Dwight SchmidtDwight Schmidt Executive Director,Executive Director,Corrugated Packaging AllianceCorrugated Packaging Alliance

In Winning Market Share, AICC In Winning Market Share, AICC Will Make Will Make

A Difference!A Difference!

AICC 2003 SPRING MEETINGAICC 2003 SPRING MEETING

Corrugated Packaging AllianceCorrugated Packaging Alliance

• Confronting the Brutal FactsConfronting the Brutal Facts• Industry ResponseIndustry Response• CPA 2002 ReviewCPA 2002 Review• CPA 2003 Action PlanCPA 2003 Action Plan• Calling All AICC “Hedgehogs”Calling All AICC “Hedgehogs”• Are We “Built to Last?”Are We “Built to Last?”

“Competing materials are reducing the demand for corrugated packaging and threatening the viability of your industry, your company and your personal success.”

- Dwight Schmidt

Confronting the Brutal FactsConfronting the Brutal Facts• RPC’s have taken several markets: milk, RPC’s have taken several markets: milk,

beverage, automotive, some redistributionbeverage, automotive, some redistribution• Several areas are under attack: produce, Several areas are under attack: produce,

case-ready meatcase-ready meat• Future areas of concern: closed-loop Future areas of concern: closed-loop

distribution systems like fast-food and salty distribution systems like fast-food and salty snackssnacks

• RPC’s go to market as a supply-chain RPC’s go to market as a supply-chain solution; historically corrugated has sold to a solution; historically corrugated has sold to a point along the supply chainpoint along the supply chain

• Increasing imports, decreasing exportsIncreasing imports, decreasing exports

• U.S. manufacturing decreasing U.S. manufacturing decreasing

• Retailer purchasing power consolidatingRetailer purchasing power consolidating

• Product safety driving many decisionsProduct safety driving many decisions

• Super-Centers with high volume and low cost Super-Centers with high volume and low cost are fastest growing retail segmentare fastest growing retail segment

• Supply-Chain solutions are being required to Supply-Chain solutions are being required to lower costslower costs

Confronting the Brutal FactsConfronting the Brutal Facts

• Corrugated Packaging Alliance: An organized Corrugated Packaging Alliance: An organized industry-wide effort to address competing industry-wide effort to address competing materialsmaterials

• Sponsored by American Forest and Paper Sponsored by American Forest and Paper Association (AF&PA) and the Fibre Box Association (AF&PA) and the Fibre Box Association (FBA)Association (FBA)

• Funded by containerboard producers through Funded by containerboard producers through AF&PA assessment (23 companies)AF&PA assessment (23 companies)

Industry ResponseIndustry Response

• Joint committee of AF&PA and FBA members Joint committee of AF&PA and FBA members oversee activityoversee activity

AF&PA MembersAF&PA Members FBA MembersFBA Members

I-PI-P G-PG-P

Interstate Interstate InlandInland

SimpsonSimpson PCAPCA

WeyerhaeuserWeyerhaeuser SSCCSSCC

Industry ResponseIndustry Response

To foster growth and profitability To foster growth and profitability of corrugated in applications of corrugated in applications

where it can be demonstrated, where it can be demonstrated, based on credible and based on credible and persuasive evidence,persuasive evidence,

that corrugated should be that corrugated should be the packaging material of choicethe packaging material of choice

Mission: Part 1Mission: Part 1

To provide a coordinated industryTo provide a coordinated industry

forum that effectively acts forum that effectively acts

on competing materials matters on competing materials matters

that could not be accomplished that could not be accomplished

by individual membersby individual members

Mission: Part 2Mission: Part 2

OBJECTIVE AOBJECTIVE AMaximize corrugated’s share in market segments Maximize corrugated’s share in market segments under direct competitive threat, where it can be under direct competitive threat, where it can be proven that corrugated is the best solutionproven that corrugated is the best solution

DELIVERABLESDELIVERABLES1.1. CCF endorsed by majority of retailers in market CCF endorsed by majority of retailers in market

segments under competitive pressure; readily segments under competitive pressure; readily available to allavailable to all

2.2. We are successful in transitioning retailers’ We are successful in transitioning retailers’ perception of industry from point solution perception of industry from point solution product sale in supply chain to total product sale in supply chain to total supply-chain-solutions partnersupply-chain-solutions partner

