Navigating the New Normal

The year 2020 was unlike any other in living memory. In addition to an economic recession and the usual series of workplace challenges—from improving efficiency to engaging a younger workforce—COVID-19 fundamentally changed the way boxmakers did business. For some, it even affected the kind of business they did, with once popular products slipping into the background as retailers and consumers alike adjusted to the “new normal.” There were bright spots as well, as manufacturers discovered that some of the solutions they initiated as a result of the coronavirus introduced efficiencies and other improvements that could be beneficial moving forward.

COVID-19 demonstrated how unpredictable the future can be, making it particularly challenging to predict the next 12 months. Adam Josephson, who tracks the containerboard industry as director of equity research/analyst for KeyBanc, says, “It’s difficult, if not impossible, to extrapolate much from what’s transpired in 2020 in terms of what to expect in 2021. We don’t know if we’re going to get a second massive government stimulus package. We don’t know what the COVID-19 situation will be like going forward. At this point [in 2020], we don’t know what the president’s policies will be. …We don’t know what the rest of the global economy will look like.” Despite these uncertainties, industry analysts and boxmakers believe there are some key takeaways from 2020 that can help to strengthen the industry and help manufacturers successfully navigate whatever 2021 might bring.

2020 Hindsight

Taking a macro view of the global industry over the last year, Josephson says, “The U.S. market has been better than I think anyone thought it would be. Demand has been healthy amid a recession and pandemic. Brazil also has seen surprisingly good demand. Mexico and Europe haven’t been so good. China’s been mixed. Demand trends have varied considerably based on the region.”

He believes the key factor driving these trends has been each country’s level of government deficit spending. “The two countries with the best demand trends this year—the U.S. and Brazil—have governments that spent an extraordinary amount of money to shore up their economies,” he says. Josephson credits deficit spending with having much more impact on the industry last year than, say, the growth of e-commerce.

Tom Weber, folding carton and rigid box technical advisor for AICC, notes that 2020 business varied dramatically among his clients, based on their core markets. “I have some clients that can’t keep up because demand is so high; they tend to be the boxmakers focusing on the food and medical segments. I have others that are running at 30%–50% reductions in volume, because they happen to be more general businesses, serving a wide variety of clients.”

That echoes the experience at StandFast Packaging Group, according to President Jay Carman, AICC’s current Chair. “When COVID-19 hit, we saw a surge in business, particularly with food-and-beverage and virus test-kit packaging,” he reports.

However, when the plant was hit by the virus in early March, despite following CDC safety protocols, productivity fell just as demand was peaking. (All of those who contracted the virus have fully recovered.) “We went from business being good to having a hard time meeting demand, causing our lead times to go out,” Carman recalls. “By April, we were having a really tough time. In May and June, we had to focus on putting additional health and safety measures in place and catch up with our backlog.”

Since then, demand has steadily increased, and today business is strong—so strong, in fact, that an EVOL flexo folder gluer purchased a couple of years ago, which had been running at only 50% capacity, is now running two 12-hour shifts every day. Carman attributes that to a “sudden increase in demand for e-commerce packaging, along with a lot of business coming from food-and-beverage and cleaning-products/sanitizer companies.”

Even though StandFast does not do a large business in displays, Carman says he has seen the retail side of their business slow down as a result of the virus. That decreased demand at retail seems to reflect the shift in shopping patterns as a result of COVID-19 lockdowns; with months of little to no casual customer browsing in retail stores, there has been reduced value in customer-facing packaging and displays.

“People just aren’t going into stores and admiring the eight-color litho-printed box or browsing the in-store displays,” explains Ralph Young, AICC’s corrugated technical advisor. “People aren’t buying that way as much now,” he says, having been forced to purchase almost exclusively from online vendors during lockdown. “When you shop online, you see the products; you don’t see the box. The box is no longer a billboard helping to make the sale. This whole push that we’ve seen toward more eye-catching boxes is no longer as relevant.”

Continuing Challenges

Of course, COVID-19 was not the only challenge to boxmakers in 2020 that will continue to resonate throughout the new year.

“I think the issue of recyclability is going to remain significant for the industry,” Young notes. “We’ve done a wonderful job when it comes to managing corrugated cartons, cereal boxes, things like that. But we still depend on waxed boxes when it comes to safely packaging meats and other food items, and wax boxes have always been difficult to recycle. That’s an area where we may see some improvement.”

Such developments should be paired with continuing efforts to promote the benefits of the humble box, Weber believes. “I think paperboard packaging and corrugated packaging are perfectly suited for today, tomorrow, and decades to come. It remains a robust means to deliver product to market in a very graphic way. I only see it growing. As we become more sensitive to our environmental responsibilities, I think people will begin to recognize even more deeply the impacts of using plastics and even semirecyclable items versus fully recycled and recyclable items like paper. It’s a strategic advantage that will continue to deliver great results.”

