Southern Carton Co.: Integrity, Quality, and Service
By AICC Staff
March 20, 2023
COMPANY: Southern Carton Co.
JOINED AICC: 1985
HEADQUARTERS: Lewisburg, Tennessee
CEO: David Kennedy
Jim Kennedy knew nothing about the corrugated box business when, in 1977, he and his wife, Kate, founded Southern Carton Co. in Lewisburg, Tennessee. At the time, he was general manager of the Heil-Quaker plant there, overseeing 1,300 people manufacturing commercial and residential heating and air conditioning systems. Yet, as successful as he was at Heil-Quaker, Kennedy’s entrepreneurial instinct told him an opportunity to sell small quantities of corrugated boxes to customers had been long overlooked by the bigger integrateds.
“He always wanted to start his own business, and wherever he worked, he excelled,” explains his son David Kennedy, now CEO of the company. “He’s getting to the end of his career; he’s 56, 57 years old, and he saw a niche here where if you wanted 500 or 1,000 boxes, you couldn’t get them from the big guys, let alone 250 or 300.” This, as David tells it, was the genesis of Southern Carton, a story that reads like that of many independent sheet plants in AICC’s membership today.
“He started with a Rite-Size boxmaker,” David continues. “He, my mother, and brother Rick started cranking out orders for 100, 200 boxes at a time. They rolled the cert stamp by hand with a little stamp pad and then glued or taped them shut.”
David explains that the little company’s immediate success soon forced the acquisition of faster equipment. “Like everybody in this business, one thing leads to another, and pretty soon he says, ‘I need to find a taper or a gluer or a slitter.’ That leads to printer slotters, which leads to flexos, which leads to rotary die cutters—all of which we now have.”
Expansion, Extension, Equipment
Today, Southern Carton is a $20 million company producing 200 million square feet annually. Its 55 employees work a single shift in an 85,000-square-foot manufacturing facility with an additional 53,000 square feet of off-site finished-goods warehousing.
A family enterprise from the start, Southern Carton is now in its third generation of ownership. Barbara Kennedy, David’s wife of 35 years, has been an integral part of the company’s growth and history as confidante, sounding board, and cheerleader. “Barbara and I discussed Southern Carton business almost nightly at the dinner table,” says David, adding that because of those discussions, two of the Kennedy sons—Connor and Sean—said, “I want to do that,” and they now work in the business, with Connor serving as president and Sean in production. (The Kennedys’ daughter, Meredith, is a nurse practitioner, and their other son, Patrick, is an engineer.)
The company’s values, as described by all the Kennedys, are “best in integrity, quality, and service.”
“Everybody here is so focused on the customer, whatever the customer needs,” David says. “Our unwritten motto is underpromise and overdeliver. Once a customer comes on board with us, they seldom leave.”
Connor adds that Southern Carton’s service ethos is grounded in what he calls a “servant” mentality. “We have a great sales team, and they’re all servants at heart,” he says. “They have a job to do, it’s true, but at the same time, they really just enjoy helping people. And I would say that about all our employees.”
The geographic reach of Southern Carton’s servant philosophy extends in a 130-mile arc from southern Kentucky in the north to northern Alabama in the south. Located about 45 miles south of Nashville off Interstate 65, Southern Carton’s central Tennessee location makes all these market areas an easy reach. Historically, David says, the pencil business dominated the local economies in the 1970s. “There were, like, nine pencil companies because cedar is so plentiful here and that’s what they were made of; there were pencil factories everywhere. Now, there are two,” he says.
The biggest economic shift to occur in the mid-South states since that time is the arrival of the auto industry. Beginning in the early 2000s, the region saw more than $10 billion in direct investment not only from legacy carmakers such as Ford and GM but also newcomers such as Toyota, Hyundai, Volkswagen, and BMW. More recently, the region has seen a renewed investment wave to support production of electric vehicles—upward of $33 billion across the Southeast, according to online publication Electrek.
Southern Carton has been a beneficiary of this shift because with automotive manufacturing come the parts and systems suppliers that support it. “The economy here has changed so much that it’s probably one-third automotive,” says Connor, “and of our top 10 customers, four are automotive.”
The balance of Southern Carton’s business mix is made up of smaller yet thriving industry segments such as retail packaging firms, consumer and commercial cookware manufacturers, and food and beverage companies.
Serving this demanding market mix has required constant reinvestment in the production capability of the plant. Southern Carton’s equipment roster upgrades in 2022 alone totaled more than $8 million, and in 2023 and 2024, the Kennedy family is expected to invest an additional $4 million to $5 million. Before the 2022–2023 upgrades, Southern Carton’s equipment list was that of a typical service-oriented sheet plant: a Ward 66 x 125 two-color flexo-folder gluer, a Ward 66 x 115 rotary die cutter, a Lian Tee 26 x 78 two-color mini flexo, and a Marumatsu 86 x 205 jumbo printer slotter. In addition, the company has an Automatan labeler, a Fuji X3 digital printer, and a Zünd sample table.
The 2022 retooling of the company’s converting and finishing capability saw the addition of an Apstar 66 x 110 two-color rotary die cutter with an Alliance pre-feeder and A.G. Stacker, a J&L specialty gluer, a Baysek 170 die cutter with load turner, two Mosca unitizers, and three Mosca strappers. The upgrades went beyond converting and finishing operations to include such plant infrastructure as 400 feet of new conveyer from Bay Machinery, two Bay Machinery load formers, a new Balemaster baler, and new cyclone. This March, Southern will take delivery of a new Apstar 66 x 126 two-color flexo folder gluer with an Alliance pre-feeder.
“We have basically retooled the plant with new or updated equipment in the past year so we are poised for growth,” David says. “Our region is growing; industry is moving to business-friendly Tennessee, and we now have a lot of firepower to meet new customers’ needs.”
