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United States News Title: Box makers wait for signal of economic growth (No Recovery seen here) Box makers wait for signal of economic growth By Mike Boyer • mboyer@enquirer.com • March 19, 2010 * Comments (1) * Recommend (1) * Print this page * ShareThis * Font size:AA Some economic indicators suggest the worst of the Great Recession is behind us, but Jim Cory at Pax Corrugated Products, isn't seeing any signs of recovery. "We're still waiting to see it get better," said Cory, president of the privately held custom box and point of purchase display maker that employs 53 in Lebanon. Last year, business was down and Cory said his company isn't seeing many indications of improvement this year. "Demand is flat, as industry box shipments are down," he said. Year-to-year shipments were down about four percent in January, he said, according to industry data. Corrugated box shipments have long been viewed as a leading economic indicator, favored by no less than former Fed Chairman Alan Greenspan. Virtually all manufactured products from raw materials to finished goods are put in a box for delivery as some point. So demand for corrugated boxes is an early sign of the economy's direction, according to advocates. But structural changes in the economy over the last decade has lessened the reliability of corrugated shipments as economic tea leaves, says Brian O'Banion, vice president of the Elk Grove Village, Ill-based Fibre Box Association, an industry trade group. As durable goods manufacturing, such as appliances, electronics and home furnishings, has moved overseas, so has demand for corrugated boxes to ship those goods, he said. After peaking at 403 billion square feet in 1999, U.S. corrugated shipments last year totaled 372 billion square feet, the lowest since 370.5 billion square feet was shipped in 1995. On the other hand, non-durable goods, such as food, beverages and clothing, represent a larger share of the U.S. economy, and box shipments are a useful proxy for that segment of the economy. "There's still a correlation there," he said. There's also been a consolidation in the corrugated box industry with large integrated paper and box producers merging, he said. That's created opportunities for smaller, independent box manufacturers who focus in specific product niches. One example is Oak Hills Carton Co., a maker of folding cartons and air filter frames in Carthage which employs about 24. About half its business is folding cartons for the medical products and auto parts markets. Folding carton start as sheet of paperboard that's cut, scored, folded and glued into a carton. A corrugated box, on the other hand, is typically heavier constructed of multi-ply fibers. "Last year turned out to be better than we thought it would be," said Ken Kabel, who has owned the business for more than 20 years. "But I don't know why." Some of the improvement was just luck, said Kabel. "One of our customers gained share from their competitors, and that helped our business." This year, Oak Hills is forecasting slight growth. "In January and February we saw modest growth," he said, "But not so far in March." Making things more difficult for box makers in the midst of weak demand is the fact that paper prices are rising. Cory said his paper prices are up $150 a ton from a year ago and he's expecting another $60 a ton increase on April 1. In the face of the slow economy, a lot of paper producers have reduced capacity or increased shipments overseas, fueling the price increases here, he said. I'm sure Brian S's failure to post this story was just an oversight on his part.
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#1. To: Nebuchadnezzar (#0)
Demand should pick up soon. Folks will be living in them.
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