The paperboard box industry in the United States has fallen off a cliff, and continues to fall with no end in sight. The winds from the East have surely changed direction with prejudice. Today, there is very little work for independent paperboard box makers, because Buyers are keeping their inventories at low manageable minimums, replenishing only existing repeat sku’s, and investing far less in new food, cosmetics, nutraceuticals, health or personal care products for the store shelves. You disagree? Let’s unravel and expose the truth. The markets today are at their lowest in new product innovations and expansions. There’s only so many ways you can rebrand and sell a new skin cream or introduce a weight loss vitamin for example. Seems someone is still pressing down on the pause button waiting for an outcome, or is it the “stop” button? Seasons come and seasons go, but the storm today is like no other, and is leaving a permanent and impressionable mark on custom paperboard box packaging for retail shelves across the United States.

Here are a few stand-out’s that are obvious.

The economy is sick with war knocking on our front door.
Do I need to discuss and explain the current chain of events of today? Are you watching the news? Depressions and recessions always cycle through each generation and more. Store shelve prices are not coming down, and the politics of our country are extreme more than ever. Presidential elections in 2024, 2028, and 2032 will only create more extreme agendas for the Left to feed on and purge. Putin’s anticipated natural death will only give rise to a greater threat to any possible world peace. The Middle East will continue to be at war until the Rapture of the Church, and China’s regime will eventually makes it’s strategic moves on the United States. War will only grow and expand, and world economies will be struggling to survive and accommodate to the extreme far left agendas. At the end of the day, the labor pains of our country will become more extreme and challenging to overcome. Sure! There’s always a few short term corrections or recoveries, but this anesthesia will only be temporary, numbing the economic pain momentarily to only re-surge even more in our industry. Lastly, we can be confident another 9/11 or something far worse will occur in the United States, having four years of an open Mexican USA border under the Biden Administration. When Iran and other neighboring countries pound and destroy Israel, the United States will be drawn into a World War.

China box manufacturers have over 47% of today’s market share with more offices on the West Coast, Chicago, Houston, New York, and in various Mid Western States.
I remember one morning early in 1995 at Royal Paper Box when our salesman Dan walked into the office lobby frustrated and screaming with emotions for losing his biggest client overnight to China, SPENCO INSOLES – one phone call from procurement informing Dan all the box packaging is moving to China. Shortly after SPENCO… Allergan, Lifescan and many others followed the new trend. This was my first exposure and wake-up call learning about the “China threat.” These were huge accounts for Royal. So why is China box pricing so cheap? It’s very simple: There is no payroll, there are no insurance mandates, no utilities, no EPA restrictions nor requirements, no taxes, and many more absences that the communist government pays itself, and rewards its citizens with gainful employment. The Communist Government controls and pays for it all. China today has approximately 39 folding carton operations around Singapore alone. They look like college campuses with their Communist Government providing the employees food, clothing, shelter and other benefits. The age restrictions are minimal. The gluing department alone is amazingly a manual hand labor operation with long stretched out tables and chairs with thousands of women and men sitting down, hand folding and gluing each single box. Die-cutting is a manual platen clam-shell operation hand feed. Their printing operation alone has no restrictions, and is 100% solvent based. USA Buyers are tricked and fooled by their promotional websites and online videos displaying full machine operations that appear no different than USA manufacturing. But most of these campuses are ghost towns, and the real manual labor is behind the scenes hidden deep in the bosom of China’s forced labor. Hong Kong demonstrations in recent times have revealed and exposed slave labor is real and alive in the Communist Regime.

Almost every paperboard box I quote TODAY is succeeded by the Chinese box brokers in Los Angeles County, Orange County, and San Diego. If the Buyer I’m bidding on denies any China sourcing, they’re oblivious and fooled of the raw box making materials being imported from China and sold to local box makers: paperboard, inks, coatings, blankets, rollers, oils, foils, glue and more. So they don’t buy overseas sourcing, but they buy from a local printer using China materials. Has anything changed since 1995? Absolutely not! The Chinese presence in paperboard packaging has only grown even greater with more salespeople and offices throughout the United States. The West Coast is the hardest hit from the Communist Government-run-manufacturing, and Southern California has become their main hub. China pricing is approximately 45% lower than local USA manufacturers. I see this everyday.

