It's tough being an independent corrugated converter these days. A quick rundown of the challenges compiled by the Middle-Market M&A Group of Minneapolis-based Piper Jaffray might make you question such a business.

Sales decline: The nation's roughly 1,400 corrugated-packaging plants have seen overall sales fall about 11 percent to $22 billion last year from 2000's high of around $24.5 billion, according to the Fiber Box Assn. This is consistent with overall US economic weakness.

Domestic competition: The industry is highly competitive due to excess capacity, sustained price pressure and a limited number of integrated producers dominating the market. Competition is intense for commodity-type business, so the Big Guys are more often competing for shorter-run, specialized work, says Piper Jaffray vp Douglas J. Lawson.

Consolidation: The six largest corrugated-container makers have 79 percent market share compared to less than 50 percent just 10 years ago, PJ reports. The hundreds of much-smaller independent converters now must fight tooth-and-nail for half the available revenue they could back in 1994.

Offshore competition: Outsourcing of a kind is impacting corrugated converters as well. As manufacturing moved to China, for example, production of corrugated containers followed. At first, Lawson says, many US converters exported to serve these foreign locations, but lately containerboard capacity has increased in these offshore markets, meaning lower export demand.

Competing products: Somewhat less of a threat than in previous years is competition from alternative packaging forms such as reusable plastic containers, stretch- and shrink-wrap and intermediate bulk containers.

Whether integrated or independent, a corrugated producer tends to sell within a 150-mile radius of any particular plant. It doesn't take a rocket scientist to determine the economic nonsense of shipping empty boxes across the continent. Thus, the conventional wisdom has been that large integrated companies have a distinct advantage over independent boxmakers. Having multiple plants nationwide lets you better serve national customers that are equally spread out, goes the thinking.

Well, independents have taken a cue from this idea and are adapting to meet the challenge. FirstPake™, a program created by the Alexandria, VA-based Assn. of Independent Corrugated Converters and approved by the US Dept. of Justice and the Canadian Competition Bureau of Industry lets AICC members form "joint-selling entities" to serve multi-site customers. Just like large integrateds, the 650 members of AICC can collaborate to cover broad regional, national and even international markets by pooling their operations, capacities and specialized, short-run capabilities.

FirstPak is a work in progress. While those AICC members taking part in the program have found both pros and cons, the consensus is positive. "FirstPak is the 'card up the sleeve' of our sales effort," says one converter interviewed for an AICC report. "It has gotten us equal consideration with the big players in much larger companies."

Want to learn more about FirstPak and what's to be gained via AICC involvement? The group's annual meeting, Nov. 10–13 in Atlanta, runs concurrent with the SuperCorrExpo 2004 trade show at the Georgia World Congress Ctr.