful company built on speed, service, and customer satisfaction. Now, as he eyes new opportunities in converting corrugated products, he’s bringing the same high-velocity drive: Says Larsen, “Moving forward here is 100% about growth.”
Steve Young is AICC’s ambassador-at-large. He can be reached at 202-297-0583 or syoung@aiccbox.org.
Listen to Bill Larsen’s story on AICC’s podcast, Breaking Down Boxes.
