Larson Packaging Company (LPC) has come a long way from its beginnings as Larson Ladder Company in 1900 and a custom pallet manufacturer following World War II. Today, LPC is a leading designer and manufacturer of custom industrial packaging with a footprint throughout California and beyond. It has evolved through the years and transitioned from primarily wood pallets to a focus on crating and specialized packaging.
The company operates from facilities in Milpitas and El Cajon California, as well as Olive Branch, Mississippi. Larson Packaging Company also has manufacturing partners in the UK and China. It offers a comprehensive range of crating and industrial packaging solutions including wooden crates, rack crates, ATA (Airline Transport Association) cases, fabricated foam, on-demand corrugated boxes, Pelican cases, custom wooden pallets and more.
Mark Hoffman, the owner and CEO of Larson Packaging Company, explained that LPC’s approach is embodied in its tagline: Smart. Packaging. Fast.
Smart, because LPC’s products are designed by experienced packaging engineers taking an engineering approach and designing for manufacturing. Packaging points to its broad-based product line, unique product design, best-in-class materials and tight tolerances enabled by CNC equipment and tooling. Fast speaks to short lead times and rapid product availability, empowered by Larson Packaging’s responsive “Customer Success Team” and backed by flexible, high velocity and lean manufacturing.
One thing that Hoffman believes separates Larson Packaging Company from the competition is the high degree of integration it seeks to achieve with customers. “We strive to be an extension of their team,” Hoffman said. “We work best when we’re partners with our customers, especially ones that might not have strong capabilities in packaging design or inventory management as we have. So, we become like their outsourced packaging department.”
From Pallets to Custom Crating, a Story of Transition
The story of Larson Packaging Company is one of evaluating and taking advantage of market opportunities and core competencies. When Hoffman purchased the company, then Larson Pallet Company, in 2001, it was a premium-quality, premium-priced manufacturer of new, custom pallets, primarily for the high-tech industry.
Working previously as a management consultant, Hoffman had dreamt of running his own business. Shortly after buying the company, he attended a pallet meeting with Susan Larson, who introduced him to industry participants. “Wow, you got to be the dumbest guy alive to buy a pallet company,” he vividly remembers being told by one industry veteran.
Those words weighed even heavier in the following months. In the wake of 9/11 and the loss of a major customer, the business that was doing $3.5 million annually in sales prior to the acquisition had slipped to $3 million and then down to $2.5.
“We were staring at a declining market,” Hoffman recalled. “The market was shrinking, and recyclers were growing and taking over the 48×40 business.”
To make matters even worse, other customers were also migrating from new custom sizes to 48×40 recycled. He realized that the business needed to move in a different direction. “We looked at the situation and thought, we’re going to have to do something different or we’re not going to survive,” he said. As a former consultant, he looked at the company’s competencies and opportunities. The company had some design experience based on its utilization of the Pallet Design System (PDS).
“We liked the design aspect,” Hoffman said. “We knew how to cut and nail wood and plywood together. And we thought crating was a big adjacent market opportunity in our area that we were not taking advantage of. We felt it was our next logical step.”
How Do You Do Custom Crates?
“Great, we can do crates,” Hoffman recollected thinking at the time, “but how do you build them? You know, what are they? How do you design them?” The company gained expertise, bit by bit. Hoffman hired a salesperson with some crating background and a “couple of manufacturing guys who knew how to make crates.”
By 2004, the company had its first crating customer and had begun its transition into a crating provider. It won a large, multi-year job to do onsite packaging for a customer that required it to bring on experienced design and crate building staff, boosting its expertise and improving cash flow.
In 2008, the company managed to acquire Dynacase, a small ATA case manufacturer, and brought it in-house. ATA cases are designed to protect and move high value, sensitive, and delicate equipment and instruments that will be routinely and repetitively transported to trade shows, customer demos, sales presentations/ events, customer training, music or sporting events, or for field repair. With the acquisition, Hoffman felt the company had developed a suite of custom industrial packaging solutions that its customers would want.
Other small acquisitions in that period included a small pallet company that was being divested by a packaging company, as well as another small crating company. “Some of these acquisitions turn out to be fiascos because they’re not the most solid companies,” Hoffman reflected. “But you manage to hang on to some good customers, and you’re able to keep some of the people.”
Further Growth, New Capabilities And Equipment Investment
When one of Larson Packaging Company’s major competitors was failing in 2012, Hoffman stepped in to fill the gap. “One of the capabilities we have is being able to jump at opportunities, we think we can take advantage of. We can move pretty quickly, which is something a bigger company can’t do,” he stated.
