Nailed and Lock Corner Wood Boxes and Shook

SIC 2441

Industry report:

This industry classification includes companies that are primarily engaged in the production of nailed and lock corner wood boxes (lumber or plywood) and shook for nailed and lock corner boxes.

The nailed and lock corner boxes and shook classification covers the production of containers made wholly or partly of wood. Containers in this category include ammunition boxes, tool chests, wooden cigar boxes, and cases for packing wines, fragile items or equipment, and produce. Shook refers to sets of box parts--sides, tops, bottoms, and ends--that are ready to assemble.

The industry represents the use and marketing of much lower-grade lumber taken from the centers of logs already milled for board and panel wood. This is particularly true for the pallet industry, which was the biggest hardwood user, at 3 billion board feet annually during the mid-2000s.

According to Dun and Bradstreet's 2009 Industry Reports, 363 U.S. establishments employed 3,375 workers in the nailed wood boxes and shook manufacturing industry in 2009. Almost 90 percent of the businesses employed fewer than 25 people. Of the $255.3 million in annual sales, Missouri accounted for 14 percent, California for 9 percent, and New York for 7 percent. Rounding out the top five states in terms of revenue were Pennsylvania and Texas.

One of the industry leaders in this sector in the late 2000s was American Wood Moulding LLC of Hanover, Maryland, which operated about 12 manufacturing plants in the United States, Mexico, Brazil, Chile, and New Zealand. Calpine Containers Inc. of Fresno, California, founded in 1895, produced a variety of wooden shipping containers, mostly for the agricultural industry. Other industry leaders included North American Container Corp. of Marietta, Georgia; Michelsen Packaging Company of California (located in Yakima, Washington); and Gatewood Products LLC of Silver Spring, Maryland.

During the industry's peak in the 1970s, approximately 1 billion nailed wood boxes were made annually. Adjusting for inflation, the industry lost some business to improved plastic and corrugated container technology (boxes from these materials cost far less to produce). Marketers hoped, however, that selling wood boxes as "specialty packaging items" would lend these products an air of quality. Both the durability and reusability of wooden boxes supposedly made them more attractive to consumers.

Like the wood containers industry, wood boxes historically have not faced much competition from foreign manufacturers. The industry's future primary concern was the expense of making wooden boxes compared to cheaper, non-wooden containers. Plastic, in particular, had emerged as a cheap and durable substitute for wood by the early twenty-first century.

Mills in the pallets and skids segment of the wood container industry grew at or near a rate of 4 percent annually in the mid-2000s. However, sales of wooden boxes had not substantially increased, with fierce competition coming from non-wood containers, such as boxes made of corrugated paperboard. Nailed and lock corner wood box makers also lagged behind the pallets and skids industry in the use of new, more efficient technology. The diversity in the kinds of boxes made by this industry resulted in a majority of production runs that were too small to benefit from automation. Improved conveyors and material handling equipment increased productivity for companies whose markets required large numbers of one kind of box. Elsewhere, however, nail guns were the most high-tech tools used to make boxes.

In 2005, the USDA Forest Service began funding through grants the assessment of potential for developing and implementing National Wood Manufacturing Industry Skills Standards. Also studied was whether there was any suitability of a potential federal role for operating and/or governing the program. An ISO 9001 certification was the most stringent of the ISO 9000 certification series, which was an initiative toward international standardization of quality specifications. Because of the growth of business globalization, ISO 9000 certification was increasingly important across industries.

Following the lead of 113 other countries, the United States adopted regulations to prevent the import and export of insects via wooden containers and pallets. Starting in July 2006, ISPM-15 required that all wood packaging material (WPM), including pallets, crates, and dunnage, be certified insect-free for overseas shipping. To acquire this certification, wood must undergo either kiln drying or fumigation with methyl bromide. Containers or other WPM lacking a stamp of certification are confiscated and burned at the border. The United States and Canada adopted an agreement exempting the other from the ISPM-15 requirements in reciprocal trade. Despite these efforts, wood pallets infested with wood-boring insects continued to make it across the border. In August 2009 U.S. Customs and Border Protection agents in Texas found live beetles in wood packaging material coming from Mexico that appeared to have been treated according to regulations. Thus, although such regulations related only to international transport as of mid-2009, the Animal and Plant Health Inspection Service (APHIS) was considering guidelines that would apply to wooden pallets being transported across state lines in an effort to control the spread of tree-killing insects. Requiring pallets to be made of higher grade wood or plastic was another option being explored.

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