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How a Commitment Became a Community
September 1, 2008 By: Mark Arzoumanian Paperboard Packaging
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Twelve years ago, Michael Feterik, president, Orange County Container (OCC), recognized a customer trend that would initially rattle any box maker: customers were moving their operations out of state. In City of Industry, Calif.-headquartered OCC's case, many of them were moving to Tijuana, Mexico, to take advantage of lower manufacturing costs. Feterik could either wave goodbye to these clients or make a commitment to them and establish a box making operation in Tijuana.
 Jeff White (l.), operations manager, and Edgardo Posada, training manager, Corrugados de Baja/Tijuana, Mexico, discuss updating the plant's training manuals. |
He turned to Gaylord Container and together they built Baja Sheets, a joint venture box plant with an 87-in. Langston corrugator. It is now known as Corrugados de Baja (CB). Six years later Gaylord was purchased by Temple-Inland. The day before this deal was completed, Feterik purchased Gaylord's share of the plant. From the get-go he made not only a commitment to his customers, but also a vow to conduct business above board. He would go beyond minimum local requirements. No short cuts.
Feterik established CB in Tijuana because he saw a burgeoning box buying market. But reducing labor costs had to be a factor, too, right?
"Saving on labors costs isn't as big an advantage as you would think it might be," he says, adding that he shares 10 percent of the plant's profits with the employees. The plant also has its own in-house doctor and nurse.
In 1996, this 440,000-sq-ft operation (including warehouse) had sales of $1 million a month, notes Chief Operating Officer Greg Hall, who has been with the company for 15 years. Today it brings in $15 million a month and produces 1.3 billion sq ft of board annually, running 24 hours a day, six days a week. It employs 480, many of whom are bused in from outlying areas. Hot meals are served to all employees every day.
Employee family days are held twice a year, once on a Saturday in early May (children receive gifts), and the second right before the start of school (children receive gifts of clothing, pencils, notebooks, and other school supplies). In addition, the plant supports local orphanages and homes for the elderly.
"It's like a little city," Feterik says. "We're going above and beyond the call of duty."
 The consistency of the folding on the plant's Rapidex RapidSet flexo folder-gluer is just one of the features that impresses Ron Ortiz, manufacturing manager, CG Group, Mexico. |
TV Evolution
In recent years, CB/Tijuana has witnessed explosive growth, thanks in large part to its location in the television capital of the world. Baja California (a western Mexico peninsula) represents 3.3 percent of Mexico's total gross domestic product, or $33 billion. The television industry first arrived in Mexico in the early 1980s. Of course, television makers (Panasonic, Samsung and Sony, to name just a few) all need corrugated boxes. The variety of televisions available nowadays is mind numbing: plasma, LCD, flat screen, and projection are today's options.
Television boxes compose 25 percent of the CB/Tijuana plant's production. Other clients are in the home improvement, appliance, office products, and electronics industries. Next Feb. 17 the television industry will go through a significant change. Today most stations broadcast analog and digital signals. But a new law requires them to transmit only digitally after Feb. 17. Analog systems will be shut down. So a lot of consumers are looking at either buying the latest television models or upgrading what they have to take full advantage of a better picture.
CB/Tijuana knows that being close to these TV manufacturers gives them a sense of supplier security. These clients (and those nearby in other industries) are aware of the plant's contingency plans (CB also has box plants in Mexicali, Nogales, and Chihuahua, Mexico) and know that they don't have to carry large box inventories.
The CB/Tijuana plant has made a concerted effort to develop local salespeople who can be at a customer's operation in minutes, not hours or days. The philosophy is simple and sound: Make doing business with CB so easy that no one can take it away.
 CB/Tijuana offers its television box buyers with a wide variety of corrugated packaging options. |
Local, Local, Local
This is why nine years ago Hall decided to recruit Santiago Fernandez, the plant's director of sales and marketing, away from Samsung, where he was a box buyer who bought from CB/Tijuana. Today Fernandez covers all of Baja California and is the first local Mexican salesperson from a local college. Now 90 percent of the plant's salespeople are from the local area.
 Willing to Take Risks |
"I saw an opportunity to make my own decisions," he says. "Greg had a vision to make the company better."
Hall was upfront with Fernandez, telling him that they were sure to have business disagreements. But now when Fernandez says Corrugados de Baja California to potential box buyers, doors open.
"I have to keep my eyes open every day, looking for business," he states.
This business doesn't come through the door and stay unless the plant can provide well-designed corrugated boxes. Over the years, veteran corporate designer Rafael González (and his 10-member design team) has enjoyed competing with box designers from throughout the world in a constant effort to develop cost-efficient ways to securely package durable goods. He motivates himself by asking, "Can somebody top my design?" or "How can I make this design better?" He has also learned the art of presenting new design ideas to clients in an agreeable manner.