Scott Fray, general manager, agrees. “We now have a broader capability to supply many types of business segments—digital wide-format labels, flexo print—and we can run small boxes up to jumbo in-house.” Fray came to Southern Carton seven years ago after spending 24 years in the industry, predominantly at WestRock and Menasha.
‘Servants at Heart’
The box industry being a service business, all of the mechanical capability in the world will not sell a single item. Southern Carton’s market approach recognizes this; thus, exemplary customer service is enshrined as a principal company value. “The whole organization works with a sense of urgency whose only focus is on the customer,” says Fray, echoing Connor’s earlier description of Southern Carton’s employees as “servants at heart.”
“Our strengths have always been in our loyal customers and our loyal employees,” David says. “Many of our customers have been with us for over 20 years, and many of our employees have been with us more than 20. I believe the secret is to never take either for granted. [The adage,] ‘treat people like you would like to be treated,’ still holds true today.”
The roster of Southern Carton’s longtime loyal employees begins with Diane Sharp, who at 43 years of service holds a one-year seniority edge even over David, who just passed the 42-year mark. Sharp speaks of Southern Carton’s customers almost maternally. “It’s nice to be able to take care of customers. We know a lot of them; we’ve been doing business with most of them for lots of years,” she says. “We exchange grandkid photos. We talk about who’s getting married. It’s a lot of fun.”
Assisting Sharp is Angela Newman, whose 23 years at Southern Carton have been devoted entirely to serving customers. Yet, she says, she is still motivated by the diverse nature of the business and the creativity in meeting customers’ needs. “What I find rewarding is being able to take care of the customers,” she says. “When I started, I thought a box was a box. I didn’t realize there were thousands of different styles of boxes and partitions. So, for me, it’s always a learning experience because I’m still learning, and I’ve been here 22, 23 years. Every day, there’s something different that goes on.”
Eugene Peek is supervisor of Southern Carton’s Fuji X3 digital press, a position he’s held for the past five years. But his experience in the company goes back 26 years beyond that, predominantly in plant supervision. “He’s the jack of all trades,” says David.
Peek has been steeped in Southern Carton’s history of growth, and he recognizes that history as a key part of the company’s success today. “I started when I was 18 so I’ve seen all of [the Kennedy] family grow up together,” says Peek. “I’ve seen it from a letter press, and I’ve been here since the first flexo we got. So yeah, I’ve seen every machine coming in as we grew over the years.”
Plant manager Angie Norman, like her co-workers, is devoted to the company and to the service of its customers. Even before she was employed there, she understood the company’s promise of reliability working in the shipping department for Sanford, then one of Southern Carton’s customers. “I was working part time at Sanford and unloading a truck from Southern,” she recalls. “Rick [Kennedy] asked me, ‘Are you happy here? Do you want a full-time job? Why don’t you come over to Southern Carton and work for us?’”
Norman worked 21 of her 24 years at Southern Carton in shipping. “I was in shipping for 21 years, and the other plant manager retired,” she says. “So, they asked me to take the job. They trusted me. They had more trust in me than I had in myself to run it.” Norman credits her co-workers for much of her success, saying, “I keep smart people around me because I don’t know all the answers.”
Like her colleagues at Southern Carton, Norman has an unflinching commitment to serving the customer, no matter how big or small. “Yeah, everybody knows who our top five customers are, but we don’t treat them any differently than our lowest one,” she says. “If they call and say, ‘Hey, I’m out of boxes! I gotta have boxes,’ we’ll do whatever we can to get them.”
Looking Toward the Future
Southern Carton has had its share of challenges as have many other independent manufacturers, particularly in finding people. “I believe the major challenge facing our industry is labor—competent labor,” David says. “We have not faced the shortages many of my colleagues have experienced, but we have felt the pinch.”
Yet, the Kennedy family has positioned the company to take advantage of expected growth in the coming years. A third generation is now smoothly in place with Connor, the market is growing, and the family is actively reinvesting to take advantage of future opportunities. “My goal is to leave the plant in the best condition possible before I fade off into the sunset,” David says. “I didn’t want to leave Connor in a position where he’s having to replace equipment so I think he’s in really good shape for the next eight to 10 years.”
For his part, Connor credits his successful transition into the company to the family culture his father and grandfather established early on. “AICC has a lot of family businesses, and a lot of them have more family members involved than we have here. And you know, there’s some conflict in some of them,” he says. Pointing to David, he adds, “He and I talk every day, and yeah, we disagree on stuff all the time. But I thoroughly enjoy working with him and looking to grow what his life’s work has been—and his father’s life’s work. This is our livelihood, this is family, and now I look at all our employees that way, too.”
David’s optimism in his own company’s prospects extends to the corrugated industry at large. A member of AICC since 1985, Kennedy is now in his ninth year as part of a CEO Advisory Group, a group he calls his “corrugated brothers.” He sees a new era of opportunity for independent entrepreneurs in the box business. In his opinion, as companies further consolidate—even among independents—there will naturally be those customers whose mix just doesn’t fit into a bigger company’s higher-speed, higher-volume runs. He maintains a unique point of view that sees a renaissance of sorts in independent sheet plant startups. “I think there’s going to be a few more mergers and acquisitions, and then we’ll see a 1970s-style resurgence of independents starting again,” he predicts. “The more the industry consolidates, the more gaps there will be in the industry to fill, and independents will resurface always and fill that void. They will be box plant guys selling or producing for another, and they’ll want to start their own little sheet plant.”
Just like Jim Kennedy did in 1977.
Steve Young is AICC’s ambassador-at-large. He can be reached at 202-297-0583 or syoung@AICCbox.org.