Suppliers’ confidence is translating to investments: 34 percent of corrugated industry suppliers are increasing their research and development (R&D) budgets in 2011. About 10 percent will spend less and 56 percent will hold steady. Suppliers see R&D as a way to stay competitive and to meet their customers’ future demands. Those suppliers reducing their R&D budgets say they have less cash and continue to experience a poor economy.
 
Top Concerns
Just like their converter customers, suppliers’ top concerns are higher energy prices. Seventy percent of corrugated container suppliers are very concerned about energy prices.

Other concerns are receding, however. Less than half of suppliers are “very concerned” about customers paying their bills (48 percent), competition (47 percent), overcapacity (47 percent) and government regulations (45 percent).
 
Are Converters Satisfied?
The Census data show the discrepancies between what suppliers consider to be “very important” services they offer and how satisfied their customers are with those services.

Technical support is considered a “very important” service by 81 percent of corrugated container suppliers; however, only 43 percent of plants are very satisfied with the technical support they receive from their main supplier. This suggests that two of five corrugated container plants believe they have inadequate technical support.

Two-thirds of corrugated suppliers rate parts availability and training plants’ employees as “very important” services to plants. So the fact that only one in three converters is “very satisfied” suggests that these could be the customers of the suppliers who don’t see parts and training as vital services.

Most corrugated suppliers believe maintenance and consulting services to be very important to their customers, and satisfaction rates suggest that these needs are being met. The data show that supplier-provided credit is satisfactory, as well.
 
Catherine Penn of Penn & Associates, Cleveland, contributed to this report.