Carton converters must address conundrums: machinery manufacturer Western Slope is committed to 'Made in the 'USA' but wishes its peers felt likewise

Paperboard Packaging, June, 2004 by Mark Arzoumanian

U.S. folding carton converters will have to do a better job of becoming niche marketers if they're going to have a chance of competing with China's growing ability to compete with them, says Merritt Kinsey, president of Western Slope Industries (WSI), Grand Junction, Colo. Sure, carton plants designed for long runs will never vanish. But the clear trend today is specialization.

Kinsey has worked in the folding carton industry for more than 20 years, starting with Multifold International, a manufacturer of carton prefeeding and packing equipment, in 1983. His resume over this period mirrors the industry's evolution. Today he runs a company that's all about niches: spare parts and specialized carton converting equipment.

"We're willing to customize our machines," he says. "You have to be creative these days. We don't pre-sell most of our machines. Instead, we make custom-designed machines no one else wants to touch. We can even modify machines and help customers add sections to make their machines go faster. Of course this doesn't make us the cheapest manufacturer."

One of Kinsey's biggest concerns is the dwindling number of U.S.-produced mainline folder-gluer manufacturers. Today WSI, which sells about 20 machines a year, and Roberts Polypro, Charlotte, N.C., are the only U.S.-based companies making mainline folder-gluers in the United States. The reasons behind this situation go way beyond labor costs.

"The U.S. isn't manufacturer-friendly," Kinsey states. "Unlike China, our government has reduced incentives to update equipment. We also have OSHA and EPA to deal with and now have to meet Commonwealth Europe safety standards."

He adds that U.S. machinery manufacturers have to sign a manifest that they will handle machine tool cutting oil from cradle to grave. So it ends up costing them more to dispose of the oil as a hazardous waste than to buy it.

"Manufacturing is a high-capital industry that needs tax relief so it can invest in its future," he says. "If this isn't done, the U.S. economy will continue to decline and our standard of living will go down too."

Yes, U.S. manufacturing has taken plenty of hits from its own government. But folding carton converters are far from blameless. While executives complain about losing business to carton makers in China and Taiwan, they're spending their money on machinery made overseas, Kinsey notes.

"It's a conundrum, a legitimate concern," admits Jerry Van de Water, president of the Paperboard Packaging Council, the industry association for folding carton converters. "I hear about 'Benedict Arnold' ceos. Most machinery suppliers to this industry are offshore or departed for offshore a generation ago. As a trade association we encourage our members to look first to member suppliers. Price is one thing but when you need that service call, try calling Timbuktu."

Paperboard converting machinery manufacturers also have to deal with the aforementioned European safety standards (for guards and electronic components) that often are stricter than those found in the United States. This involves additional costs and certifications. Kinsey, who puts "MADE IN THE USA" on all WSI equipment, sees this as Europe's way of blocking free trade. He also laments the current lack of trust in the carton converting industry.

"More and more customers don't want to pay for a machine we make until it is delivered," he says. "They also don't want to commit to buying a machine until they see it running. They want longer and longer payment plans and put less money up front. There's a difference between a financial manager and a company manager. Bean counters are running the carton converting plants nowadays. They want us to build a machine and then go see it run. But when you're buying a specialty machine, you're not going to see it run beforehand and will have to help pay for its development.

"In addition, reverse auctions have infiltrated the folder-gluer machinery market. It's difficult to come up with a bid. That's why we tend to do better with owners and managers."

IPBM's Demise Was Western Slope's Godsend

No one likes to see a machinery manufacturer approaching its 100th anniversary collapse. But that's what happened when International Paper Box Machinery (IPBM), Nashua, N.H., started experiencing financial troubles in 1996.

At the time, Merritt Kinsey, currently president of Western Slope Industries (WSI), was general sales manager of Multifold International, a wholly-owned subsidiary of IPBM based in Milford, Ohio. He regularly commuted between the two companies. But by 1996 working at either of them was very unpleasant. It was time for a change. That's when he joined WSI.

Back in 1996, WSI was a small re-manufacturer of older machinery and parts supplier that had been in business for 13 years. It was started as an offshoot of Southern Tool Co., West Monroe, La., which made packaging machinery for Riverwood International (now Graphic Packaging) and Mead (now MeadWestvaco). Modifying IPBM right angle folder-gluers was a major part of Southern Tool's business. In 1983, WSI was founded in Grand Junction, Colo., to not only expand its customer base but to take advantage of the numerous outdoor activities the area offered. Southern Tool no longer exists, a victim of relying on long-term contracts with too few customers.