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Smurfit-Stone makes the packages,
which sell the product.
By Glen Sparks
One good place for this story to begin is in the pet food aisle at the local supermarket. Think about it for a second. Pet owners must choose from a variety of snazzy, Technicolor bags, cans and boxes. They only want the best for Fido the dog or Fluffy the cat.
But do these very same consumer-savvy pet owners study the list of nutrients on each package and compare them to the next brand, or do they buy the most colorful package? Patrick Moore, chairman, president and CEO of local packaging giant Smurfit-Stone Container Corporation, thinks that he knows the answer.
“The packaging sells the product,” Moore says during an interview at Smurfit-Stone headquarters in downtown Clayton. “I am sure of it. In the pet food industry, things are so competitive. You want to stand out and be noticed.”
Moore probably has the inside track into the right answer. Smurfit-Stone is the industry leader in the manufacturing of paperboard and paperboard packing. The company also is the largest producer in North America of containerboard, corrugated containers, specialty bags and clay-coated recycled boxboard. Every year, the company ships enough corrugated containers in North America to cover Forest Park 1,400 times (Forest Park= 1,370 acres or 59,677,445 square feet).
 Smurfit-Stone operates nearly 150 corrugated
container manufacturing facilities throughout North America. The company’s ability to print high-quality graphics on corrugated packaging sets Smurfit-Stone apart from its competition. The company has six manufacturing plants in the St. Louis region. |
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Smurfit-Stone might not be the most recognizable St. Louis company, especially for one that did $8.3 billion in sales in 2004. Smurfit-Stone products, though, fill the kitchens, pantries, bathrooms, refrigerators of most households.
The company makes the packaging for— among hundreds of other products—Purina pet food, Kellogg’s Corn Flakes, Scope mouthwash, Budweiser beer, Duracell batteries, White Rain hair care, Keebler’s animal crackers, Birds Eye frozen foods, Gain detergent and Motorcraft motor oil. It even works on point-of-purchase displays for leading companies such as Walt Disney Co.
This good work and creativity requires 35,000 employees and 250 plants that are located from New Hartford, N.Y. to Torrance, Calif. Smurfit-Stone operates 21 paper mills alone. The company has a corrugated container facility in Chesterfield that serves 110 customers in a 200-mile radius. That facility enjoys state-of-the-art equipment after suffering severe damage in the 1993 flood.
Smurfit-Stone also has corrugated manufacturing sites in Kirkwood, Berkeley and Highland, Ill., in the St. Louis metropolitan area. The folding carton plant in Pacific manufactures boxes for items such as cereal and tissue boxes. The company has a recycling center office in Earth City and a recycling plant in north St. Louis.
Not surprisingly, Smurfit-Stone also is the world’s largest paper recycler. It collects and processes about 6.5 million tons of paper every year.
Sales of paper and boxes are up. Prices are getting better. Inventories are slow. These are good things for Smurfit-Stone. The company initiated a large-scale restructuring plan in October 2003. That plan included letting go 1,400 workers, closing plants and shutting down machines. It shuttered a mill in Thunder Bay, Ont., and idled one of two paper machines Jacksonville, Fla. It also reconfigured the linerboard machine in Jacksonville to shift medium production from the idled machine. Now, the machine is more efficient, runs smoother and manufactures a more high-quality medium.
Overall, Smurfit-Stone wanted to decrease inefficient capacity and cut down costs. The paper packing industry is notorious for piling up inventory. Companies wanted to run machines as fast as they could, no matter the demand. That just isn’t good business. Moore is happy to report that the restructuring plan
has worked. Smurfit-Stone reported a profit for the first time in two years in the third quarter of 2003. It expected to make a profit again the fourth quarter.
“Our goal is to continue along the path that we’ve established the last few years,” Moore says. “We don’t need to keep growing at the same pace. We do want to continue to be innovative.”
