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April 27, 2020 Board Converting News

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BoardConverting Serving the North American Corrugated and Folding Carton Industries for 36 years April 27, 2020 VOL. 36, NO. 17

Premier Packaging Ups Capacity With New Machinery Investment BY LEN PRAZYCH Premier Packaging began in 1994 in Louisville, Kentucky, as a single sheet plant. Increasing demand from the Indianapolis/Chicago region led the company to open its new facility in Indianapolis in 2016. From an order-quantity standpoint, the Indianapolis plant is far from the av- erage sheet plant--its average order quantity is around 5,500 pieces,

New Indy Acquires Shoreline Container

Ontario, California based New-Indy Contain- erboard, a joint-venture that was formed in 2012 by the Kraft Group and Schwarz Part- ners, LP, announced that it has acquired Shoreline Container in Michigan New-Indy will optimize Shoreline’s two manufacturing facilities, both of which are located in Michigan: the Holland facility pro- duces corrugated packaging products, and the Zeeland facility distributes protective and specialty packaging materials. Terms of the deal were not disclosed. In a written statement, New-Indy said, “The addition of Shoreline Container is a great fit strategically to our existing operations and provides further integration for our mill sys- tem. We are excited about the opportunities this acquisition will provide and the services we will be able to implement through the combined companies.” New-Indy operates three recycled paper mills, one kraft pulp and paper mill, and 14 packaging facilities throughout the United States. The company name is derived from being the newest independent manufacturer and supplier of recycled containerboard in the corrugated box industry.

where most sheet plants are averaging orders of around 1,000 or 1,500 pieces. In the 2018 peak season between October to December, the com- pany was producing boxes using a 50-inch Serenco, which was run- ning seven days a week, 24 hours per day in Indianapolis. The staff was running shifts around the clock: two 10-hour shifts during the week and two 12-hour shifts on the weekends. In order to reduce labor costs and the amount of overtime, and to meet the growing volume demand, Premier Packaging was in need of a machine that could produce very big truckload quantities for high ca- pacity customers. Concurrently, they also required a machine capable of quick changeovers, as they field orders as small as 100 pieces that meet the needs of local mom-and-pop businesses as well. “We produce pretty much everything, from a full die-cut all the way up to inside/outside print boxes, regular slotted carton (RSC) boxes, full overlap (FOL) boxes, and beyond,” says Bryan Fitch, General Manager Premier Packaging invested in a 3-color Latitude Flexo Folder Gluer PP1230 to meet growing volume demand from high-capacity customers.

WHAT’S INSIDE

6 x x 8 x x 12 x x 26 x x An Update On The Payroll Protection Program (PPP) 12 Industrial Production Shrinks As 22 Million File Unemployment 21 Jamestown Container Ramps Up Production Of PPE, Boxes 30 FTA Announces Excellence In Flexo Award Winners

CONTINUED ON PAGE 24

AVERAGE CONTAINERBOARD PRICES The average prices reported are tabulated from prices PAID by various sources throughout the United States the week previous to issue. Prices in some areas of the country may be higher or lower than the tabulated average. The prices tabulated here are intended only for purposes of reference. They do not connote any commitment to sell any material at the indi- cated average. Transactions may be completed at any time at a price agreed upon by seller and purchaser.

REGION E. Coast Midwest Southeast Southwest

42# Kraft liner $885.00-890.00 $900.00-910.00 $900.00-910.00 $900.00-910.00 $930.00-940.00 $903.00-912.00

26# Semi-Chem. Medium

Short Ton Del. Short Ton Del. Short Ton Del. Short Ton Del. Short Ton Del. Short Ton Del.

$820.00-850.00 $835.00-855.00 $835.00-855.00 $835.00-855.00 $865.00-875.00 $838.00-858.00

West Coast U.S. Average

SHEET PRICES BY REGION (AVERAGE) Per 1MSF, local delivery included, 50MSF single item order, truckload delivery. Sheets

E. Coast Midwest South-SW S. CA N.CA/WA-OR US Aver.

200# 275#

$62.26

$72.05

$62.69 $82.80

$85.35 119.54

$73.13 101.29

97.32

99.89

90.86

113.65

OYSTER UP-CHARGE 8.34

8.34

275# DBL-WALL 350# DBL-WALL

107.46 118.45

114.69 129.32

116.54 137.25 117.82 145.56

141.08

122.76

148.46

131.80

CANADIAN SHEET PRICES (AVERAGE) In Canadian Dollars, per 1MSF, local delivery included, under 50MSF single item order, truckload delivery. 200# 275# Oyster UC 275#DW 350#DW $78.56 $99.18 $9.00 $96.32 $105.83 CANADIAN LINERBOARD & MEDIUM The average prices reported are tabulated from prices PAID by various sources throughout Canada. Prices may be higher or lower in various areas of the country. The prices tabulated here are intended only for purposes of reference. They do not connote any commitment to sell any material at the indicated average. Transactions may be completed at any time at a price agreed upon by seller and purchaser. Prices are Canadian $ and per metric ton.