OBJECTIVE BOBJECTIVE BPrevent government and other organizations from Prevent government and other organizations from biasing packaging choices in marketplacebiasing packaging choices in marketplace

DELIVERABLEDELIVERABLENo legislation favorable to RPC’s is passed and No legislation favorable to RPC’s is passed and no misrepresentation of evidence goes unansweredno misrepresentation of evidence goes unanswered

OBJECTIVE COBJECTIVE CAddress marketplace concerns regarding Address marketplace concerns regarding impact of non-recyclable corrugated packagingimpact of non-recyclable corrugated packaging

DELIVERABLEDELIVERABLEWaxed corrugated replaced by corrugated Waxed corrugated replaced by corrugated packaging alternatives that can be recycled packaging alternatives that can be recycled in normal OCC waste streamin normal OCC waste stream

OBJECTIVE DOBJECTIVE D Implement coordinated communication strategy to inform target audiences of progress in Implement coordinated communication strategy to inform target audiences of progress in corrugated market developments, and to enhance attitudes and behavior toward the corrugated market developments, and to enhance attitudes and behavior toward the corrugated industry and its productscorrugated industry and its products

DELIVERABLEDELIVERABLEWe are successful in changing attitudes and behaviors of targeted audiences We are successful in changing attitudes and behaviors of targeted audiences with our messageswith our messages

E.Identify next corrugated markets susceptible to competitive material threats.

F.Establish cooperative relationships to explore synergy and eliminate redundancy in our work and expense incurred on behalf of our industry.

OBJECTIVE EOBJECTIVE E

Identify next corrugated markets susceptible to competing Identify next corrugated markets susceptible to competing material threatsmaterial threats

DELIVERABLEDELIVERABLE

Competing materials don’t get a foothold in another market Competing materials don’t get a foothold in another market without our knowledgewithout our knowledge

OBJECTIVE FOBJECTIVE F Establish cooperative competitive materials relationships to Establish cooperative competitive materials relationships to maximize synergy and eliminate redundancy in work and expense maximize synergy and eliminate redundancy in work and expense incurred on behalf of the industryincurred on behalf of the industry

DELIVERABLEDELIVERABLERelationships established, synergies identified and expenditures Relationships established, synergies identified and expenditures minimized — within budgetminimized — within budget

2002 EXTERNAL ACTIVITY2002 EXTERNAL ACTIVITY

• Established retail contacts including Established retail contacts including 14 face-to-face meetings14 face-to-face meetings

• Softened Wal-Mart’s stance on RPC’s vs. CCF Softened Wal-Mart’s stance on RPC’s vs. CCF • Developed Draft Standard for CCF for case-ready Developed Draft Standard for CCF for case-ready

meat, visited major meat processors and retailers meat, visited major meat processors and retailers to receive input to receive input

• Received endorsement from Sam’s Club Received endorsement from Sam’s Club on CCF for produce on CCF for produce

• Completed successful commodity studies for Completed successful commodity studies for grapes & strawberries and published findings grapes & strawberries and published findings

2002 EXTERNAL ACTIVITY 2002 EXTERNAL ACTIVITY (continued)(continued)

• CCF containers approved in variety of fruit CCF containers approved in variety of fruit commodities (grapes, strawberries, melons, commodities (grapes, strawberries, melons, tree fruit, citrus, apples, etc.) tree fruit, citrus, apples, etc.)

• Kroger committed to using CCF and has been Kroger committed to using CCF and has been requesting it requesting it

• Facilitated use of CCF throughout SuperValuFacilitated use of CCF throughout SuperValu

• Conducted and published Willard Bishop Study Conducted and published Willard Bishop Study showing low RPC penetration, but higher showing low RPC penetration, but higher penetration in some commoditiespenetration in some commodities

2002 INTERNAL ACTIVITY2002 INTERNAL ACTIVITY

• Presented industries’ point of view at nine forumsPresented industries’ point of view at nine forums• Established Executive Director position, office Established Executive Director position, office

and CPA identityand CPA identity• Worked out infrastructure, deliverables, action Worked out infrastructure, deliverables, action

items, budgetitems, budget• Revised Plan below objective levelRevised Plan below objective level• Visited senior managers of seven AF&PA/FBA Visited senior managers of seven AF&PA/FBA

members to discuss Plan and progressmembers to discuss Plan and progress• Developed Comprehensive Communications PlanDeveloped Comprehensive Communications Plan

