The Corrugated Market Today - Winter 2011
Following price increases in late 2009, the price of a cardboard box rose to the level it was in 1995. So after fifteen years, the net effect has been zero movement in price. This is measured against retail price inflation during the same time frame of 50%. (This is an average of around 2.7% per annum, which is relatively low). So in reality, the price of a box at that time was 50% lower than it would have been if box prices had remained in line with all other goods. Over the long term, shareholders will not tolerate continued loss making, so the supply/demand imbalance has to be addressed, and eventually prices will have to move back to a point where the selling price is greater than the total cost. This occurs either through rationalisation, where the bigger companies merge and take out capacity, or through failure, where companies simply go bust. Looking at the corrugated market today, both of these events have happened. We have seen rationalisation and failures during 2010 and this has continued throughout 2011.
Paper
Following two price rises in 2009, the corrugated paper makers moved back into the black during first qtr of 2010, and prices moved above costs for the first time in a long while. Papermaking in the UK was roughly in balance from a supply/demand perspective during late 2009 early 2010 but then slipped so that there was a tightening of supply of paper which drove up prices further in regular stages throughout 2010. We are now well into 2011, escalating input costs of papermaking mainly in the cost areas of Waste paper (which is experiencing high global demand particularly because of reduced waste coming out of Japan and stronger demand from manufacturing in major countries including Germany). Starch used in papermaking, power and timber pallets these, are all pushing paper prices ever upward. Global demand and events including volatile and increasing oil costs are having an increased effect on paper prices, with what is happening in the UK as a whole having less influence on Global and pan European pricing decisions. Owing to the fact that the supply/demand balance has been cleverly achieved, the paper producers are now in the driving seat and are passing on manufacturing input costs as they occur. The increase speculated by the paper suppliers in the summer for late autumn has not now materialised and owing to a slight overcapacity in paper owing to a slower seasonal take up there has been a slight softening in prices in spot buying situations. Should this become permanent, it will filter through to a softening of Box prices early in 2012.
The Corrugated Market
In the normal course of events in this marketplace, the increased price of paper would move loss making into the box plants, where over-capacity would prevent these increases being fully recovered. This changed in 2010, because as was said, the inevitable balancing mechanisms of over-supply, which are closure and rationalisation, had already begun. So check the financial robustness of your current supplier.
What will happen now?
There was as predicted, significant rises in the price of corrugated products throughout 2010. Whilst these didn't recover to where they should be, that is increasing by 50%, box prices did increase by 28%+ by the end of 2010 as compared with autumn 2009 prices. Despite this, corrugated remains by far the most cost-effective form of transit packaging, and will be seen by some as still being too cheap. With further increases in paper being applied during the first half of 2011, one thing that has to be avoided is the quoting of firm prices for any prolonged period as with current price volatility these may become unsustainable.
The future of Corrugated
Corrugated has a great advantage over other packaging mediums as it comes from a renewable source - wood. It is one of the best examples for sustainability, the perfect loop; because theoretically all corrugated board can be recycled and turned back into paper. You lose some of the fibres during the process of paper recycling because they become shorter, and they eventually enter the environment as a natural biodegradable material. Across Europe as a whole corrugated has 82% and growing going back into paper production. Customers can tend to think that they are destroying valuable trees when they use corrugated boxes which is Europe at least is definitely not the case, because we plant more trees than we cut down. If you look at the balances in the Scandinavian Countries, they are achieving a completely sustainable forest economy. Another ideology is that one way corrugated box use is worse than returnable. This statement is false as a generalisation. Each case has to be viewed on its own. Sometimes returnable systems are better; sometimes one way is, depending on the circumstances. Corrugated is excellent in cost effectiveness. It is lightweight and easy for staff to handle, and there is unlimited scope in terms of size & design. Corrugated is easy to print and is a natural, renewable, recyclable, biodegradable product.
Corrugated is the ideal material for Transport packaging. The input-output relationship is excellent. With clever construction you can save a lot of waste & material. There is constant development in this respect. The paper industry is now producing standard 90g already, which is achieving the same performance as heavier papers did in the past. Over the years you can observe a constant decrease in the average weight of corrugated packaging which can only help the environment. Corrugated is also ideal for RFID with chips easily integrated into the box. When all the above is combined in a manufacturer who cares and has significantly reduced is carbon footprint as part of its environmental responsibilities the result is...
