Stretching boundaries: Toronto-based The Hughes Group is much more than a sheet plant making corrugated displays

Paperboard Packaging, August, 2004 by Mark Arzoumanian

Whenever John Hughes goes shopping, he always remembers to bring cash, credit cards and a digital camera. A digital camera? Hughes, president, The Hughes Group, Toronto, never knows when he might come across an eye-catching point-of-purchase display. So the camera is always in his pocket.

"It's a way for you to know what's going on with your competitors," he says. "Taking pictures also gives me a sense of what valued-added features retailers are looking for." Not too long ago on a visit to his mother in Florida he walked into a store to pick something up and saw an innovative display. Out came the camera. Hughes knows there's a very good chance the display has never crossed the border into Canada. It's yet another idea he can bring back to his designers.

Hughes' father, also named John, started Hughes Containers Ltd. (HCL) 42 years ago. It was the second sheet plant in Ontario. But unlike the majority of industry executives in the corrugated packaging industry, Hughes didn't follow in his father's footsteps. Not initially, at least.

"My dad was a short order cook for the big guys, running the classic sheet plant," Hughes states. "He liked to fly under the radar of the integrateds. He would say, 'I just want the crumbs' and would run that 500 box job for a brewery."

Taking a Walk

As a teenager John worked at his father's plant. But he had no interest in staying with HCL and making the box business his career. Instead he began as a teacher and then turned to the investment community to make his living. Nevertheless, he found that he relished every opportunity to walk through manufacturing operations.

"When I walk through a plant I'm looking at a tribe of people and want to see how they are interacting, how effectively they work as a team," he says. "Sometimes you witness old, clunky teams and other times you witness wonderful, well-oiled teams working around a machinery center. It's delightful to watch."

So when his father decided to sell the business in 1987, John decided he wanted to participate in the ongoing development of a well-oiled team. He bought the sheet plant (he won't say for how much) and proceeded to embark on an aggressive growth plan that has transformed Hughes Container into The Hughes Group with three plants totaling 104,000 square feet.

The Hughes Group consists of:

* Hughes Containers Ltd. (sheet plant)

* Decorr (temporary display provider)

* Nova Pack (fulfillment and specialty needs, often for pharmaceutical firms)

* Design Plastics International (semipermanent and permanent displays).

The Hughes Group, which has annual sales of about $20 million (Canadian) and employs 80, buys its sheets from Independent Corrugator, Toronto. Boxes comprise 35 percent of its output; the rest is displays. Those boxes (and many of the displays) are made for the pharmaceutical and cosmetics industries. They are sold to companies in greater Toronto.

The plant's displays aren't distributed in the traditional just-in-time methods of boxes, where the customer completely controls delivery dates and times. Often displays are ordered as multiple releases. For example, a customer will request to receive 3,000 to 5,000 displays spread out over a three-month period. So the plant has some control as to when it runs what.

Coordinating The Parts

The inventory control feature of Advanced Software's (AS) Advantzware box software has allowed the plant to handle these rolling deadlines. When a company assembles and releases a variety of displays over a period of time, it has to be certain the production of all display parts is coordinated.

Some of these displays include non-corrugated pieces, most of which are made in-house by Hughes. Advantzware can keep track of these components, allowing Hughes to meet its display deadlines.

"Joe [Hentz, president of AS, Yardley, Pa.] has grown a lot because of Hughes," says Colin Charles, chief financial officer of the Hughes Group. "He was able to modify his software to help us keep track of a 15-component Revlon display as a set because we were selling it as a complete unit for one price."

Hughes' display orders normally range from 500 to 5,000. But it has produced its share of 15,000 displays too. It has also run as few as 50 displays for Costco.

"Retail is king in the display business," says Mike Johnston, vice president, sales, Decorr. "More and more, the demand is for retail chain-specific displays."

Hughes is finding ways to become more efficient within its own system and its customers' systems, he adds. Today it's all about taking a few steps back and looking at the whole display and packaging process. The company does a lot of package redesigns for its customers; one of them is a large photographic product manufacturer. Hughes studied its existing packaging and asked: Is there a better way to package this product?

For years this manufacturer packaged its photographic paper in a roll box. The previous supplier produced the set-up boxes in large numbers for various reasons, including an extensive gluer setup. It then delivered them in tractor-trailer loads. So it was shipping a lot of air. Hughes' design department reconfigured the package so that it could be shipped flat and hand assembled without glue. Today it stocks the flat sheets and assembles and ships on an as required basis, delivering skidloads, not trailer loads. A trailer load consists of 20 skids; now the customer accepts deliveries of four skids at a time, an 80 percent inventory reduction.