ROLE of CPAROLE of CPA

1.1. To coordinate, focus and enable all competing To coordinate, focus and enable all competing material efforts undertaken at industry levelmaterial efforts undertaken at industry level

2.2. To identify and fund projects that generate To identify and fund projects that generate factual information, and communicate factual information, and communicate information to positively affect attitude and information to positively affect attitude and behavior of those who influence use of behavior of those who influence use of corrugatedcorrugated

ROLE of CPAROLE of CPA

““Facts are stubborn things; Facts are stubborn things; and whatever be our wishes, our and whatever be our wishes, our inclinations, or the dictates inclinations, or the dictates of our passions, they cannot alter of our passions, they cannot alter the state of facts and evidence.”the state of facts and evidence.”

- John Adams- John Adams

Willard Bishop StudyWillard Bishop StudyFebruary 2002February 2002

Determining the Market Determining the Market Penetration of Returnable Penetration of Returnable

Plastic Shipping ContainersPlastic Shipping Containers

Bishop Study ParticipantsBishop Study Participants

21 individuals, 21 individuals, representing 19 retailers, representing 19 retailers,

from all three major from all three major food store formatsfood store formats

Bishop Study ConclusionsBishop Study Conclusions

• Not much RPC penetration, except Wal-Mart Not much RPC penetration, except Wal-Mart • Retailers like and want to adopt Common Retailers like and want to adopt Common

Footprint – we need to make sure it’s available!Footprint – we need to make sure it’s available!• Retailers have 3 choices: Common Footprint, Retailers have 3 choices: Common Footprint,

RPC’s, traditional corrugatedRPC’s, traditional corrugated

• Retailers concerned about up-charges they have Retailers concerned about up-charges they have to pay grower/shippers – separate fact from to pay grower/shippers – separate fact from fiction while retaining value-added positionfiction while retaining value-added position

• Display-ready CCF not always requiredDisplay-ready CCF not always required

• Wax containers continue to be vulnerable to Wax containers continue to be vulnerable to RPC’s; retailers want CCF without wax and iceRPC’s; retailers want CCF without wax and ice

Bishop Study ConclusionsBishop Study Conclusions

Credible Evidence StudiesCredible Evidence Studies

• Conducted by University of California - DavisConducted by University of California - Davis

• Sponsored by FBA and RPCC (Reusable Pallet Sponsored by FBA and RPCC (Reusable Pallet and Crate Coalition)and Crate Coalition)

• Purpose: To compare existing corrugated Purpose: To compare existing corrugated packaging used to ship produce with RPC’s packaging used to ship produce with RPC’s and Corrugated Common Footprintand Corrugated Common Footprint

• Commodities: Grapes, Tree Fruit and StrawberriesCommodities: Grapes, Tree Fruit and Strawberries

Corrugated Common Corrugated Common Footprint Containers …Footprint Containers …

Grape Study ResultsGrape Study Results

1.1. Allowed a 5 – 9% larger Allowed a 5 – 9% larger payload of fruit payload of fruit

2.2. Cooled at the same rateCooled at the same rate

3.3. Showed no difference in Showed no difference in moisture loss ... than RPC’smoisture loss ... than RPC’s

Tree Fruit Study ResultsTree Fruit Study Results

1.1. Allowed a 6% larger Allowed a 6% larger payload of fruit payload of fruit

2.2. Cooled slightly slower, Cooled slightly slower, but faster than traditional but faster than traditional 8-down corrugated box8-down corrugated box

3.3. Generated significantly Generated significantly less bruising … than RPC’sless bruising … than RPC’s

Corrugated Common Corrugated Common Footprint Containers …Footprint Containers …

1.1. Allowed an 11% larger Allowed an 11% larger payload of fruitpayload of fruit

2.2. Cooled at the same rateCooled at the same rate

3.3. Generated significantly Generated significantly less bruising ... than less bruising ... than comparable RPC packscomparable RPC packs

Strawberry Study ResultsStrawberry Study Results

Corrugated Common Corrugated Common Footprint Containers …Footprint Containers …

Other ToolsOther Tools

• ““Full Disclosure” SoftwareFull Disclosure” Software– Activity-based costingActivity-based costing– Unbiased toolUnbiased tool– New updates in 2003New updates in 2003