Box packaging has become unnecessary and useless secondary packaging that adds nothing more to the brand and hook. It’s no longer an asset.
I remember in 2013 I had landed a huge box account called Alaffia in Oregon owned and lead by Olowo-n’djo, a dedicated and very smart business man and the founder of the brand. Every skin care product had a box, and the purchase orders were fluent monthly. It was my best account that made my job fun. My timing to get in the door was perfect as the company was still growing and becoming a national brand. But all this came to an abrupt end a couple years later after the company grew larger and brought in consultants. I remember the phone call with the buyer: the boxes are being phased out and Alaffia will go direct with their jars and containers on the shelves at Wholefoods and other chains. Gone! Vanished! This event continues to be more common and repeats itself to this day as Buyers are finding the “box” as an unnecessary cost, opening new margins for procurement to present to their peers. Of course, this is not a solution for all Buyers, but the trend is becoming more popular for paperboard box markets, such as cosmetics, nutraceuticals, personal care, and more.

Flexible packaging is dominating as a cheaper and lower price packaging alternative that takes up less warehouse space, and is far more manageable at lower costs.
The bag has won this battle, and creative plastic wrapping is truly the runner up. Every year I exhaust myself calling on thousands of companies throughout the United States, exhibiting at the Natures Expo in Anaheim, and as I go down the list of each company name, the paperboard box is disappearing more and more every twelve months, and the flexible packaging is appearing more dominate. It’s a fact that can not be denied. This gauge alone is so revealing and a warning to the paperboard packaging market that is shrinking faster at an exponential rate.

More independent box makers are closing shop, converting to brokering from the owner’s homes.
Brokering paperboard packaging at one time was a viable and profitable business when printers and box makers controlled the high margins during the late 70’s and 80’s. Jim Hodges, my friend, Mentor and owner of Royal Paper Box always reminded me of the millions of dollars Tom Roslansky, the sales manager, was making for the company, selling at crazy margin levels you can only dream of today. Although it was short lived, this was the time when box making was a huge money making business and new box makers were popping up everywhere. These were the Ozzy and Harriet days of paperboard manufacturing. Brokers were everywhere bidding on new box projects, and dangling them in front of trade shops for the lowest manufacturing costs. But all good things came to an end quickly, and the tombstones of failed box makers and printers began to appear across the Nation like an extinction of dinosaurs. Everyone thought software box packaging would last forever, or the cosmetic markets would never consolidate, or CD and DVD packaging would last forever. As the markets consolidated going into the 90’s, brokers were scrabbling, migrating their clients to both commercial printers and box shops at far smaller margins just to keep their accounts. The successful brokers with their ego and greed still rode the wave, hiring chauffeurs to drive their limos around town as they worked the phones in the back seat. The glory and rewards of running your own box shop quickly became a burden and risk to their net worth when they could easily service their clients with another local box shop. This became a growing trend that peaked in the the late 90’s, and since has lost it’s sex appeal. Still, thousands of owners of closed factories still broker to their loyal buyers from their homes. Here are just a few of my local friends that closed shop and started brokering from the home – in remembrance: Mid-Cities Paper Box, Marfred, Standard Paper Box (red brick building front photo above), House of Packaging, George Rios, Ivy Hill, Anderson Lithograph, Franklin Press, Bertco, Southern California Packaging, Graham Packaging, IL Walker, LA Paper Box, UBS, and thousands more across the United States. These were independent giants at one time in the paperboard packaging arena. Forgive me if there have been any resurrections. Their websites make them appear still as a box manufacturer. Yeah! Many of them are getting the Communist government to supply their box accounts today to make things worse.

