1. Rethinking Processes, Retrofitting Equipment and
a Better Way to Monitor Board Performance
CONVERTING THE NEW LIGHTWEIGHTS
Sarilee Norton, President
Ralph Young, AICC Technical
Director
Randy Banks, President,
Sharp-International
2. AGENDA
Consolidation, Economic Metrics, Lightweights—
The New Industry Dynamics
Quality and Consistency—We Can Do Better
Crushing the Board--What Do We Really Know
About Where We’re Losing It?
2
3. Same Old, Same Old or Finally a Different Take?
THE NEW INDUSTRY DYNAMICS
5. 2011—A BANNER YEAR FOR TRANSACTIONS
RKT/SSCC; IP/TIN
– Long-term positive for the industry
– But a lot has to happen first
‘Discipline in the containerboard and corrugated box
markets’
– TIN and SSCC—5th and 6th out of six
– Someone has to do it
– TIN—better cost structure and high integration strategy
Kapstone and Boise
What else? What’s next?
5
6. WHAT’S NEXT?
G-P/PCA?
– Cultural history
– Attractive geography
– But what does Koch want?
– If ain’t it broke…
Pratt marches to its own tune
Boise, a buyer or a seller?
Still a lot of 1-2% players out there
Multi-plant independents and sheet feeders
6
7. NEW INDY CONTAINERBOARD—THE NEW
NORMAL?
Oxnard and Ontario CA mills produce 550,000 tons
Together Schwarz Partners and Rand-Whitney
operate more than 20 converting facilities
If you can’t beat ‘em, join ‘em—benefits of scale
and supply source ownership
“This investment represents a generational commitment by
both families to the industry. We have been looking for
opportunities to grow, and these two California mills are
located in what we believe to be a very strategic market for
the future of our industry. They represent two assets that
would be very difficult, if not impossible, to replicate today.”
7
8. CONTAINERBOARD SHARE BY COMPANY
Greif Brothers Longview Fibre
Green Bay All Other
2% 2%
2% 7% International Paper Shown in 3 unlabeled wedges:
Rand Whitney+ 34%
Schwarz Interstate Resources
2%
Boise Atlantic/New Forest 1.0-1.5% each
2%
Kapstone Simpson Paper
2%
Pratt
3% Shown in ‘All Other’:
Norampac Orange County Cont.
3%
Hood Industries
0.5-1.0% each
PCA Sonoco Products
7%
Durango Group
Rock-Tenn
Georgia-Pacific 20%
11%
8
9. Access to New Local Markets, Plant Consolidations,
or Both?
REGIONAL CONVERTING IMPLICATIONS
9
10. SIZE MATTERS
For the large integrateds, it’s usually about scale and synergies
– IP had 140 plants after Weyco, closed over a dozen
– Smurfit-Stone ~110 in 2008, RKT less than 100 today
– TIN closed several, IP has closed four more already
Pick the best facility in overlapping local markets or shut down and
start over
For smaller integrateds and regionals, a good way to enlarge
capabilities and extend geographic reach
For the independents, a great time reinforce quality, service and
responsiveness you provide
10
11. THE ‘CURRENT’ ROCK TENN
Even more capacity along the Route 95
corridor—MA, NJ and into the Carolinas
Legacy Rock Tenn presence in TN, GA, AL
Mega resources in Chicago-to-Milwaukee
stretch
Only US based supplier with major position in
Canada
11
13. THE ‘NEW’ IP—BOX PLANT NETWORK
Southern CA and Chicagoland ‘thickets’ of box
plants
Northern CA, upper Midwest, eastern PA, the
Carolinas, northwest GA, TN, central FL and LA-TX
are also capacity pockets.
Except for the Dakotas, the Rocky Mountain states
and sparse coverage in New England, they are
EVERYWHERE!
And 10 box plants in Mexico
13
15. WHAT DOES THIS MEAN FOR THE EVERYONE ELSE
IN THE INDUSTRY?
For converters, not really about reducing capacity
For consolidators, ‘synergies’ imply fixed cost
reductions—headcount, bricks and mortar, services,
property obligations, inventory baseload
Where are the two major networks saturated?
