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With New Parent, Atlantic General Poised for Full Flight in Wirebound
North Carolina packaging company launches aggressive effort in wirebound container industry after being acquired by Universal Forest Products.
By Tim Cox
Date Posted: 2/1/2000
WARRENTON, N.C.—As a container manufacturing business, Atlantic General Packaging had everything in place to be successful.
Located in north-central North Carolina near the Virginia border, a region with an abundant wood supply, the company was situated with good access to major interstates. It had a scragg mill for an integrated approach to manufacturing container components. In the company’s specialty, wirebound containers, it had extensive manufacturing capacity — some 12 machines for stitching together wood components with bulk wire.
With only one sales representative, however, it lacked a strong, aggressive sales and marketing effort.
That is changing, however, since the company was acquired in early 1998 by one of the major players in the forest products industry, Michigan-based Universal Forest Products. Universal’s management saw a clear opportunity to position Atlantic to springboard on its manufacturing capacity and other assets.
The changes initiated since Universal’s acquisition already have paid off. Atlantic’s sale of wirebound containers increased more than 20% in 1999.
Atlantic General Packaging is a complete industrial wood-based packaging plant with 80-plus employees, including about 60 hourly workers. The company manufactures and sells cut-to-size materials and components for assembled boxes, crates, skids and wirebound containers. It supplies wirebound containers mainly to industrial customers, such as automotive, heating and air conditioning, foundries, and geo-textiles. The company does have accounts in agriculture, however; it supplies both wirebound crates and bin boxes to these customers. It distributes and ships containers and bins nationwide, as far away as California. About half of its production is custom wood packaging and half is wirebound containers. It also offers packaging made of alternative materials, such as foam and plastics.
In some industrial wood products, competition is "somewhat fierce," noted Andy Galombeck, industrial sales manager. In others, like specialty custom packaging, there is less. "It’s just like 48-by-40 pallets," he said. "That’s very competitive. If you branch off and do other creative things, there is far less." The competition in industrial wood packaging comes mainly from small, family-owned businesses, he said.
Like other pallet or container businesses, Atlantic has a few "mainstays" when it comes to customers. However, the company’s accounts are spread over a wide range of industries and businesses, he said. "We are very diverse. We don’t have all our eggs in one basket. We’re here to serve the customers." For wirebound containers, orders usually average a minimum of 300 to 500 units. Orders for custom packaging may range from 50 to 1,000.
Andy had a role in Universal’s acquisition of Atlantic and, as industrial sales manager, has been responsible for beefing up sales and marketing efforts.
The company was originally founded as General Box in the 1980s. Steerman Forest Products purchased the business in 1991, and the name was changed to Atlantic General Packaging.
Universal’s interest in Atlantic General was sparked both by those in top management and those working in the trenches. At the top level, you might say Universal’s interests had Italian roots. In the administration of former President George Bush, Universal chairman Peter Secchia was the U.S. Ambassador to Italy. During the same period, the military attache to the U.S. embassy in Italy was Allen Kimball. After serving in the Bush Administration, Peter returned to Universal as chairman, and Allen became an economic development recruiter for North Carolina’s Warren County. Allen urged Peter to bring Universal to Warren County.
Another level of interest was precipitated by Andy. While working at Universal’s Elizabeth City, N.C. plant, located about 100 miles to the east, he sold wood packaging to a customer in a nearby state. An application arose where a wirebound container was the best solution, and Andy worked out an arrangement with Atlantic, which supplied them. So Universal already had a working relationship with Atlantic prior to the merger.
Michigan-based Universal is the largest U.S. manufacturer and distributor of wood products in four markets: retail home centers, manufactured housing, residential and commercial site-built construction, and industrial. It also is the world’s largest producer of preservative-treated lumber. The company’s net sales for the first nine months of 1999 were $1.1 billion, an increase of 17% over the same period in 1998. The industrial market — which includes pallets and containers — comprises only a small share of Universal’s overall sales, about 6%. In the industrial components and packaging sector, the company has about 30 facilities across the country, the majority located east of the Mississippi River. The company is in the midst of a five-year plan to grow sales to $2 billion by 2000 and to become the No. 1 supplier to the four markets it serves. The five-year plan includes a target of doubling industrial sales to about 12%.
Atlantic embarked on a three-phase plan to reposition the company after becoming part of the Universal fold. Atlantic’s operations were comprised in a scragg mill and two other facilities at its plant in Warrenton. Phase one was jettisoning the scragg mill. "It made more sense to put capital expenditures into processing material," Andy explained. Universal’s operations focus heavily on lumber remanufacturing. The company does not operate sawmills, so a scragg mill did not figure into its plans. The scragg mill was shut down and auctioned last fall along with other equipment.
In the second phase, one mill was significantly upgraded. The company essentially put in two new lines to process cants and other raw material into remanufactured components for wirebound containers — primarily thin slats. A state-of-the-art rip line begins with a new West Plains Resaw Systems unscrambler and cut-up line. The sized cant material it produces is fed directly in-line to a custom-built Brewer Inc. gangsaw that rips it into slats as thin as 1/4-inch. The company also put in a new Newman KM-16 multi-trim for sizing cants; the Newman line begins with an unscrambler. Material sized by the Newman KM-16 travels via conveyor to a Cornell gangsaw to be ripped. The upgraded mill also has new electrical and dust collection systems as well as a new Williams hog for grinding scrap.