Online store sales continues to skyrocket with Amazon, Walmart, and several other chains eliminating the need for store shelf packaging.
Why buy a paperboard box when it will never be seen on a store shelf? The common approach today is purchase a mock-up or prototype with a glossy proof laminated to the plotted sample for a professional photograph to be used on their website and/or trade show booth. Will product sales be lost? Of course not! Buyers today are purchasing common rollover-side trays from ULINE, shipping their online orders straight in the corrugated shipper with a decorative label, and eliminating a huge box packaging cost that opens up their margins. The smarter and frugal buyer will use USPS shipping boxes that are free, slap a custom brand label on the box, and build the cheap shipping cost (probably with markup) in the product price, advertising free shipping. Think! Who cares about the shipping container? The sale was already made online with a beautiful box prototype. Seriously, no one in the paperboard box industry in the early 80’s or 90’s saw this coming today. Sadly there is hope for the box if a Chinese broker is selling in the neighborhood today, delivering an $0.18 to $0.32 cent box that’s a minor cost, and could still be used in the brand box packaging. If you must buy your box packaging in the USA for products sold online, Buyers will purchase plain boxes and slap a label on the outside, or print one color. I have seen simple NRTE’s and STE’s with brilliant and clever one color artwork that outperforms elaborate four color process artwork with spot UV, embossing, and foil stamping, which is a total waste of packaging costs that will eventually find itself in the trash. Some product companies still think the box presentation is essential to make the sale. Yes, for a few markets I agree, but overall you’re throwing your money away. Remember, less is more in today’s box packaging market.

Paperboard mills continue to buy and invest in their own independent converting plants in the United States, going direct to the markets.
The next time you walk through a food market chain, such as Whole Foods, Mother’s Market, Ralphs, Walmart, Kroger, Costco, Meijer, and others… look at all the boxes on the shelves. Who made these? Over 72% of the boxes today you see in the markets are manufactured by folding carton companies owned and operated by the paperboard mills in the United States and Canada. The remaining amount of box packaging comes from the independents, privately owned operations that are faced with huge market challenges to overcome and survive. Paperboard is the primary commodity that determines the “price,” and determines if a box maker can sell it’s box packaging at their internal cost levels, and remember the paperboard mills are selling their material to the box maker, controlling the paperboard market. In the old days the paperboard mills focused solely on their paperboard rolls sold to the printing industry, and purchased a few companies for the large commodity work, such as Dixie Cups, Doho’s, and high volume food packaging. Today large conglomerates are buying up small volume work usually manufactured by the independents. I remember when COVID blanketed the country, and overnight the paperboard supply was eaten up by the pharmaceutical companies pushing their drug products, and the paperboard supply became so scarce the independent box makers were calling each asking to buy their board. There was no more board available for the independents and their clients, sending the box unit costs out of the roof, forcing Buyers to restock their box packaging from the paperboard mill conglomerates or from our good friends from the Communist Regime. I had to explain to all my clients why their box prices went up 7% to 10% or more (box owners had to throw in more markup). Let this be a lesson for future things to come with the paperboard commodities in the United States. China TMP paperboard’s quality doesn’t come close to competing with USA paperboard mills’ virgin pulp, but who cares! More and more independents are buying China’s paperboard at a fraction of what it normally costs to sheet roll stock in the United States. Let’s face it… for some box makers partnering with the communist government is the only way they can survive in the USA paperboard packaging markets. Oh and remember to hush the word. We don’t want our clients to know we’re buying and using China’s board that is solvent based and has no EPA regulations applied, and is made by slave labor… Opps!, I meant forced labor. I just saw a pig fly across my window 🙂

Independent owners today are less interested in the longevity of their company physical assets, and more interested in selling out to avoid further losses.
It’s all about cooking the books to look positive and appealing to the next investor or for the big buyout. Box makers come, and box makers go. I’ve had front row seats for over 35 years to this cycle of greed wrapped with pride and ego. Most independent box makers are the first ones out of the gate to avoid the slaughter, leaving the team behind. Earlier I mentioned how box makers are closing shop, and are converting over to a brokerage out of their homes or a small office. This continues to be a common cycle I see everywhere. I only know a few independent box makers that invest in their employees and focus on their well being before themselves. These are owners of integrity and selfless professionals that understand the employee-employer relationships and vendor relationships are equally important if not more than the client relationship. I’ll talk more about this later, but for now I must say the majority of box makers in the United States are owned by wealthy salespeople that have very little interest in the well being of their teams to keep their companies running regardless of the losses and risks they’re facing head on. The harder it becomes to make a profit for an owner in box making, the easier it becomes to justify lay-off’s, closure, or take the brokerage road.