Shutdowns always put some accounts in jeopardy
For most customers, this is still a local business
For the containerboard supply, may be fewer mills, but
capacity not likely to shrink
15
16. Please Check the Security of your Seatbelt…
INDUSTRY KEY DRIVERS
16
17. US BOX SHIPMENTS FELL 13% 2007 – 2009
Steepest decline for the market since the 1970s
Shipments recovered 3.5% 2010, far more subdued
than the growth in manufacturing
Since 2010, essentially flat through the third
quarter 2012, continued strong headwinds for the
US economy will prevail before market accelerates
to 3% (?) growth in 2013 and 2014
Long-term, box shipments may average 1.5%
– Containerboard to grow at a more sedate 1.0% rate
– Shift to lightweight liner takes hold in North America
17
18. CONTAINERBOARD EXPORT MARKETS WERE VOLATILE IN 2009-
2010, BOOMED IN FIRST HALF 2011, STABLE NOW?
2009-2010 due to numerous factors
– Global credit crisis and economic shocks
– Black liquor credit for US mills
– Shortages that developed following capacity closures
– Fluctuating domestic demand
By and large, exports supported containerboard prices
at higher levels than the historical norm but growth in
China’s capacity may have a dampening impact going
forward
Latin America a growing export market, but can it make
enough of a difference
18
26. MAJOR LIGHTWEIGHT INITIATIVES SINCE 2006
KapStone is also focused on lightweight kraft linerboard and Longview
markets lower basis weight grades
Company Location Capacity Material Origin
International Pensacola, FL 500,000 Kraft linerboard Conversion from
Paper uncoated free sheet
New Forest Scarborough, ON 250,000 Recycled liner/ Greenfield
medium
Pratt Industries Shreveport, LA 350,000 Recycled liner/ Greenfield
medium
KPAQ St. Francisville, LA 220,000 Kraft linerboard Conversion from fine
paper
Abitibi Bowater Coosa Pines, AL 100,000 Recycled Conversion from
SP Newsprint Dublin, GA ? containerboard/ newsprint
paper
Greenpac Niagara Falls, NY 540,000 Recycled New machine adjacent
linerboard to existing site
26
27. GREENPAC BASICS
Partnership which includes
– Norampac (60%): Canadian based, 6 machines, primarily
recycled, ~3% share of North America
– Jamestown Container, Containerboard Partners and affiliated
box plants
– Integration of newly purchased Bird Packaging
328-inch multi-fourdrinier recycled linerboard machine;
540,000 tons capacity; will represent almost 2% of N.A.
linerboard capacity in 2013.
Basis weight range 20-35#; will trim 3-out to meet
modern corrugator requirements
27
28. WHY WOULD THEY DO IT?
Separate what’s good for the industry from what’s
good for the company
3% of the market, will be 6th, after PCA and Pratt
5 mills; 1.1 million tons, mainly recycled (inc. Trenton)
– No virgin liner capabilities
– Machines are narrower, slower, older
– Will trim only 2 or on some just 1 roll for 98- and 110-inch
corrugators
– Highest cash costs of the top six
28
29. LIGHTWEIGHTS—SOME MIGRATION, NO
INFLUX…YET
The Norampac machine is 12 months away—not too soon
for them to be developing customer opportunities and
marketing strategy
Pratt is producing lightweight recycled liner and medium at
three mills, day in, day out
Kapstone, Longview, Atlantic and others are marketing
lightweight grades
Reports that additional companies are quietly running
lighter weights for specific customers
Some Europeans would love to find a way to serve the US
market.
29
30. LIGHTWEIGHTS–TAKEAWAYS
The case for lightweighting
Technological considerations
Lightweights are mainstream in Europe
The pull of global CPGs and retailers
Virgin versus recycled—who wins?
Will Norampac be the first or the only?
30
32. WHY SHOULD I BE INTERESTED?
Continued consolidation-reduced supply
Containerboard price fluctuations coming
International companies buying in Europe
Elevated combining and converting technologies
new flutes M, R, S, and T
Methods to evaluate sheet suppliers
New packaging designs
Prepare for shelf and retail ready packaging
Financial savings could be substantial
32
33. QUOTE FROM GENERAL MILLS
“…We realized that most of that innovation that
was happening was coming from small
companies.”
“Most of the innovation is also happening
outside the U.S”
“We want to drive cost savings through a focus
on performance needs.”