LPC immediately hired “a lot of their people” and quickly acquired some of their customers, finding itself almost fully immersed into the custom industrial crating business that it had envisioned a decade earlier. The company rebranded as Larson Packaging Company to reflect its repositioned range of offerings, and partly in response to competitors who inferred to customers that they were “just pallet guys because of the previous company name”—and hence didn’t understand the unique design requirements of crates and packaging.
At the same time LPC attracted an independent salesperson with significant crating experience and a growing book of business. He helped improve quality in products such as rack crates for data center servers. LPC created a tool-less design, which requires extremely tight tolerances and superior product protection. The reusable racks are designed to protect sensitive systems valued at several hundred thousand dollars each.
After a manufacturing partnership with another company in the Mid-South failed to deliver the quality requirements needed for a customer, Larson Packaging Company decided to set up a small production operation of its own, quickly buying a building and hiring a general manager.
The company continued to grow its product line. It became a Pelican case dealer in 2016, and it acquired Kryptonite Cases, another ATA case manufacturer. In 2018, LPC expanded their foam packaging business. While it had used foam previously in its crating, it also began offering foam-based packaging, thanks to the addition of packaging designers with deep foam and corrugated experience, as well as the addition of some key foam processing equipment like a Kongsberg CNC table, Ttarp and Gong Young skivers, Edge Sweets bandsaws, Ttarp and Associated Pacific die presses and a Flow waterjet cutting machine. At the 2018 PACK EXPO show, LPC bought a demo version of the Zemat Boxmat corrugated box maker to expand its capabilities into corrugated packaging. Shortly thereafter, LPC added a flatbed die press from Diecutters Inc. Other key equipment for the company includes a range of high-volume woodworking equipment, optimized crosscut saws and metal fabrication equipment, as well as ShopBot CNC routers.
A few names familiar to Enterprise readers, LPC also just recently purchased a GoFast notcher to replace a 30-year-old machine. They also have a Baker two band resaw that relies on a Cresswood hopper-fed grinder.
Hoffman explained his equipment philosophy, "We've learned the hard way that we prefer to invest what's required on new equipment with good factory support. The used stuff just costs too much given the maintenance and never works the way we want it to."
As a result of the company’s success, and through his alumni contacts, Hoffman began being invited to speak at Entrepreneur Through Acquisition (ETA) conferences. Today, there are business school programs to train students how to acquire and run businesses. Hoffman joked that he was recruited as a speaker as someone who had been self-taught about acquisition “in the wild” prior to the current infrastructure available. Networking at such events proved to be invaluable. At one function an opportunity was brought to his attention, a packaging company in San Diego. “That was in November of 2019 and then nine months later, we closed on First Class Packaging. That was a pretty big acquisition for us.”
Banks and Financing
Early in the business trajectory after 9/11, the company experienced significant cash flow challenges as custom pallet sales sagged. Hoffman had to go to the bank and arrange loan deferrals, and for a while, he was paying interest only. He was faced with selling his home to keep the business going. He recalled that when he consulted his wife about the original acquisition, she was supportive. She had grown up in Peru and had known hard times in the past. “She’s like, ‘What’s the worst that could happen?’” Hoffman laughed. “I told her, well, we can lose everything,” and she says, ‘Well, I’ve been poor before. And it wasn’t that bad.’” So, true to her word, when it got tight, they sold their home and rented one closer to the business.
The company has relied on SBA loans and other bank debt through growth and acquisitions, at times with high-interest rates. A key turning point for the company came when it could purchase the property for its headquarters location in Milpitas. The company had been leasing from the Larson family. “That was huge, because of the way that property appreciates in California and the advantages of owner-occupied financing,” he said. Ultimately, that appreciation enabled the company to refinance at better rates and access additional money to finance growth.
Hoffman noted that while dealing with the banks was tough, it was ultimately a positive experience in helping him develop his business. He also cited the guidance received from his attorney and accountant. “They were instrumental in helping me as advisors,” he said. “I don’t have a Board, which is good because they probably would have fired me,” he laughed.
“It’s funny, because when I looked back at my first acquisition, I did so much wrong, I hoped I would one day get another chance so I could do the right things and get more value out of it,” he continued. As it turns out, practice makes perfect. “I had a chance to do it again, and I actually felt like I knew what I was doing,” he concluded.
Now boasting annual revenues well beyond what the company did in its pallet-focused days, the decision to transform into custom crating has been fully validated. Larson Packaging Company has established itself as a custom crating and industrial packaging specialist of choice to a host of high-tech product manufacturers on the West Coast and beyond. With flexible, fast delivery capabilities, attention to tight tolerances and precise quality, as well as a range of custom industrial packaging solutions, the company has not only moved up the value chain, but become integral to its customers’ success.