Commercial printers are suffering even worse today, and continue to penetrate the box industry with existing tooling hoping to either broker or build a customer base to improve their statements.
I remember back in the 80’s walking into commercial print shops all over Southern California never seeing a single box on a press sheet, but this quickly changed in the 90’s as commercial printers found it easy to adjust their presses for paperboard. The excitement for many of these shops were short lived as they learned they needed a longer dryer extension to achieve optimal results with no spray powder. Most press installations for commercial shops had very short dryer extensions if any. Man Roland and Heidelberg in the 90’s lead the way to finally eliminating spray powder to avoid offset in the press delivery. My father mastered the key to drying the press sheet, and taught me the key to achieving the best sheetfed litho box printing relied on the length of the dryer extensions and the configuration of chill and hot air along with inter-duct drying systems. After the piggy-back style presses became extinct and were replaced with inline ink units, more box makers were learning the importance of longer drying extensions to eliminate spray powder and dusting, and were able to palletize higher sheet stacks with minimal heat in the pile. Drying the press sheet to a crisp lock was the chemistry every commercial printer had to learn overnight. Many of these commercial shops had their press deliveries a few feet away facing the building walls, and it was impossible to build the extension needed to compete against the existing box shops. This was a make or break for owners trying to convert their commercial shops for box manufacturing. I still remember seeing the salesman owners out on the production floor looking so out of place, measuring the temperature of their stacks trying to gain the efficient and quality levels equal to the existing box shops. It was comical to watch. Today, when you walk into a commercial print shop there is a good chance you will find one used die-cutter and pre-owned gluer sitting in the back ready to make a box. The pre-owned/used market for paperboard printing presses, tooling, and equipment is massive, and commercial shops are their biggest buyers.

Second and third generation owners and mangers that inherited from their father’s success in the 70’s, 80’s and early 90’s are weak with pride and ego not having the skill set to lead and rebuild for today’s markets.
Whenever I look through a magazine publication for printing and packaging, and see a father and son or family standing for a portrait for a featured article with a printing press or some production in the background, I want to puke! The breed of owners today are just not the same with equal strengths, integrity, innovation, and selflessness like their founding fathers who took risks and made sacrifices. It’s true! Unless the offspring spends years on the production floor, running the equipment alone, works every tool and machine in the factory, works in the air-hammer stripping department, runs the night-shift, learns pre-press, design and sample, builds relationships as a floor manager, and spends at least 3 years in sales… the offspring is not qualified for the CEO position or ownership in a box making operation. I’ll share more on this matter later, but for now I will say throughout my decades meeting, working together, and interacting with ownership and their offspring as far back as I can remember, I can say with total confidence the new box makers of today are playing the role, and do not have the character and leadership strengths to win the battles that face them today, finding, implementing, and investing in the narrow solutions in paperboard packaging that are available now to survive and flourish in this economy and future economies. It’s far easier to sell the company to the highest bidder.

Buyers are not changing box suppliers for entertainment and penny margins anymore.
Relationship building always has been the roots of any client-base going back to the earliest box salespeople in our industry. The traditional approach of lunches, baseball games, dinners, perks, and strip clubs no longer applies to today’s salesman and client relationship. Times have changed. Buyers are truly ghosts today with no more physical contact, interaction, and without the loyalties. In the past years selling paperboard box packaging, I have gained more clients never meeting the Buyer, nor giving them a tour of the plant operation, nor sometimes never talking on the phone. It’s a sea of changes for the traditional box salespeople with their old school techniques. Today the boat anchors that hold these Buyers down have gone even deeper with heavier chains. Buyers are not budging with large commodity volume sku’s and even more the lower volume items: “Sure, I’m happy to take a look at your pricing and box samples, but we’re very happy with our current supplier. If anything changes I’ll let you know.” Buyer’s today are smarter than ever in box packaging procurement, and it takes far less of a salesman’s finessed pitch, and more of a down to earth realist almost showing desperation to just break the ice and crack open a door for an opportunity to bid. I’ve met all types of Buyer’s, and I’ve learned less is more. Keep it simple. Pitch the punchline and move on.

So there you have it about a dozen facts to support my position. Will the paperboard packaging industry return to a normal? Impossible. Oh it may see some recovery with a new face, but it will never return to pre-covid nor bring the dinosaurs back to life. Instead, survival and success in the folding carton industry today requires a new breed of risk takers and leadership that can push through the commonalities and routines of box manufacturing and sales. Innovation and originality are two ingredients that are rarely seen in these past generations of box makers. A lot of spoil offspring inheriting their father’s success falls short to achieving this new breed. Investors today with their greed and ego have no depth to understanding how to make serious returns in both the small volume and commodity paperboard industry. It can be achieved. There is hope. Yes! Curious?