The Futures Bright - The Future is corrugated!
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Current employment opportunities with an excellent IIP accredited Company with an Apprenticeship employer certificate!
Full or Part Time Sales People required (Including the opportunity for Sales Apprentices)
If you are someone with a technical/production background who loves to: Make friends, serve people, solve customers’ problems, doesn’t mind hard work, and relishes giving customers world class customer care, then we want to hear from you...
All jobs represent an opportunity to join a progressive, forward thinking company that values its staff. For more details contact Louise O Brien by e-mail at Louiseo@greyhoundbox.co.uk or by telephone on 0113 276 2366
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We were and still are called Great Britain because we were and still are Great! Please let’s not forget that whatever the media portrays, we are still great if we want to be. We are what we think.
As a nation, we have had periods of slumber, but we are now being awoken from that slumber by Global events. Don’t believe those who say ‘because we are small isle we cannot compete with the Big countries in the future’. We are Great not because of our size, but because of many other things central to which is our ‘Creativity’. Prosperous nations are those who create, and we are at the very the cutting edge! Once we not only create but ‘Create and Make’ we will re-enter the premier league and stay there. Britain is now rising to that task of making as well as creating.
So the next time you watch the news or read the paper and all you hear is stories from people (who have decided to make a living by focusing on the negative and running the country down), don’t believe it because You are Great!
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We are hopeful you will have noticed our new updated and improved website during your visits in 2010. Watch this space for added enhancements and improvements in 2011.
You now have the facility to find the boxes that you are looking for easily, be it for Industrial, Business or Home use and order them on line for a very fast delivery. We are continually updating our stock box range on this website too so please visit frequently to watch for special offers or for that box size that is perfect for you needs and your budget.
Other features include the ability to do your own quotation using our 'Custom box calculator' (see ‘Boxes for You custom made in 24hrs’) this section is primarily aimed at those emergency Box order requirements where you cannot find a stock box in our ‘Stock Box’ range to fulfil your needs.
Alternatively, please feel free to request a quote, which only takes a few seconds to output after clicking on a particular box style, using our 'Request quick quote' option.
The Greyhound Box & Packaging website has previously been nominated for an award.
This website is being updated and improved all the time, but one thing we would appreciate is as much feedback you can give us on this website as possible. We welcome your comments be they critical or not so it can be improved to help you still further! Please contact us.
Thank you.
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Greyhound Investment Continues.
Good progress has been made throughout the company throughout 2010 with new Key Sales & Production Personnel joining the team. Owing to our expansion, we increased our working areas to 35,000 square feet. The Beza Road site has now 2 major units..unit 1 is now purely manufacturing and offices. At this site more recent investment included an enhanced automatic extraction system for cardboard waste meaning nothing goes to landfill and 100% is recycled reducing our carbon footprint and helping us towards our environmental 14001 accreditation. Enhanced design and sample making facilities have been added and also advanced 4/6 point Crash lock gluing/Stitching machines. Storage and distribution takes place from unit 2 next door.
We also have had some major software upgrades to our IT this year. Generally Systems and software are being improved and updated all the time such that capacity has increased. Our ability to deliver your emergency bespoke box orders and stock call off orders is better than ever before!
We have recently invested in 3 more vehicles for our truck fleet and have significantly enhanced handling systems, software and printing facilities. 2011 promises significant growth despite the recession - so watch this space! We are investing with the long term in mind to make sure that we are still here to support the British Manufacturing and fulfilment industries for many, many years to come.
Best Wishes & we look forward to Partnering with you and helping you soon.
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Helping others!
At Greyhound, we have a philosophy of not just investing in the future of our own business but also in people from inside and outside of our community because everyone matters. That's why every year we donate a percentage of our profits to charities. This isn't us trying to look good, but it is a sign that our attitude isn't just in investing in the here and now and what is temporary, but also investing in what is eternal.
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