P-Squared News

P Squared’s own Victor Pinto was interviewed recently by “Brazil Business” magazine. You can read the article below.

1. Which the importance of Brazil in the North American market for corrugated exports?
As is already known, Brazil is one of the most important producers in the world of paper for the manufacture of corrugated boxes. However, only a very small portion of this raw material is used in North America. North America is dominated by US, Canadian, and European suppliers. The majority of the corrugated boxes from Brazil that enter the North American market are in the form of packages for products manufactured in Brazil, such as produce packaging.

2. Where is Brazil in relation to the sector of corrugated packaging?
Brazil is recognized as one of the leading manufacturers and consumers of corrugated boxes. The position of Brazil in the global arena for corrugated manufacturing is rapidly improving and is the top producer of corrugated in Latin America, followed by Mexico, Argentina and Chile. As the economy in Brazil improves, its market participation in corrugated will also improve.

3. How Brazil can to have a better participation in the exportation area?
Brazil will improve its participation with the continued growth of its manufacturing base and produce industry. Equally important is the growth of its paper supply available to the export market. The major integrated companies of Brazil have recognized this and are making large investments to improve both in capacity and in the quality of their product.

4. Do some norms exist in North American that facilitates the import of products in corrugated boxes?
The standards for corrugated box packaging in North America are established by a combination of user requirements, industry initiatives, and individual marketing entrepreneurship. Of course, these standards are mostly driven by the large consumers of boxes such as the major warehouse stores, distributors, and goods producers. Manufacturers of corrugated boxes, through their involvement in local, national, and international corrugated industry trade associations and the associations of their customer base are given access to these new standards as they are being developed. I would encourage any Brazilian corrugated box manufacturer who is selling boxes destined for the export market to participate in the meetings and committees of the international trade associations of our industry such as ACCCSA, TAPPI, FBA, AICC, and FEFCO.

5. The United States prevent to imports of products that use isopor packings or wood and/or plastic?
The United States remains a relatively open market as compared to others for the import of any type of packaging. However, any large buyer or user of corrugated packaging, such as Walmart or FedEx, can impose restrictions on the type of packaging it requires, and the market is free to meet or reject these demands. Industry trade associations frequently assist their members to create, modify, and understand new requirements from their customer base. A recent example of the assistance provided by a trade association is the Corrugated Packaging Alliance (CPA) helping set a new standard for box manufacturers selling to the produce industry known as the Corrugated Common Footprint (CCF). The corrugated industry trade associations are working with manufacturers in their respective regions to ensure that corrugated continues to be the material of choice for packaging.

6. How is the market for corrugated in the world?
The market for corrugated boxes is continuing to expand driven by growth in developing countries especially China. In mature markets such as North America, the trends are towards more sophisticated packaging with high graphics, multiple packaging materials, contract packaging, and other concepts to reduce cost in the supply chain. Corrugated box manufacturers now realize that it is important to understand the business of their customers and help them alleviate bottlenecks within their supply chains. This may mean the need to supply smaller quantities more often, provide quick changing graphics to meet brand or seasonal requirements, and service multiple regional, national, or international locations with the same standard.

7. What is the growth forecast of the corrugated sector?
The forecast for growth of the corrugated boxes is relatively low but stable in North America as compared to Brazil and other developing countries. As the economies of Brazil and other emerging nations improve, the internal consumption of corrugated boxes will increase. The corrugated box industry in Brazil can be expected to grow on average about twice as fast as the North
American market.

8. Do trade associations such as ACCCSA help in the stimulation of the corrugated sector?
As with any trade association such as ACCCSA or TAPPI, the stimulation for growth by the manufacturers of corrugated packaging is in the creation of new standards, improvement in productivity and capabilities, usage of new technologies, and ultimately the reduction of cost within the complete supply chain. Corrugated Synergies International and its sister company P² are in the forefront to help small and medium sized independent corrugated box manufacturers in different parts of the world understand this new global market. By utilizing our purchasing strength in raw material, operational expertise, and synergistic relationships across the industry we enable these independent manufacturers to compete on a global basis.

9. Does the case of Walmart (box substituting shelves) represent a market trend?
The trend of marketing-based packaging that has been credited to Walmart is continuing to grow and represents the fastest growth segment in the North American corrugated box industry. By using boxes as the marketing medium, the products on the shelf are easier to sell. This fact has helped spur growth of high graphics in the North American and other markets where Walmart and other mega-store retailers are strong participants. In addition to this, these large chain stores now represent the largest retailers of food previously dominated by supermarkets. This is causing a change in the presentation and requirements of packaging for the produce and meat industries.

10. Do you have world-wide statistics of the sector such as revenues, production levels, and total employment? In case you do not have this, where we can obtain this information?
We do not have these statistics but they can be obtained through the International Corrugated Case Association (www.iccanet.org).

11. How do you see the potential of the Brazilian market in relation to the world?
Brazil is blessed with abundant fiber resources for the production of paper. It is also a growing market for corrugated packaging, especially in the produce industry. The opportunity exists for Brazil to continue to expand its worldwide market share in paper while meeting its internal demands. Likewise, small and medium corrugated box producers must continue to evolve and integrate themselves in the global marketplace. These independent producers should equip themselves with the technology and operational expertise that will permit them to compete against the larger integrated companies.

12. Is the use of corrugated boxes for the sector of fruits, vegetables and meats growing in the world? What is the participation that Brazil can have in these markets?
Brazil continues to grow its produce (fruits and vegetables) and meat sectors. This will be an important stimulant in the demand for corrugated boxes now and in the future. Although Brazil’s participation in the world market for these sectors is growing each day, there is a large internal demand that will limit the availability of these goods for export. The export growth in these sectors will be driven by the capacity available for the produce and meat producers of Brazil.

13. Which new technologies are advancing in of the corrugated sector?
To ultimately reduce their supply chain costs, Walmart together with the US Department of Defense has placed requirements for RFID Tags on all packaging for tracking purposes. This technology will continue to evolve and change the marketplace. Other advances in the corrugated box industry are related to quality and productivity such as high board line machines, inspection sensors to inspect each box manufactured for registration and tone, quick change capabilities, and infeed and outfeed automation through robotics. Although some of these advances are costly due to the capital requirements, the producers of corrugated packaging that can meet these new demands will be at the forefront of the market. Most manufacturers are also evaluating their internal operations to reduce costs in their value stream. Concepts such as lean manufacturing are being embraced by the progressive companies in our sector.

14. How do you see the future of the corrugated sector?
The future of the corrugated box industry is bright. In North America, the large integrated companies are refocusing their operations and eliminating excess capacity which is positive for the industry as a whole. There are good opportunities for the small and medium independent companies to continue to gain market share by providing better service through a combination of
design innovations, application of new technologies, and low cost production within the complete value stream.

15. Could you briefly speak on your career?
Victor H. Pinto is a graduate of Texas A&M University, College Station, Texas USA with a Bachelor and Master of Science in Mechanical Engineering. Mr. Pinto has over 16 years of experience in the corrugated box and folding carton industries and is a Regional Board Member for the Technical Association of the Pulp and Paper Industries (TAPPI). For most of his career, Mr. Pinto has worked for domestic and European-based equipment manufacturers in field engineering, research and development, design, marketing, and sales. Mr. Pinto has also worked in private consulting in training plant personnel to improve production and maintenance, and analyzing existing processes and practices to streamline operations for his clients. Mr. Pinto is employed by Corrugated Synergies International (CSI) as Vice President of Development and its sister company P² as a Senior Consultant. CSI/P² is a management company that utilizes its excellence in operations plus end-user and supplier relationships to synergize the strength
of its associated members.