Joe Piton , Buyer, FBA 2012 Annual Meeting
33
34. WHY ULTRA LIGHTWEIGHTS?
Europe linerboards tons <35# at 45% +
US linerboard tons below 35# at 17%
European paper making and combining highly
sophisticated
Australians are here, Europeans are coming—
fifteen years ahead of us
Cost effectiveness and sustainability
34
35. RECENT INDUSTRY HEADLINES--USA
Converting plants energy self-sufficient
Solar panel fields at RFC and Maxco
OCC prices still high, wood unchanged
Collection of OCC at 91%-an all time high
Export of US OCC now over 40%
Recovered fibre inclusion in containerboard
at 46%- all time high in US, Europe 85%
Mills reduce fresh water usage, burn biofuels
35
36. WHERE ARE LIGHTWEIGHTS PRODUCED?
Atlantic Packaging and Rock-Tenn Solvay
IP Pensacola (all export) UFS machine
SP Newsprint-GA
Kapstone-NC and SC
Converted SBS machines- KPAQ-LA
Norampac (GreenPac) Niagara Falls
Grupo Unipak Mexico?
Longview Fibre: Port Townsend-WA
On the drawing board-newsprint
Imports?
36
39. NEW FIBRES TO NORTH AMERICAN CONTAINERBOARDS
Sugar Cane
Ground wood (newsprint)
Eucalyptus
Hemp
Northern European hardwoods
Mixed office waste with coatings
Challenges to waste paper dealers,
papermakers, combiners, converters, and
corrugated users
39
40. LEADING EDGE CORRUGATOR TECHNOLOGY
Automatic web tension controls
IR temperature sensors at six locations
Crews, quality personnel, or lab technicians that
conduct temperature audits every shift.
Moisture sensors at two locations and a
manual moisture analyzer for combined board
at the dry end of the machine
Speed sensitive warp arm adjusters on the
preheaters and preconditioners.
40
41. LEADING EDGE CORRUGATOR TECHNOLOGY
Precise glue applicator gravure rolls.
Containerboard from only two paper machines
with specific fibre length and sheet formation.
Automatic load controls on the double facer
Concise recipes (machine settings) for each
board combination
Controls to monitor and adjust adhesive
temperature and viscosity
41
42. STATE OF ART: CONVERTING
Three minute change anilox rolls
Ink control systems: now temperature
Bobst PolyJoiner, AMS’s Tri-Feeder
New prefeeder systems
Lighter weight back anvil covers
42
43. STATE OF ART: CONVERTING
Flexos 15,000-20,000 blanks/hour
Continuous run, set up while running
Non-crush converting-Emba and others
Robotic bundle handling-Automatän
Optical scanners: adhesion and slots
43
45. REQUIRES INNOVATION AND REDESIGN
Doublewall: E/B, B/B, E/E, E/F
Design for smaller boxes, boxes with master
pack, RRP, SRP, counter displays, headers
Faster merging of small flute and folding carton
applications
Greater opportunities for small flute now that
emerging containerboards are available.
Carton within a carton
45
53. It’s All About Crushing the Board
MD TORSIONAL STIFFNESS AND BOX
PERFORMANCE
54. WHAT DOES THIS RAILWAY BRIDGE…
…AND A PIECE OF CORRUGATED BOARD HAVE IN COMMON?
54
55. CORRUGATED BOARD
Caliper
Bending Stiffness = Tensile Stiffness of the
Liners x Board Caliper²
55
56. MD TORSIONAL STIFFNESS
Why is MD Torsional Stiffness Important?
