LIGHTWEIGHT CONTAINERBOARD
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1 WHAT CONVERTERS NEED TO KNOW LIGHTWEIGHT CONTAINERBOARD Sarilee Norton January 25, 2012
2 MILL PERSPECTIVE 2
3 ADVANCES IN PAPERMAKING Multi-ply linerboard Mini-fourdriniers Formation technologies Other improvements Consistency profiling headboxes Extended nip presses Film transfer size presses Single tier drying sections
4 FIBER CONSIDERATIONS Virgin versus recycled Economics of recycled mills and of recovered fiber Quality of the furnish Global considerations Who s using the recovered fiber Who s supplying the recovered fiber 4
5 LINERBOARD, BEFORE AND AFTER 5
6 ANALYSIS OF MEDIUM BY GRADE Perspective has changed Targeting the application SOURCE: The Future of Lightweight Containerboard in North America
7 IMPACT OF ECT SPECIFICATIONS Average box basis weights have declined Mostly driven by lighter weight alternatives to standard grades Lighter linerboard, 35# HP for 42#; 56# HP for 69# Lighter medium, 23# for 26# for non-compression spec boxes But essentially no change for 26# and lighter Medium average has actually increased
8 A FEW MORE WORDS ABOUT BASIS WEIGHTS 8
9 AQUICK BASIS WEIGHT CALCULATION SIDEBAR lbs./msf or 646 grams/meter 2 9
10 MOST DO IT WITH LESS * Purple asterisk is basis weight average, per FBA Annual Report for 2009; dotted line from 2000 data point indicated in same report SOURCE: ICCA Global Containerboard Summit, 2007 Except China, major corrugated producing regions have significantly lower average basis weights Chinese numbers reflect prevalence of doublewall 10
11 WHY ARE THEIR BASIS WEIGHTS LOWER? Components Lighter 75% of linerboard is recycled, 15% of that 100 gram (20.4#) or less 85% of medium is recycled, 30% of that 90 gram (19.4#) How come? Comparative Statistics United States Germany Japan Average Size of Household Houses with more than 5 rooms 72% 40% 31% Power consumption kwh per capita Municipal waste generation kg per capita Forest Area km 2 per capita SOURCE: NationalMaster.com 11
12 SOCIAL, ECONOMIC, COMMERCIAL CONSIDERATIONS Population density about 75% higher than in U.S. More proactive about sustainability Different investment climate Lightweights offer savings Supply chain factors Transportation? Distribution and storage Retail-ready packaging Enough to explain 20% difference?
13 FLUTE AND WALL PREFERENCE Vary widely by region and country Capabilities-driven board quality and flute type E-flute and other microflute emerging SOURCE: ICCA Global Containerboard Summit, 2007
14 NORTH AMERICAN MACHINE CAPABILITIES About 140 containerboard machines Median age: 41 years Median technical age: years Less than 20 capable of running 23# linerboard Less than a dozen capable of running < 23# medium 3 new since 2000 versus more than 30 new in Europe
15 CONVERTER VIEW 15
16 SOME BASICS ~568 NA corrugator plants, 523 in US Produce 80% of finished boxes or components Fewer plants, less overhead But higher productivity SOURCE: FBA Annual Report,
17 CORRUGATORS WIDER, FASTER, MORE VERSATILE Inline litho-laminating Speed + Uptime = Productivity Quick-change flute cassettes Precise gluing systems Temperature monitoring equipment SOURCE: Norton Associates research More flute options, more print options High-speed, automated converting equipment 17
18 LIGHTWEIGHTS CURRENT TEMPERATURE More grades, more inventory Productivity and waste is it an issue? Best practices The converters weigh in Integrated versus independent No compelling value proposition, yet 18
19 TELL ME SOMETHING NEW 19
20 IT STARTS WITH KNOWING AND DOING THINGS RIGHT Okay, maybe this isn t new Equipment that is properly installed, calibrated and maintained Best practices industry standards and guidelines, equipment manufacturer procedures and guidelines, what you ve learned from past problems Benchmarking Supplier quality assurance don t let them deliver less than you pay for Lightweights are less forgiving 20
21 CORRUGATOR WET END Rollstands and splicers Integrated tension controls between roll splicers and roll stands to ensure paper isn t jerked ; controlled tension ramp up Pre-Heaters Driven drums to ensure web tensions are controlled as they unwind Temperature and speed control for managing wrap arm positioning Medium pre-conditioning units Easy to overheat paper with steam chest Heat/tension/moisture optimization infusion technology 21
22 CORRUGATOR WET END (CONT.) Single facers Roll tensioning devices to minimize medium tension and control spikes during splices reduce likelihood of fracturing, tear-outs, poor flute formation Corrugating roll configuration modifying the shape, width and amplitude to better accommodate lighter weights, to reduce medium consumption Peripherally heated corrugators, wider elevating belt Glue machine Less starch, but tighter tolerances Curved infusion hot plate to heat/steam flute tips, open fibers Rider roll system versus contact bar improves precision 22
23 CORRUGATOR WET END (CONT.) Double facers Heating sections designed to create less thermal deflection under load reduces potential for edge crush in combined board and more uniform heat transfer Heat press shoe system auto adjusts for hold down pressure, retains settings for each board combination Vacuum traction section prevents crushing as board exits heating section, stabilizes moisture profile across the web to produce a more uniform, flatter, stiffer sheet 23
24 CORRUGATOR DRY END Slitter-Scorer Driven score tooling top and bottom to prevent sheet from spinning up, driven pull rolls to avoid crush and sheet marks Cutoff Knife Driven top hold down on out-feed section to avoid lead edge damage, knife exit roll adjusts to board grade Stackers In-feed position onto stacker vacuum belts critical; auto adjust feature to ensure the right in-feed angle 24
