Wood Container Technology Coalition - Part I
Who Would Have Guessed that Wood Containers Would Cause Such a Stir?
By Ed Brindley
Date Posted: 9/3/2002
Atlanta, GA — I never would have guessed as I took a short cab ride from the airport to the Atlanta Hilton Airport that such an exciting meeting was right around the corner. Certainly I had no reason to expect anything out of the ordinary for the second annual meeting of the Wood Container Technology Coalition. Nasty rainy weather, a mature industry that peaked years ago, no premeeting hoopla out of the ordinary. The stage was set to go through the motions for a couple of days out of courtesy to my hosts, the good people who had worked so hard to put together this meeting.
It just goes to show. Do not let preconceived notions taint your radar screen. When I got back in a cab two days later headed for the airport, I left the hotel excited. Not because of any single event but because of the electricity that permeated the air throughout the two days. Having attended professional meetings in the pallet, container, forest products, and materials handling industries for 25 years, I rarely get so upbeat at a meeting. I am a positive person by nature and almost always enjoy a meeting and feel like it was worth attending. But I rarely sense the level of energy that was in the Atlanta air.
Twenty five years ago, my first NWPCA meeting was exciting because it was new to me. The early IAPR meetings were exciting because many attendees were fairly new to professional meetings and the pallet recycling industry was exploding with growth at the time. The now famous Memphis meeting of the NWPCA was very exciting because CHEP was a new issue which represented a great unknown.
But here we have a mature industry, in fact one that has lost much of its old might because competitors have taken many previous wood container markets. The meeting had more attendees who were at mid-career or later instead of younger people. Perhaps the meeting’s tone is best described by the title of Dr. Mark White’s starting presentation —Wood Containers in the Future. That’s right — Future!
The Wood Container Technology Coalition is not an association, it is a coalition of industry people who believe that much can be gained if the wood packaging industry puts together a dynamite annual meeting that will benefit all attendees. A volunteer committee, on which I now have the pleasure of serving, works to design a program, negotiate the meeting logistics, and put together an outstanding networking opportunity for everybody who wants to revitalize the wood container industry. Many industry professionals know the well kept secret that wood is the way to go. All raw materials have their own set of advantages and disadvantages, but wood’s list of strong points is very impressive. We have just not done a very good job of highlighting them to the market. Now the wood packaging people are stepping up to the plate.
While this meeting is not an annual association meeting, it is supported by several associations, none of which have their own wood container meeting, including the American Wood Packaging Association, National Wooden Pallet and Container Association, and the Engineered Wood Association (formerly American Plywood Association). Part I of this story attempts to put a perspective on the level of energy the networking intensity generated, along with some of the insights from Dr. White, the lead off speaker, and Dr. Bush on marketing wood products. Part II will follow in October with other interesting program topics and material.
Tours - Always Popular
Most people enjoy plant and company tours, which have become a popular part of pallet and container meetings over the last ten years. This meeting started by touring three Atlanta area companies, Weyerhaeuser’s Barnesville, Ga sawmill, Keadle Lumber Enterprises’ Thomaston, Ga sawmill, and Timber Products Inspection in Conyers, Ga.
Weyerhaeuser’s Barnesville mill, a Southern Yellow Pine sawmill, offered an opportunity to see automation and computerized controls in a modern sawmill setting. The Keadle sawmill is a family owned plant that manufactures both SYP and hardwood lumber products. Its pine products are kiln dried, and some are pressure treated. About ten million bd.ft. of hardwood products round out Keadle’s product line. Oak, poplar, gum, maple and ash are used for furniture, flooring, and other items, including hardwood pallets.
Timber Products Inspection, Inc. an established and well known lumber inspection company, is one of the most active agencies accredited by American Lumber Standards Committee to audit and certify
box and pallet manufacturing facilities to comply with European Union and USDA regulations for heat treating non-manufactured wood packaging products.
Next year’s meeting, the third in this sequence, is being planned earlier in the year - next February in Chicago. This timing and location will let participants take part in PROMAT, the largest materials handling show in this part of the world. Participants will learn a great deal about materials handling, the venue where wooden packaging lives. People can come early (Monday through Wednesday) to attend PROMAT before its last day on Thursday if they wish. Then they can stay for next year’s exciting program on Friday and Saturday.