First, change your primary focus to the USA Ethical Pharmaceutical Market, which is the safest and most aggressive market to build your box shop sales. The Ethical Pharm market is built from the hospital operating table, and has the strictest requirements and compliance mandates. This is the only market that actually withstands and grows during depressions, recessions, virus pandemics, wars, and various economic or political crises. It is the most robust paperboard packaging market that is a necessity in the United States and in the hospitals around the globe. The advantages of Ethical Pharm clients are amazing, but to win these purchase orders requires a strict discipline of procedures and cleanliness that almost every owner box maker (and investor) is not interested to pursuing, because their too impatient, arrogant and blinded by their greed for short-term gains and uninterested to see the long-term financial advantages. The costs for making a box plant audit-ready for Ethical Pharm can exceed in the range of $450,000 plus, depending on the floor layout and space allocation for starters if done correctly. I can write a book on how to build a box making operation for ethical pharmaceutical markets, and lead the industry, but sales owners and investors today are not interested, and have come late to the game.

I was born in the paperboard packaging industry, mentored by my father, Rolf Peterson, and later by Jim of Royal Paper Box, two amazing pioneers in this box industry as independents. Starting on payroll at Hostmann-Steinberg formulating and making printing inks during my college days, I moved to ink management and then to ink sales, then onward to Rick Pasin’s Coatings and Adhesives in Leland, North Carolina as their West Coast Sales Representative, trained by the most talented salesperson I have ever met, Sam Calkins from Concord, New Hampshire. Sam was a brilliant salesman in flexo, gravure, and sheetfed litho, and could sell anything. He was a huge mentor to me that trained and exposed me to the printing industry throughout the United States. I met all the major owners and players in print from Riverwood, Case-Hoyt, Field Container, to Kellog’s cereal boxes to the highest volume commodities supplying America. Throughout my high school days I learned the world of paperboard packaging in my home in La Mirada, California, where I grew up. My father introduced me to everyone that either was a supplier, client, owner, salesman, or co-worker. I have so many memories in the factories and countless meetings. In 1993, my experience and exposure to the printing and box making industries was already at a peak. Jim Hodges and my father offered me a salary position at Royal Paper Box as a Management Trainee, and there my journey stepped up to a whole new level that gave me the experience in every position from the front door to farthest entry in the back of the ten acres of warehouse and manufacturing. I did it all for 14 years in manufacturing, management, design, sales, customer service, and much more. My experience, skills, and talents developed is too long to list in this industry on a resume, which I’ve learned most owners care less to read. The only thing I have not done is ownership, although my work at Royal and the decision-making, system developments, profit-n-loss performances, installations, GMP, and so much I did made me feel like an owner. I really miss it. I remember in 2010 coming back to box making after a disastrous 4 year break, Nick at Advance told me over lunch that I knew too much, and I would be more of a threat to owners in this industry. It was obvious everyone was protecting the interests of my prior employer. My story in box making is extensive, and my experience and exposure covers a history of box making that most owners today and professionals are not aware and probably wouldn’t care. The true hero’s and mentors of the independent box making industry were born in the 50’s, 60’s, 70’s, and 80’s. Sadly many of these companies are no longer with us, but they truly left a mark in the industry with sales leadership, innovation and technological advancements we assume and take advantage of today. For three years I had the privilege to be a part of the Independent Carton Group (ICG), and was asked to be on the Board my last year. I designed their logo, which they still use today with their brand, but sadly they replaced the beautiful huge website I built for them. ICG was a joy to be a part of, setting up new supplier agreements and more, and once again my eyes and ears were opened to all the major independent box operations in the United States from the Voss family at Diamond to Disc Graphics, Bob Zumnbiel, Mark Sonderen, All Packaging, Climax before they closed, Charlie, and a countless number of other companies, owners, managers, and associates. I miss the Group. Truly, so much to share, the countless stories that has inspired me and trained me in so many different ways in paperboard box manufacturing.

Lastly, I miss the challenge, and would give an arm or leg to start my own operation, and build the strongest independent box maker in the United States that meets all frontline battles with success and long-term growth. The paperboard packaging market may be dead, but their is still plenty of low hanging fruit out there if you know how to grab it and not lose it.

God bless 🙂