25 MORE CORRUGATOR CONSIDERATIONS Corrugator controls Systems for automatic set-up based on board combination, order libraries to store the information; bridge buffer controls and splice synch Software to integrate sensor feedback for on-the-fly process monitoring, adjustment and control EXAMPLE: Intellisys has more than 20 corrugators in Europe running automation, control strategies design and fine tuning for Paper and Corrugator process industries. 25
26 HOW ABOUT DOUBLEWALL? The U.S. sells away from doublewall, Europeans migrating to it. Lightweight doublewall versus heavier weight singlewall for retail-ready and display packaging: Better flat crush Better printing surface Better economics? Complementary flute profiles and pitch ratios 26
27 DOUBLEWALL OPTIONS Consider the trade-offs performance improvement, fiber weight, price/ton premium for lightweights, yield benefits Consider suppliers availability of lightweights, quality and consistency of the board Explore coatings and additives to enhance the strength of super lightweight board. 27
28 CONVERTING CONSIDERATIONS If your FFG looks like this one, you re golden If it looks like this one, probably not 28
29 CONVERTING IMPERATIVES Start with flat board Feeders that don t degrade the sheets Testing procedures and protocols Lightweights, microflutes may require different test methods and standards New measures and apparatus DST DON T CRUSH THE BOARD 29
30 WHY WE BELIEVE LIGHTWEIGHTS WILL HAPPEN! 30
31 SUSTAINABILITY The Walmart effect Retail power Commercial leadership Company initiatives Procter and Gamble Kraft Eco-Calculator Right-Sizing selectivity for who supplies Other names in the sustainability news Unilever, Yum Brands, others 31
32 RETAIL-READY A LOT OF BENEFITS An holistic approach to packaging in the retail environment, integrating: Marketing Materials cost and efficiency Sustainability Operations data Okay, but what is it? SOURCE: 32
33 IMPACT OF RETAIL READY ON CORRUGATED Per PIRA International, RRP could be approaching 3.4 million tons in US by 2011 Microflute structures growing 5% a year in Europe, PIRA says: Retail pressures for smaller packs is likely to lead to further growth for microflute grades that can offer print and cost benefits over conventional flutes and folding cartons Standardization will require high level of cooperation: US example corrugated common footprint May be the most compelling driver for lightweights 33
34 OF COURSE IT S ABOUT PRICE! Quality and consistency Reliability Flexibility Industry savvy Lightweights a lot more choices on the menu 34
35 SO WHERE IS THE DEMAND? Supply constrained Strategic implications for large integrateds Supply chain managers in a quandary We want lightweights Can we get enough, will it work? Jeopardy or opportunity for the industry? 35
36 A SCENARIO FOR CHANGE Time is right for lightweight investment Black liquor credits Restrained spending climate in recent years Generally good balance sheets But a tough strategy for the large integrateds to embrace Who will step up Mid-sized integrateds, recycled positions Independent consortium European supplier not at current exchange rate
37 A SCENARIO FOR CHANGE (CONT.) North American companies with underutilized graphics paper assets Cost to convert Economics versus competitors Incremental upgrades What are the limiting factors for lightweights Market impact of more of the same grades Who s out there? 37
38 WHAT CONVERTERS CAN DO Look for the opportunities, use lightweights as a way to inform customers about market trends Tell them what you re doing to be ready Position lightweights as a way to gain entry into megaretailers as a regional supplier Cultivate relationships with containerboard suppliers who offer or will likely be offering lightweights Super lightweights, under 23#, not a substitute for 32 ECT where compression performance is required Lightweights may not be a good strategy for your business model 38
39 Products, Services, Information and Analytical Support for the Corrugated Industry Sarilee Norton January 20, 2011
40 OCC PRICES WHOA! SOURCE: RISI Price Watch 40
41 FLUTE GEOMETRY AND MECHANICAL PROPERTIES Less pitch (-) More pitch (+) FCT ECT BCT TUF FCT ECT BCT TUF FCT ECT BCT TUF FCT ECT BCT TUF More height (+) Less height (-) FCT: flat crush test ECT: edge crush test BCT: box compression test TUF: take-up factor 41
42 PRODUCTIVITY GAINS FOR U.S. BOX PLANTS SOURCE: FBA Annual Report,
43 RETAIL READY PACKAGING BASICS Retail-Ready Packaging is easy to: Identify Open Replenish Shop Dispose Clear recognition of brand, type of product and variant on case for store staff Reduced time, clean or no tear to ensure optimum finish and reduced need for a cutter Single one touch movement onto shelf faster than decanting each unit At-a-glance identification of category and brand and unimpeded access to shop product Straightforward to dismantle packaging and separate and recycle materials SOURCE: Institute of Grocery Distribution Report,
44 EFFECT OF COMPLEMENTARY PITCH RATIOS Reduce washboarding, increase strength as much as 10-20% 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 44
45 Trends in Corrugated Today Over the last twenty years Average ECT values have declined 14% Average stiffness has declined 30% Average fiber consumption has declined 21% Average box compression has declined 10% Average recycled content now 43% Yet, we are still packaging the same products! International Containerboard Conference
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