Perhaps the biggest concern for boxmakers this past year, though, has been ensuring the health and safety of their workforce by exploring a variety of new ways of conducting business, including moving office staff and others to work-from-home situations.

“Customer service people can speak to customers from anywhere,” Weber acknowledges. “With virtually every company shutting down supplier visits, salespeople are now off the road and working from home as well. And there are lots of hybrid situations, where some are working from home and some still need to come in to the workplace.

“I see some of these workplace changes becoming permanent,” he says, “because leaders have found that they’re effective. They protect their people and their client base, they provide much-needed latitude for employees looking for some flexibility in the workplace, and they help to keep costs down. Even a year from now, I think there’ll be 20%–40% of businesses that will still be operating this way because it works.”

Christine Walters, HR and employment law consultant and founder of FiveL Co., agrees. If employees are reacting positively to some of the changes, and productivity is where it needs to be, there may be no reason to return to the previous way of doing things. “This might be a new normal,” she says. “But that’s going to vary from company to company, based on what works for them and what doesn’t.”

Managing the New Normal

With a “new normal” come new challenges. For example, while some positions can be moved successfully to home offices, no one will be running a flexo machine from their spare bedroom.

“Boxmakers are always going to need a certain number of people on the shop floor if they’re going to stay in business,” Walters says. “And yet there will be other members of that workforce—maybe in graphic design, product design, or in management positions—who can work from home. That can create a shift in what that workplace feels like, from a social perspective, as a community. The groups that don’t have as much flexibility, because of the nature of the work they perform, resent the fact that they have to get up, get dressed, get in their car, etc., while some of their peers and colleagues get to work from home. The flip side to that is that, in some cases, managers are now managing teams that aren’t in the same building, people they can’t easily see. So they’re wondering, ‘Are they still doing their job?’”

The solution is to focus more than ever on communication. “Leaders need to help people understand what’s happening and why it’s happening,” Walters advises. “I do think leaders will need, more than ever, an HR professional on the team, somebody who can help them navigate the federal, state, and local laws that may be implicated by some of these changes. Because the staffing models are new, businesses have never faced some of these questions before. For a smaller company, maybe a family-owned company that doesn’t have a dedicated HR professional, the situation may be a bit more challenging. That’s where groups like AICC can be extremely helpful, giving them a sounding board and professional working groups where they can ask questions and share their practices with one another.”

For Carman, moving to a hybrid work environment—by late 2020, 50% of his office staff was still working remotely—ended up being surprisingly beneficial. “Most people would think face-to-face meetings were the best way to communicate with others,” he says, “but we’ve found that our staff had to present more accurate and comprehensive information to each other when working from home.”

Because all meetings had to be scheduled, and there were no opportunities for casually following up in the hallway or across cubicles, effective communication required thorough planning and real intention. “This resulted in better communication overall, as well as improvements in time management.”

This kind of hybrid work environment may offer long-term benefits going forward, Carman notes. It helps employees better manage their work-life balance, addressing related to child care and long commutes, for example. It may also solve some of the challenges involving hiring and retaining new employees. “These benefits may help attract new employees who are not within a close geographical proximity, which, in the long run, can substantially expand your hiring pool.”

Growing Forward

Despite the lingering impact of COVID-19 and the general political and economic uncertainty, boxmakers and industry analysts are optimistic about 2021.

“From a fiber perspective, I think it’s a good time for the packaging business,” notes Young, even though he still has concerns about the immediate future for displays, graphics-heavy boxes, and the litho business. “Independents are the manufacturers nimble enough to thrive at times like this. They can pivot into those niches where people have needs. I think that’s only going to continue as we move into 2021.”

Weber is convinced that it is just a matter of time before all segments of the industry rebound. “People are still adding equipment and running products that have the highest level of graphics I’ve ever seen,” he points out. “There’s still a desire to appeal to that consumer who recognizes value, branding, and high-quality graphics by providing a high-quality product. I expect that, in a year from now, most of us will be traveling back to our favorite stores and shopping. Retail stores will be overrun with people who just want to get out of their homes. I think the sales will recover for all of those products that have suffered as a result of the pandemic.”

“2020 was a phenomenally unpredictable year, and 2021 will be, too,” Josephson says. “The unpredictability is greater now than it ever has been, which makes planning for the future very difficult. Manufacturers should continue to invest in their business, of course, while being as low-cost and efficient as possible, and provide the best customer service they can.”

“I’m feeling positive about 2021,” Carman says. “I hope that employers will work hard to keep their employees safe and healthy and that the independents will keep growing and adapting to the demands of the market.” Because even though 2021 almost certainly won’t look like “business as usual,” it will continue to offer opportunities for every boxmaker prepared to embrace them.

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