Smurfit-Stone prides itself on creating “outside of the box” boxes. The company’s Creative Resources Group is dedicated to building a better package and, in the words of CRG Regional Director Mike Ryan in a recent issue of company employee magazine Connections, “change the customer perceptions of what packaging can do and what Smurfit-Stone can deliver.”
CRG teams help make packaging more convenient and appealing. It added a holographic background to a Kleenex carton to give it more “sizzle” on the store shelf. Smurfit-Stone also introduced a line of SpongeBob SquarePants tissue boxes that include a sticker set.
The company was awarded top honors at the recent National Paperboard Packing Competition in Chicago. Here is one example: Family Time Snacks Inc. wanted to improve its microwave popcorn package. Studies had indicated that most microwave popcorn connoisseurs pour the product into a separate container after popping it. Family Time wanted to convert the traditional popping bag into a carton.
Smurfit-Stone created just such a paperboard carton. It has a double auto-bottom for easy set-up, corner seals to prevent messy oil from leaking. The seal didn’t decrease the “pop volume,” a key term in the microwave popcorn industry. The carton printing and design make it attractive to consumers.
| An example of a point-of-purchase display made by Smurfit-Stone. |
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“We are always thinking about packing solutions,” Moore says. “People understand that creating the right package is incredibly important to the entire product.” Companies also must work fast. In the old days, it might take six or eight months for a company get a package ready, from the drawing room to the assembly line. Now, Smurfit-Stone can do it in six or eight weeks.
“You just have to be fast,” Moore says. “The customer is very fickle. Think of the Atkins diet. That thing just exploded. People were coming out with new products all the time. Speed to market is a key. Now, look. That craze seems to be ending. You need to be ready for the next one. I think we are leaders in that area. Some of the other companies are playing catch up.”
The Smurfit-Stone Container Corporation, Moore says, “is really just a six-year-old company.” It was founded in November 1998, after the merger of St. Louis-based Jefferson Smurfit Corp. and Stone Container Corp. of Chicago. Smurfit-Stone acquired St. Laurent Paperboard, a Montreal firm, in 2000. Smurfit-Stone purchased the Mead Westvaco (Stevenson, Ala.) containerboard mill and related operations in fall, 2002.
Later that month, the Jefferson Smurfit Group, the largest Smurfit-Stone stockholder at the time, privatized and distributed its 29.5 percent stake in Smurfit-Stone. In April 2003, Smurfit-Stone acquired the remaining 50 percent of Smurfit-MBI, a Canadian packaging company, after previously buying the other 50 percent.
The company headquarters for the Smurfit-Stone Container Corp. is listed in the annual report as 150 N. Michigan Ave., Chicago Ave. That is a result of the merger agreement. For all practical purposes, though, Smurfit-Stone headquarters are at 8182 Maryland Ave. Just about every major company executive works out of St. Louis.
“It becomes expensive when you talk about changing the headquarters,” Moore says. “In this case, you would be talking about transferring about 150 people here. Some people, of course, would not want to come here. You would be losing a lot of good people. That said, we really think if St. Louis as being the company headquarters.”
Moore started with the old Jefferson Smurfit Corp. in 1987 as assistant treasurer and was appointed treasurer in 1990. Three years later, the company promoted him to vice president. After serving as chief financial officer, Moore took over as president and CEO in 2002. He added the title of chairman in May 2003. Before joining the company, Moore worked for 12 years at Continental Bank in Chicago.
He says that the packaging business is a little more exciting than most people might think. “This is a dynamic, innovative business,” he says. “The quality of some of the packaging is just unbelievable. This isn’t about just producing plain, brown boxes. We can use 10-color presses to produce our products and ensure that they have high impact on the shelves.”
One interesting Smurfit-Stone project is the development of Radio Frequency Identification (RFID), a high-tech tool that transmits electronic product codes. These so-called “smart tags” contain a chip with an antenna that communicates using radio waves. They are different bar codes in that they don’t need manual swiping, and do not require a line of sight for workers to read them. Some industry experts believe that RFID will eventually replace bar code technology.