"Televisions are lighter now but [box buyers] forget," he says. "The biggest question I have to ask them is why. Who is telling you to do this? I have to break down old paradigms."
González remembers the time he and a colleague bought a weed whacker so they could study the box. While they were carrying it out of the store it fell out. Store personnel saw this and said it would be okay to grab another boxed weed whacker. But González just smiled and brought that device back to the plant to study how it was packaged. CB not only redesigned the box so that the weed whacker would never fall out again, it shrank it. Now the manufacturer can ship it flat, doubling the stacks it can form in a truck.
In April 2007, television maker Samsung's foam supplier suffered a fire. Samsung turned to CB's sister plant just a few miles away, Tijuana Packaging Solutions and Fulfillment, which specializes in producing, diecutting and applying all sorts of foam and then, if required, applying it to corrugated packaging. This packaging not only serves the television industry but producers of refrigerators and lighting. The plant not only provided the foam Samsung needed to transport its televisions safely, but also reduced the amount of foam needed to package each television. And the foam it supplied was recyclable and more flexible than what Samsung had been using.
Hit with a Jolt
Eighteen months ago the television industry was hit with a jolt when low-priced televisions from Taiwan-based Vizeo (packaged in a full litho-labeled box) started coming into the U.S. CB/Tijuana's television customers wanted to know if the plant could match or exceed this packaging. These customers had always been tough (demanding straight boxes down to 1/8 in., for example) and now they wanted packaging with eye-popping graphics appeal.
Although the plant had been satisfying television customer needs with its 66 in. by 190 in. McKinley three-color flexo folder-gluer and an Asitrade laminator, management recognized that it was time to reevaluate and expand its printing and laminating capabilities. For example, to prevent skewing, the McKinley had to be slowed. With higher productivity demands this was no longer tolerable.
After doing its homework, the plant found the answer to its quality and production needs in the 66- by 183-in. five-color Rapidex RapidSet flexo folder-gluer with dual slotting sections and an inline diecutter, which has been making boxes since mid-February. Recently the plant added an Alliance prefeeder and a JB Machinery dryer to the Rapidex. One of the factors in Rapidex's favor was the good experiences OCC had with its sister company, S.A. Martin.
"From one job to another we're up and running in five, six minutes with only one to two boxes as waste," says Ron Ortiz, manufacturing manager, CB Group. He adds that inks and plates can be preset while running a current job.
When asked about running speeds, Ortiz says it is efficiency and consistency, not speed, that concerns him day-to-day. The consistency of the folding he's witnessed on this machine, whether on singlewall or triplewall, is impressive, unlike anything he has seen on any other machine, he says. (For the record, a one-color job on the Rapidex can run at 6,500 per hour; the McKinley would do the same job at 4,000 per hour.) In one shift the Rapidex has produced 798,000 sq ft of boxes. On multi-color jobs Ortiz likes the Rapidex's one-pass advantage, not only for television boxes but also for water heater containers.
"It produces a very square box," he states. "We even ran a warped box and it held registration. The set-up time we've gained is now productivity time."
One of the challenges for his Rapidex crew was the transition from manual to computerized adjustments. But once they learned how the computer on the machine made operating it easier, their apprehension disappeared.
"It's more of a 'mental' machine than a 'physical' machine," Ortiz notes.
The boxes printed on the Rapidex come from sheets made on the plant's Langston corrugator (which averages 600 ft/min and runs 12 percent white top linerboard) with a Fosber slitter-scorer. Corrugated Technology's computer software gives the plant the flexibility to schedule corrugator orders not based on costs and other options, not trim.
The plant operates a visual tag system that revolves around machines pulling work. Next to each converting machine you will find job jackets in blue, white or green. If a job is in a blue jacket it goes to the plant's warehouse. A white jacket means run it and ship it out while a green jacket signifies that it has to go through multiple converting operations.
Although CB/Tijuana will warehouse boxes (customers pay for the service), it also runs a web-based system tied into its customers' operating systems. Multiple deliveries in a day are commonplace; sometimes they're executed every 30 minutes or hour. The plant will even assemble corrugated packaging "kits" for some of its television customers so that their production lines can run smoothly.
Warehouse obsolescence is addressed every 60 days. If boxes are still on the plant's shelves after two months, the customer is given 30 days to take them. After 30 days the boxes are shipped and the customer is billed for them. Because terrorism concerns are growing throughout the world, the plant participates in the Mexican government's "fast pass" program. This allows its trucks to pass through customs without being stopped and searched.
Since 1996, CB/Tijuana has worked not only with the Mexican government but also with the local community. Company executives know that giving back to the employees that help them to serve their customers well (and make a profit) breeds loyalty and makes coming to work each day a "family " experience.
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