42# Kraft Liner 26#

Semi-Chem Medium

East West

$920.00 $965.00

$910.00 $945.00

AVERAGE CONTAINERBOARD PRICES.indd 1

3/7/19 2:04 PM

April 27, 2020

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Greif To Raise Prices On URB, CRB In May

Core Competency

Delaware, Ohio based Greif, Inc. announced that it is im- plementing a $50 per ton price increase for all grades of uncoated recycled paperboard (URB), effective with shipments beginning May 18, 2020. The company also announced a $50 per ton price increase for all grades of coated recycled paperboard (CRB), effective with ship- ments beginning May 13, 2020. The increases are in re- sponse to cost pressures in labor, recycled fiber, transpor- tation, and chemicals used in production

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AF&PA Releases March 2020 Boxboard Report

The American Forest & Paper Association (AF&PA) has released its March 2020 Boxboard Monthly report. Total Boxboard production in March decreased two percent compared to March 2019. It was down two percent when compared to the same three months of 2019. The box- board operating rate was 94.8 percent, down 1.0 points from March 2019 and up 0.5 points year-to-date. Solid Bleached Boxboard production in March decreased six percent compared to March 2019. It was down five per- cent when compared to the same three months of 2019.

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April 27, 2020

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An Update On The Payroll Protection Program (PPP) BY JOEL GREENWALD, ESQ.

Q: If my business employs over 500 employees, can I qualify for a PPP loan? A: While companies with 500 or fewer employees are qualified for the PPP loans, those who have over 500 em- ployees are not automatically disqualified. Companies that fall within an employee or revenue threshold set by the SBA for their industry are also considered small business- es and qualify to apply for PPP loans. Additionally, companies that meet the SBA’s “alterna- tive size standard” based on their tangible net worth (not more than $15,000,000) and net income (not more than $5,000,000), qualify as small businesses and therefore are eligible for PPP loans. Also, the most recent guidance states that a business can be eligible, “if the business has 500 or fewer employees whose principal place of resi- dence is in the United States.” Businesses that employ more than 500 employees, therefore, should carefully ex- amine if there is another basis to qualify for the PPP loans.

NOTE The laws are changing rapidly in the current pan- demic/crisis. Therefore, the legal issues discussed here

are subject to constant change. It is best to consult with counsel con- cerning any legal advice you may need. Businesses are rushing to take advantage of the assistance provid- ed by the CARES Act. While many have already submitted applications

for PPP loans, others are wondering if they are eligible for the loan. SBA’s most recent guidance contains insight into the loan program and clarifies a few important questions. Joel Greenwald

Q: If my business qualifies for a loan, when will I receive it? A: The SBA has stated that a lender must make the first disbursement of the loan to the borrower no later than ten (10) calendar days after it approves the loan. Given the volume of the applications being received, we will need to see if lenders can comply with the SBA’s mandate. Q: What goes into payroll costs? How do I account for independent contractors? A: Payroll costs under the PPP are used both to determine the total loan amount, as well as the amount of the loan that may ultimately be forgiven. Thus, determining amounts a company spends on payroll and other covered costs are vital for PPP appli- cants. Payroll costs include the gross mon- etary compensation paid to each employee (up to a max of $100,000), plus payments made by an employer for retirement funds, health insurance premiums, as well as state and local taxes paid by the company on em- ployee compensation. Payroll costs, how- ever, do not include payments to indepen- dent contractors. Independent contractors can apply for PPP loans themselves, and a business thus cannot include payments to them in its payroll costs. Q: When does the eight-week period begin for purposes of determining the amount forgiven on my loan? A: As a reminder, the potential amount of the total loan eligible to be forgiven is equal to the amount spent on covered costs during

CONTINUED ON PAGE 34

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April 27, 2020

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COVID-19 Impacting Supply Chain, But Corrugated Market Is Booming According to a report in waste360, COVID-19 has driven extraordinary circumstances rarely or never seen, impact- ing the supply chain, resulting in a state of constant flux in the paper industry. Demand for recovered paper is red hot to cold, depend- ing on end markets. China, which drastically cut imports a couple years ago, has now stepped up purchases, and its paper mills are asking U.S. and other overseas suppliers for more material. Meanwhile, some recyclers who were selling tissue and toweling to away-from-home customers that have shut down are hustling to shift to stay-at-home markets, where products are flying off the shelves. Corrugated in particular is seeing a boon. Some mills can’t get enough of this material, and as they fight for mar- ket share, they are paying higher premiums or paying pre- miums for the first time. “Corrugated was staggering at $35 per ton in the Mid- west for months and went up in March mainly because the export market got strong in Asia. I expect prices will con- tinue to rise in April due to diminishing supply and increas- ing domestic demand,” says Leonard Zeid, Executive Vice President of Marketing and Brokerage for Midland Davis Corporation, a scrap paper, metal and plastic brokerage with a processing plant in Moline, Illinois.