The tags assign a specific code to each item. Bar codes assign the same universal tracking code to a particular product. The bottom line to all this technology is that the tags help improve inventory tracking by greatly reducing, or eliminating, lost products during shipping.
In 2002, Smurfit-Stone created a team to study RFID. Smurfit-Stone, along with companies like Wal-Mart, is pioneering the research and development of RFID. Some companies already are shipping boxes with RFID tags, according to Board Converting News, a leading publication in the packaging industry.
“We have portable readers set up so we can take them to a customer for a pilot trial,” Betty Brennan, a Smurfit-Stone engineer said in the publication. “We can run tests for our customers and help them qualify RFID tags for their particular product. At Smurfit-Stone, we’ll work with our customers on how and where to apply the tags on the boxes, check the readers and do what we can to make the system work.”
She adds that Smurfit-Stone is studying steps to keep down the price of tags. “The reality is that id these tags are not low-cost, it’s not going to make sense in a lot of these application,” Joseph LeBlanc, Smurfit-Stone vice president of research and development, said in BCN. “There are lots of things we have to learn about RFID technology. Fortunately, for Smurfit-Stone, we are positioned on the subject due to early engagement on RFID.”
Many packaging companies are outsourcing much of their business overseas. Smurfit-Stone has no plans to consolidate manufacturing operations in China or other far-away places. Moore says that the future of the company is in North America.
“It just isn’t practical to produce the packaging in China, and then ship it back here,” Moore says.
Workers at all of Smurfit-Stone’s facilities can count on a safe workplace. Occupational Hazards, a leading magazine for safety, health and loss prevention, calls Smurfit-Stone one of America’s safest companies. Moore says that Smurfit-Stone put together a pro-active education plan to improve worker safety.
“Our Smurfit-Stone Accident-Free Environment process embraces the beliefs that all injuries are preventable, safety is everyone’s responsibility, working safely is a condition of employment, training employees to work safety is essential and safety is good business,” says Larry Otten, director of health and safety at Smurfit-Stone.
The combination of safety, high-tech production and creativity add up to Smurfit-Stone remaining the industry leader for many years to come. Moore says that the demand for good packaging will continue to increase.
| With 21 paper mills, Smurfit-Stone is North America’s largest integrated paperboard manufacturer. The mills produce a wide range of paperboard substrates, which are then converted into packaging products by Smurfit-Stone’s facilities. |
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“This really is a competitive industry and the changes have really been demand-driven by our customers,” Moore says. “There is no sign that the demand for our products is decreasing. Companies need packaging. If the demand ever does decrease, Smurfit-Stone plans to be the last one standing.”
A Strong
Safety Ethic
By Glen Sparks
Smurfit-Stone does not just preach safety. It practices it. Just ask Patrick Moore, the company’s chairman, president and CEO.
“If I am going into one of our buildings and the sign says that everyone must wear a safety hat, I cannot go in until I put on my hat,” Moore says.
Moore points to the Smurfit-Stone Accident-Free Environment. Through SAFE, the company has developed a model for creating a safer workplace. At everyone one of Smurfit-Stone’s 260 facilities, supervisors stress safety. The company’s 37,000 employees understand that it takes a daily commitment to maintain safety, Moore says.
Since creating SAFE in 1994, Smurfit-Stone has improved safety by 80 percent. For the past three years, the American Forest and Paper Association recognized Smurfit-Stone as the safest company in the paper industry.
If an accident does happen at Smurfit-Stone, workers try to determine the root cause. They create the steps to ensure that it does not happen again. “Near misses” get the same, studied treatment. Smurfit-Stone even asks workers to maintain a safe environment at home.
“I am personally committed to safety at Smurfit-Stone because it’s the right thing to do,” Moore says. “Every employee has the right to expect a safe work environment.” |
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