Networking - The Heart of a Meeting
Networking is the heart of just about any meeting. Certainly the level of interaction between the 85 or so attendees to the Coalition meeting was active and intense. This is the element that most caught my attention. There is every reason to believe that future Coalition meetings will build on this energy.
Eleven exhibitors had table top displays in the exhibit hall that adjoined the amphitheater meeting room, an ideal setting for the meeting. Sponsors of hors d’oeuvres at the welcoming reception were Enduropak, Klimp Industries, Inc., and Tuscarora. Other exhibitors included Coastal Remanufacturing and Lumber, Deploy Tech, Hardy-Graham, Industrial Reporting, Inc. (publisher of Pallet Enterprise), Magnolia Forest Products, Packaging Incorporated, Pest-Heat, and Southern Pine Council. Participants had plenty of opportunity to interact with exhibitors and talk with each other in the exhibit hall. Two evening receptions, two continental breakfasts, and three meeting breaks provided networking opportunities.
An Exceptional Program
Wood Containers in the Future
A meeting’s program is potentially one of its most important reasons for being. A strong program provides the icing, whereas a weak program can greatly degrade the entire meeting. The Coalition meeting had plenty of icing. Mark Halverson of the Engineered Wood Association was an outstanding moderator for the conference. In addition to working hard on the program, Mark kept things moving and was instrumental in adding to the positive feeling of accomplishment that permeated the conference. I hope he will take this leadership role again in Chicago.
Dr. Mark White, director of the Sardo Pallet and Container Research Lab at Virginia Tech, set the tone when he spoke on wooden containers in the future. Mark is known as the expert on wooden pallet design, but he admitted that in spite of his vast knowledge and experience with wood and wooden pallets, he has had a relatively limited experience with wooden containers. Mark had done his homework and put together an impressive amount of information on the packaging market, including wooden packaging. Mark emphasized that wooden packaging may have a better and more exciting future than many might think.
Between 2000 and 2005, the U.S. average GDP is predicted to grow 3.5%. Wooden containers are predicted to grow annually an average of 2.2% from $812 million in 2000 to $904 in 2005 (Table 1). In his analysis of the seven packaging materials, wooden containers currently constitute only about 1% of the total packaging materials market. Mark called wood the "classy" packaging. But we must do a better job of getting out that story. He stated that the wooden container industry must "Market! Market! Market!"
Mark forecast that "Manufacturing will not be where the lowest manufacturing costs are, nor where the raw materials are, nor where the markets are. Manufacturing will be everywhere in the world. Every hour of every day $1.1 billion dollars of product value flows through the world air and sea ports."
Mark further predicted that the pace of business in all global societies will double between 2000 and 2020. Average product delivery times have been halved in the past 10 years, and further reductions are inevitable. He anticipates that "slow boats" will be replaced by high speed transoceanic vessels, cutting ocean delivery times in half. Expect air freight to handle a higher percentage of intercontinental shipments.
All of these factors will force reductions in packaging weight and volume. Mark suggested that more wood container companies expand their service to become a third party logistic service (3PL) and sell to 3PLs because 3PLs will handle much more transfer of products to customers, including the packaging function. The future represents huge changes. Wood can be an important part of that change, or it can stand idly by and just watch these changes take place.
Value added packaging will become more common. For example, a shelving system where mass merchandisers rent floor space and deliver their product "display ready" on portable shelves is a good fit for wood container designs. In the business-to-consumer market, wood bins and collars make good consolidation packages to handle smaller packages. Mark stated, "Containers will become more convenient - easy to open and close, more attractive. The container is a consumer’s first impression of a product."
Mark suggested that container manufacturers study new materials, such as wood based composites or wood/plastics composites. Consider replacing wire and staples with clips, velcro, plastic fasteners, and glue. Modify your wood materials by using sealants, high pressure laminates, fire retardants, etc.
Because the EU is our largest trading partner, Mark suggests that we conform now to the EU packaging waste directive goals. Reduce packaging weight and volume, reduce material toxicity, and use materials that are suitable for recycling, energy, or reuse. Mark further suggested improving container design procedures using CAD and prototype testing. A packaging supplier improves service by becoming a total supplier, adding plastic, metal and paperboard containers to the product line. He closed with this recommendation: "Expand your piece of the packaging market by developing new technologies, marketing, and increasing product offering."