Box Shipments ( U.S. Corrugated Product Shipments) Industry Shipments In Billions of Square Feet Month March 2020

Year

Actual

Percent Change Avg Week Percent Change

2020 2019

34.739 31.870

9.0

7.895 7.588

4.0

Industry Total

Year-to Date

March 2020

Year

Actual

Percent Change Avg Week Percent Change

2020 2019

98.981 94.892

4.3

7.733 7.531

2.7

Industry Total

Containerboard Consumption (Thousands of Tons)

Year

Month

Percent Change Year-to-Date Percent Change

2020 2019

2.8653 2.5967

10.3

8.1983 7.8036

5.1

Container Board Inventory - Corrugator Plants (Thousands of Tons)

Corrugator Plants Only

Date

Percent Change Weeks of Supply

Percent Change

Mar. Feb.

2.1278 2.2978

-7.4

3.3 3.7

-10.8

Shipping Days

Year

Month

Year-to-Date

2020 2019

22 21

64 63

SOURCE: Fibre Box Association

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April 27, 2020

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Allan Malachuk, Formerly Of Koenig & Bauer, Dies At 79

Allan Malachuk, 79, former President and CEO of Koenig & Bauer (US)’s predecessor company, Planeta North Amer-

ica, passed away on April 19th. Malachuk was a well- known figure in the printing industry for over 40 years, especially in the folding car- ton segment. He was the President of Royal Zenith, a Great Neck Long Island based distribu- tor of sheetfed offset press- es, when it was acquired in

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1990 by the East German press manufacturer, Polygraph Export-Import Company. Malachuk continued in that role for the new U.S. subsidiary which was renamed Planeta North America. He was instrumental in guiding the compa- ny while the parent was transitioning from the communist economy to a free market. In 1992, Polygraph was purchased by Koenig & Bauer AG, a West German printing press manufacturer and the company name was changed to KBA North America Inc. and relocated to Williston, Vermont. He remained as Pres- ident and CEO until his retirement in 2002.

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April 27, 2020

Industrial Production, Retail Sales Shrink As 22 Million File For Unemployment BY CHAD MOUTRAY, PH.D. Economic indicators continue to decline sharply as the effects of COVID-19 continue to ripple across the United States.

• Manufacturing production fell sharply by 6.3 percent in March as firms grappled with the COVID-19 outbreak, including closures, reduced activity and significant supply and demand dis- ruptions globally. Durable and nondurable goods production decreased 9.1 percent and 3.2 per- cent in March, respectively, with all 19 major sec- tors experiencing declines.

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• On a year-over-year basis, manufacturing production has declined 6.6 percent. Manufacturing capacity utilization plummeted from 75.0 per- cent in February to 70.3 percent in March, the lowest rate since May 2010. Meanwhile, total industrial production decreased 5.4 percent in March, the largest monthly decline since January 1946. • The current outlook is for production in the sector to decline 12 per- cent between February and May before starting to rebound in June and beyond. However, the economic damage will take some time for manufacturing to fully recover from, with production down 6.5 percent in 2020. • The New York and Philadelphia Federal Reserve Banks reported sharp- ly reduced activity in their districts in April, with more than 70 percent of respondents in both reports noting decreased orders for the month. With that said, respondents in both reports felt cautiously optimistic for a rebound over the next six months. • With Americans under stay-at-home orders nationwide, retail sales plummeted 8.7 percent in March, the largest monthly decline since the series began in 1992. The extent of the decline in retail spending in March was mind-blowing, particularly in some sectors, but there were also some bright spots. Over the past 12 months, retail spending has declined 6.2 percent, but with motor vehicles and gasoline station sales excluded, retail sales eked out a 0.2 percent year-over-year gain. • New housing starts fell 22.3 percent in March, down from an annual- ized 1,564,000 units in February to 1,216,000 units, an eight-month low. Over the past 12 months, new housing starts have risen 1.4 percent, with single-family starts up 2.8 percent but multifamily activity down 1.6 percent since March 2019. Housing permits eased to the slowest rate since July, declining from 1,452,000 units at the annual rate in February to 1,353,000 units in March. • Nonetheless, builder confidence plummeted to the lowest level since June 2014 on worries that residential construction and sales will be severely impacted by the worsening in economic conditions due to the COVID-19 pandemic. New housing starts and permits will also likely move lower in April, perhaps closer to 1 million units at the annual rate, before hopefully rebounding in subsequent months. • There were 5,245,000 initial unemployment claims for the week end- ing April 11, building on the 6,615,000 claims added for the week end- ing April 4. These are unprecedented levels, suggesting that 22 million Americans filed for unemployment insurance in the past four weeks as the economic toll of the COVID-19 crisis takes hold. At the same time, continuing claims increased from 7,446,000 for the week ending CONTINUED ON PAGE 14

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April 27, 2020

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