• Collateral Material for Industry MembersCollateral Material for Industry Members

• Comprehensive Communications PlanComprehensive Communications Plan– Trade ShowsTrade Shows– AdvertisingAdvertising– Press ReleasesPress Releases

2003 Goals2003 Goals

1.1. Revise our produce focus from retailer CCF Revise our produce focus from retailer CCF specification preference to commodity by specification preference to commodity by commodity implementation challenge to RPC’s commodity implementation challenge to RPC’s

2.2. Implement CCF standard for case-ready meatImplement CCF standard for case-ready meat

3.3. Make revisions to “Full Disclosure” to make it Make revisions to “Full Disclosure” to make it more user-friendly as well as generate and more user-friendly as well as generate and publish supply-chain case studies for key publish supply-chain case studies for key commoditiescommodities

4.4. Fight pro-returnable legislation at all levelsFight pro-returnable legislation at all levels

2003 Goals2003 Goals

5.5. Collect and communicate with retailers the Collect and communicate with retailers the industry’s ongoing wax replacement efforts industry’s ongoing wax replacement efforts while aligning with AF&PA Containerboard while aligning with AF&PA Containerboard Technical Committee to define single waste Technical Committee to define single waste stream wax replacement criteriastream wax replacement criteria

6.6. Execute comprehensive Communications Plan Execute comprehensive Communications Plan to affect behavior of key audiences and place to affect behavior of key audiences and place more information in hands of industry’s front more information in hands of industry’s front line sellersline sellers

2003 Goals2003 Goals

7.7. Study RPC poolers to understand their Study RPC poolers to understand their strengths, weaknesses and economic drivers to strengths, weaknesses and economic drivers to better predict corrugated’s vulnerability by better predict corrugated’s vulnerability by market segmentmarket segment

8.8. Establish cooperative relationships directly Establish cooperative relationships directly with Canada and Mexico and with rest of world with Canada and Mexico and with rest of world through ICCAthrough ICCA

9.9. Leverage maximum impact on 2003 goals Leverage maximum impact on 2003 goals within approved budgetwithin approved budget

In Winning In Winning Market Share, Market Share,

AICC AICC CANCAN Make Make A Difference!A Difference!

Calling All AICCCalling All AICC“Hedgehogs”“Hedgehogs”

Twin Cities Project

““A Better Way” CampaignA Better Way” Campaign

““STOP SHREDDING MONEY”STOP SHREDDING MONEY”

““Would you buy a new wheelbarrow after every trip?”Would you buy a new wheelbarrow after every trip?”

““What if you tossed the toaster after every breakfast?”What if you tossed the toaster after every breakfast?”

““What if you threw out the baseball after every pitch?”What if you threw out the baseball after every pitch?”

Calling All AICCCalling All AICC“HEDGEHOGS!”“HEDGEHOGS!”

• Sponsored by SWMCB Sponsored by SWMCB andand RPCC RPCC

• Hosted workshops for local businessesHosted workshops for local businesses

• Began direct mail campaign Began direct mail campaign

• Hosting website: Hosting website: www.swmcb.org/better-way

• Market researchMarket research

• Marketing planMarketing plan

• Utilizing tax dollars for interest-free loansUtilizing tax dollars for interest-free loans

Built to Last?Built to Last?

CPA’s Role:CPA’s Role:

• Make direct contact to challenge claimsMake direct contact to challenge claims

• Alert lobbyists to prevent spreadAlert lobbyists to prevent spread

• Develop public relations campaignDevelop public relations campaign

• Remain active in all areas of competing materialsRemain active in all areas of competing materials

Built to Last?Built to Last?

AICC “Hedgehog’s” Role:AICC “Hedgehog’s” Role:

• Educate and arm your Educate and arm your sellers with information to sellers with information to fight returnablesfight returnables

• Formulate strategies that Formulate strategies that influence behaviors of influence behaviors of your customersyour customers

• Keeping vigilant Keeping vigilant to save your marketsto save your markets

Built To Last?Built To Last?

“ “ The battle goes not to the The battle goes not to the strong alone, but to the strong alone, but to the vigilant, the active, the brave.”vigilant, the active, the brave.”

- - Patrick HenryPatrick Henry

In Winning In Winning Market Share, Market Share,

AICC AICC CANCAN Make Make A Difference!A Difference!