In the third phase, the company restructured its operations further by leasing an adjacent warehouse and consolidating all wirebound container assembly under that one roof. Virtually all of its wirebound stitching machines were moved to the warehouse, which had better lighting and more space for manufacturing, storage and loading. Some machines also were repaired or upgraded.
At the same time, operations for custom container manufacturing were consolidated into the mill that formerly housed the stitching lines; this mill also houses operations for manufacturing cleats, the wooden support members in a wirebound container. The mill is equipped with a Baker Products four-head horizontal resaw and a Baker single-head machine, an Alden rip saw, machines for sawing material to length for cleats and sawing 45-degree angles on the cleats, a chop saw, and several drill presses. The plant also has work stations for assembling custom containers.
In addition, the company reorganized and strengthened its sales and marketing efforts, particularly to take advantage of its production capacity for wirebound containers but also to increase sales of custom wood packaging. Andy accepted a transfer to Atlantic and responsibility for growing sales. Since relocating he has been researching markets, reorganizing, and adding and supervising sales personnel, including new sales representatives in key market regions. The number of sales personnel has been increased from one to four; each representative is responsible for a specific product area and-or geographic market.
Andy’s office reflects his activities. On one wall is a map of the U.S. with pin markers for customers. On other walls are large sheets of paper with handwritten notes about markets and potential customers.
The increased sales and marketing efforts have paid off. Atlantic’s sales increased about 21% in 1999, according to Andy. "We intend to continue that the next three years."
"We have a fantastic design staff," said Andy. "The customer tells us what their problems are and what they want to do, and we develop, we design, we provide samples, and we usually end up selling."
Being part of a national company gives Atlantic distinct advantages. Universal’s plants can complement one another — one mill can either make a finished product or component that another cannot, for example — and the network of sites spurs sales leads that are shared with other locations. "That will continue," said Andy. "That will domino."
Atlantic purchases most of its raw material — both hardwoods and softwoods — from sawmills in North Carolina and Virginia. Atlantic typically buys 4x6 and 6x8 cants and 15/16x8. It also buys pine in 2x4 and 2x6 and plywood in thicknesses of 3/8, ˝ and 3/4. For wirebound containers the company uses mainly hardwoods although it is not limited to those species. When another Universal plant bought some raw material from Brazil for manufacturing fence pickets, for example, Atlantic piggy-backed on the order and bought some of the stock to make cleats for wirebound containers.
The company sells sawdust for boiler fuel. Scrap wood is processed in the new grinder and also is sold for boiler fuel. The company intends to expand efforts to recover downfall and to utilize it in some value-added product, according to Andy.
In the wirebound arena, the company competes in a much larger geographic market. In custom containers, however, location and shipping distance is more of a factor, and the company’s efforts are keyed mainly to Virginia, Maryland, and the Carolinas.
About two dozen employees are devoted to wirebound container manufacturing operations. The stitching machines, supplied by Stapling Machines, require significant time for set-up or change-over — about six hours, Andy estimated. Since Atlantic has so many, it usually can leave each machine set up for a specific container, and simply change crews from one machine to another. The company normally has about two lines operating at a time.
Stitching machines are essentially two machines in one system. The first machine fastens the components of the boxes together into mat form using a continuous binding wire and fasteners made "on the fly" from a 600-pound to 1,000-pound carrier spool of wire. The fasteners are cut, formed and driven in one motion. They range in size from thickness of 20 gauge to 14 gauge wire and length of 5/16 inches to 2 inches. The "legs" of the staple-like fasteners are divergent points that flare when driven and subsequently are clinched for added holding strength.
The second machine cuts the binding wire between the mats and forms loops with prongs that are securely clinched on either end of the mat. When the mat is assembled, the loops threaded and anchored, the container is ready for shipment.
During a recent visit to Atlantic General’s facilities, a crew was busy at one of the company’s stitching units. The workers placed resawn slats and cleats onto a conveyor enroute to the stitching unit and off-loaded the finished mats.
Atlantic is a member of the National Wooden Pallet and Container Association and has benefitted from participation in the trade group, said Andy, who serves as chairman of the association’s Container Council.
Container manufacturers increasingly must and will become involved in container management, Andy believes. "I think it has to be," he said. Recycling containers will conserve wood resources, reduce costs for customers, and eliminate waste disposal headaches. "People need to find ways to return and re-use product," he said. Manufacturers either must move in that direction themselves to provide such services to customers or else partner with third-party businesses that will handle the logistics, such as container recovery, retrieval and return. Universal provides such services on a small scale for customer-specific applications in a couple of regions, he said.
Offering container management services will provide manufacturers a number of benefits, Andy noted, such as creating opportunities to sell higher value products and services. Some large manufacturing businesses already have made the switch to nonwood containers, he noted, because they have been able to establish closed loops and recover their shipping platforms.