July 24, 2019
As some of you may know, I spent the bulk of my career in the folding carton industry with several majors and a relatively minor player. Although one might think the major and minor businesses were distinctly different, they truly were not. My objective was always to serve the customer, first and foremost. As many would say, the customers of any company pay all of us. And as I observe today’s activities in the industry I have dearly loved for so many years, I am rather chagrined at the rate of change for what appears to be no good customer reason.
The majors are definitely getting bigger through acquisition and consolidation, and the pool of minors is shrinking at an alarming rate. My advice to the many wonderful independent folding carton companies out there is to stay and fight and not give up—better times are ahead for you. These majors are acquiring great independent companies at a staggering rate and then trying to “synergize” their purchases to create some quick value by cutting heads, as they refer to the fine folks that built the very assets they just paid handsomely for. This does not make much sense to me. The folks running the company are the company! I am not talking about hands and backs, but heads and hearts—the soul of the company.
At the end of the day, these majors are in a fight for their lives as they decimate many of their acquisitions with too little regard for the carnage they leave behind. The one truth in the equation is that the customer still gets to vote on their supply source, and many will not be bullied. I strongly believe that any independent that still treats its people well and its customers even better will ultimately carry the day when it comes to getting new opportunities, which as we all know are the lifeblood of any business.
The majors are “losing the ball in the sun” when it comes to customer services and an attitude of gratitude, as well. These days, they seem to think they are the only game in town, and that is absolutely not the case. The new world order is beginning to emerge as independents are beating the devil out of the big guys when it comes to lead times and quality, leading to better value. If something is too good to be true, it usually is, so cost is rarely the most significant factor in a customer’s decision matrix. If that’s the case, run, don’t walk away, for this year anyway, but try again in 2020.
I have seen it from 30,000 feet for the past four years, and if I were younger, I would purchase a carton business tomorrow and beat the big guys at their own game. I have never had more ex-customers call me in my industry consultant role to ask me how best to find and qualify better supply sources than the majors. These ex-customers are exasperated at what has happened to them in recent years, and they feel as though they are trapped by heavy-handed leadership that announces they have purchased their good folding carton supply partner, then immediately announces a new cast of characters to call on them when all of the known ones are dismissed. Lastly, six months later they announce to the customer via an email that their “supply-chain-approved” carton plant of choice has now been closed permanently and consolidated into another already full-capacity facility. If this does not spell opportunity to all of you independents out there, then I don’t know what does.
This is the time to market and sell with all of the energy and resources you can muster. There are hundreds of prospects and ex-customers out there that need you desperately and would love to know you’re still alive and kicking. The folding carton lead times have been getting stretched further and further as people, quality, and customer service have been cut once, twice, and cut some more. The time to strike is now ! These customers may not pick up the phone and call you, but they will definitely take your call and set up an appointment to hear that you may have a plan to help them end the pain they are incurring daily. Yes, they will not want to hear that it may cost a little more, but at the end of the day, they will be encouraged that someone has given them a great pathway back to normalcy and a robust supply chain that can allow them to once again meet their cherished customers’ needs with trust and confidence.
Here’s to a great second half of 2019, the year of the independents.
Tom Weber is folding carton advisor for AICC. Do you have any questions? Ask Tom at 440-221-3103 or tweber@aiccbox.org.