Marketing Wood Products
Dr. Bob Bush, associate professor of forest products marketing at Virginia Tech, presented a solid program on trends in marketing wood products. Bob is well known through his contributions at the Center for Forest Products Marketing and Management at Virginia Tech.
Bob highlighted four trends in the marketing of forest products - 1) Environmental awareness and environmental marketing, 2) Globalization of forest industries and forest products marketing, 3) Alternative/substitute products and materials, and 4) The increasing importance of marketing. While "Wood is wonderful," this may not be the general public opinion. It is up to us to put our best foot forward and develop a more active campaign to promote the value of wood. It is somewhat ironic that people in the wooden pallet and container business realize what an outstanding packaging material wood is, but we do not seem to have a good handle on how to market this truth to the people who really count - our customers.
Under environmental awareness, Bob mentioned three factors - environmental certification, life-cycle analysis, and recycled and "rediscovered" wood.
He stated that "certification will happen." The public wants an easy answer in both consumer and industrial markets. They prefer solutions that don’t require them to pay, at least they do not see themselves paying.
Bob questioned whether or not a life-cycle analysis approach will work. He is concerned that the public’s perception is now too strong for life-cycle cost facts to change it. People see trees, while most do not view oil exploration as an everyday part of their lives. A plot of trees is cut down and the public sees the forest products industry destroying their environment. Most of the time it is land being cleared for development, not for logs. They rarely see the reforestation efforts being practiced by the forest products industry. The deck is stacked against us in this arena.
Recycled or "rediscovered" wood is a good trump card, but one that is not properly recognized. Solid wood usage for pallets and containers has grown from 8.3 billion bd.ft. to 10.2 billion bd.ft. between 1995 and 1999. Of that, "new solid wood" was 73.5% and "recovered wood" was 26.5% in 1995. They changed respectively to 64.2% and 35.8% in 1999. Recycling has made major inroads, but most of the public doesn’t understand that.
The forest industries and marketing of forest products are rapidly becoming more globalized. More competition is coming from overseas, a trend that is not likely to change. There has been a large increase in U.S. imports of non-Canadian softwood from Europe and from the Southern Hemisphere. Do not forget Russia either, for it has the largest softwood resources anywhere in the world, resources that are just beginning to be tapped as internal logistics and manufacturing capabilities improve in Russia.
Much has been said about alternatives to wood as a basic packaging raw material. While market penetration of alternative products has been less than some had feared they would be, they definitely have impacted the wood packaging markets. Plastics, corrugated, metal, plastic composites, and other imported wood, such as Radiata pine, serve to cap the price of our products, raise customer expectations, and offer alternatives from industries that are vastly different from wood. All of these factors serve as constraints on wood packaging.
Bob emphasized the increasing importance of marketing in the forest products industry. He noted four sources of competitive advantages for wood - 1) Production efficiency in the wood industry, 2) Good access to raw materials, 3) Transportation because of short shipping distances for many items, particularly wood packaging, and 4) A large and expanding market.
Evolving distribution systems provide potential benefits for wood packaging that our industry may often overlook. In 1987, Sterns and Strurdivant stated, "Although American companies have been ignoring the ways in which they deliver products and services, their customers are increasingly inclined to demand higher standards of performance. So, important opportunities for gaining competitive advantage through distribution remain." The materials handling and logistics industries have increasingly received greater attention in our society. Our wood packaging products lie at the very heart of this renewed interest at higher management levels.
Factors in evolving distribution systems include the blurring of traditional functions, brand identification and promotion to end-users, growth in direct sales, forward integration to capture "lost" profits, the "big box" phenomenon, third party management, retail outlets, and JIT. These factors tend to support innovations in packaging and their applications in a heavier service related sales environment. This opens doors to innovative wood usage.
What Lies Ahead?
In our October issue, tune in to Part II of this article that covers the material presented at the Wood Container Technology Coalition. Also mark your calendar for the third annual Wood Container Technology Coalition meeting that will be held on February 13-15 in Chicago in conjunction with the PROMAT materials handling show. You will hear more about this in coming months.
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