1. MD Torsional Stiffness is a measure of the
“Structure” of the whole board but especially
the flutes
2. MD Torsional Stiffness failure leads to Bending
Stiffness Failure
3. Bending Stiffness Failure leads to Compression
Failure
4. Compression Failure leads to Box Failure
5. Box Failure leads to very unhappy clients
6. If you don’t measure it you can not control it
56
57. WHAT PROPERTY BEST DEFINES ‘STRUCTURE’
MD Torsional Stiffness
Unstrained board flute profile
Liner movement indicated by arrows
57
58. MD TORSIONAL STIFFNESS
There are three important times when you need
to know about MD Torsional Stiffness
1. When you are making it
2. When you are destroying it
3. When you are guaranteeing your box
performance
58
59. MD Torsional Stiffness Testing
An easy and accurate way to measure MD Torsional
Stiffness using a natural resonance technique
59
60. BUILDING IN TORSIONAL STIFFNESS:
CORRUGATOR INFLUENCES
Selection of liners and mediums – type, quality, basis weight
Corrugating temperature, moisture, friction, drag
Corrugating rolls – profile, size, wear
Glue application – film thickness, evenness, quality
Adhesion – pressure roll, tack development, temperature
Pressure rolls during drying
Slitting
Feed rolls anywhere
60
66. B/C DW – PITCH RATIOS
BC flute with conventional pitch ratio of 11/9
BC flute with adapted pitch ratio of 4/3
BC flute with adapted pitch ratio of 3/2
67. TYPICAL IMPROVEMENTS ON CORRUGATOR USING
MD TORSIONAL STIFFNESS
Kiwi Fruit Board Grade BPI Comparisons
# Paper Make up Comments BPI
1 DCK170(M190HP)K175(D115)K230-BE 2011 Grade 31.6 CONTROL ML's MB's
2011 Exisiting B SC adds 9.2% BPI ambient even
2 DCK170(SC180)K135(D115)K230-BE 34.8 9.2%
flute Rolls after reduction of middle liner.
New B fresh rolls (no flank or
New B flute Rolls 6.6%
3 DCK170(SC180)K135(D115)K230-BE 37.1 profile change) adds a further
13.3.12 (14.8%)
6.6%
4 DCK170(M190HP)K175(D115)K275-BE 2011 Grade 31.4 CONTROL I T's
2011 Exisiting B SC adds 9.2% BPI ambient even
5 DCK170(SC180)K135(D115)K275-BE 34.8 9.8%
flute Rolls after reduction of middle liner.
New B fresh rolls (no flank or
New B flute Rolls 14.3%
6 DCK170(SC180)K135(D115)K275-BE 40.6 profile change) adds a further
13.3.12 (29.3%)
14.3%
Ian, i'm sending this to you in confidence. F.Y.I. and you may find interesting. The calipers have also
increased & ECT only marginally. M
The xls is pretty self explanatory but we have 3 sets of figures from numerous tests Dec '11 though to last
week in 4'12 comparing old 2011 CONTROL & failing Kiwi Fruit Trays to new Semi Chem data & recently
new B flute rolls installed 13.3.12 ..NOTE the new B flute is not a new flank clearance/profile/T//Up its just
a straight replacement.
Without knowing the MDTS, these impressive
improvements would not be identified
67
76. COST SAVINGS MODEL
Medium Offset
Actual = tested DST ALTER board grades & prices Use -5.057
lbs to gsm x = 4.882 RF -5.057
SC -2.057
USA Board Grade - C Flute
Cost/1000ft² DB Medium SF Actual Theory DST
Old Board $ 27.44 Now 35 23 35 9 11.0
New Board $ 25.20 New 31 23 31 10.0
Cost Savings $ 2.24
Cost % savings 8%
Weight savings (lbs) 8
Wgt % savings 8%
77. WHO IS TESTING MD TORSIONAL STIFFNESS?
Australia Estonia Hungary Poland
Austria England Ireland Scotland
Belgium Fiji Italy Spain
Chile France Lithuania Sweden
Czech Republic Germany New Zealand Thailand
Denmark Holland Papua New Guinea USA
26
Australasia/Pacific
88 Europe
USA - ?
77
78. MD TORSIONAL STIFFNESS IS:
The missing major strength property of corrugated board
The property that tells you how well you make your board
The property that tells you how badly you crushed your board
The property that tells you how well your board will perform in
the service environment
The property that leads to box failures in a stack
The major property you need for quality control
The property that allows you to optimize board grade
performance
78
79. IMPLEMENTING AN MD TORSIONAL STIFFNESS
PROGRAM WILL ALLOW YOU TO:
Improve the quality of corrugated board off the corrugator.
Improve the quality of finished boxes off the RDC/FFG.
Reduce damage during conversion
Setup a QC system to guarantee optimal performance
Reduce board weight
Shift money from raw material cost to the bottom line
Reduce customer complaints
Keep an eye on your competition
79
80. Rethinking Processes, Retrofitting Equipment
and a Better Way to Monitor Board
Performance
CONVERTING THE NEW
LIGHTWEIGHTS Sarilee Norton, President
Ralph Young, AICC Technical
Director
Randy Banks, President,
Sharp-International