Setup Paperboard Boxes

Setup paperboard box manufacturers comprise one of the smaller paper and board products industries. Sales have tended to increase and decrease sharply due to various market factors including economic conditions, inventory levels, and industry capacity. For example, according to the U.S. Census Bureau, the value of setup paperboard box product shipments grew a total of 18 percent from 1984 to 1994, increasing from $466.1 million to $554.9 million. With the pulp and paper industry in recession in the early 1990s, shipment values of setup paperboard boxes dropped to about $430 million in 1993. By 1997 the value of shipments had recovered to $635 million. After reaching a new record of $644 million in 1998, shipment values fell to $544 million in 2001, then rebounded the next year with shipments totaling $641 million. That was the highest figure the industry would see for the decade, as shipments fell to $606 million in 2005 and $533.2 million in 2007.

Since this is a small industry, some of the spikes in shipment values may be explained by changes in customers' inventory levels. If customers hold more product in inventory one year, they tend to purchase less the next year, even if their consumption rate is steady. However, an even more important factor is the price of the product, which tends to swing widely. The cost of materials rises and falls with the market price for paperboard, which during 1994 and 1995 rose as much as 50 percent before dropping in 1996. Paperboard costs remained relatively stable throughout the rest of the 1990s, not rising until 1999. Prices continued to increase into the early 2000s but then fell as demand slowed, along with the economy, later in the decade. These wide price swings help explain the volatility of shipment values in the setup paperboard box industry.

Customers of the setup paperboard box industry are divided among several different product groups. According to the U.S. Census Bureau, in the early 2000s setup boxes used by department stores and other retailers accounted for 20 percent of the market, while those used for textiles, wearing apparel, and hosiery accounted for more than 10 percent. Setup boxes used for cosmetics (including soap) accounted for less than 10 percent, while candy products manufacturers used less than 5 percent of the total. Setup paperboard boxes used for a wide variety of other products accounted for the remaining 51 percent of the market.

While this is a mature industry with little chance for exponential growth, it appeared to be a stable one. Since setup paperboard boxes are, by definition, rigid packaging, they face little competition from alternative materials--such as plastic--that cannot provide rigidity without undue cost. Also, the ability to recycle setup paperboard boxes is seen as an environmental plus, and they can be made quite easily from recycled materials.

Most of the companies in this industry are smaller, niche manufacturers. Caraustar Industries, of Austell, Georgia, was the largest manufacturer in this industry in the late 2000s, with sales of $819.7 million and 3,200 employees in 2008. The company had four divisions, one of which was a folding carton segment. In 2009 Caraustar emerged from Chapter 11 bankruptcy as a private company. Other leaders in the setup paperboard box industry include Old Dominion Box Co., of Madison Heights, Virginia; Schiffenhaus Industries Inc., of Newark, New Jersey; and FN Burt Co., of Buffalo, New York.

In 2007 the United States's 82 setup paperboard box plants employed 3,557 people, according to the U.S. Census Bureau. About 74 percent of employees were production workers. Total annual payroll was about $130.5 million. Employment in this industry has been trending downward for years. The number of people employed in this category in 2007 was nearly a quarter of what it was in 1983, when the industry employed 12,300 people.

According to a report by Supplier Relations US LLC, the setup paperboard box manufacturing industry saw revenues of $545.6 million in 2008. U.S. imports in this category were worth $162.0 million, and $63.4 million worth of products were exported. The firm estimated total domestic demand in 2008 at $600 million.