I caught up with Jay Willie, Executive Director of the Independent Carton Group (ICG) just before he struck out for one of the groups quarterly meetings. The ICG has an interesting business model and long history so I began the interview with that line of questions.

Karstedt Partners – What is the ICG?

Jay Willie – The Independent Carton Group (ICG) is an association of independently owned and operated folding carton companies. None of our members are affiliated with a major paper mill. Our mission is to help member companies competitively compete with the vertically integrated companies. We have three programs to help accomplish this mission; a purchasing program, a supplier assurance program and quarterly business meetings.

Karstedt Partners – Before we get to the nuts and bolts of the association, tell us how the association began.

Jay Willie – Heads of the original five companies met at Kennedy Airport in 1982 to discuss how they could help each other if one of them had a catastrophe occur at one of their facilities. These original member companies were Dee Paper Box, Zumbiel Packaging, Curtis Packaging, Lebanon Packaging and Harvard Packaging. As part of their agreement they began a tradition of best practice and technology sharing that continues today. In 1991 the association hired its first staff that included Andy Willie, recently retired from Curtis Packaging, as its first Executive Director.

Karstedt Partners – So in the following years the association began offering members more services, can you take us through that phase of growth?

Jay Willie – Through the early 90s Andy began evaluating how member companies purchased offset printing plates from various vendors. This first effort in volume pricing provided all members with a means to purchase plates in volume (by using their group consumption) that offered price advantages they could not gain individually. With this success to build on in 1999 the group created the ICG Purchasing Program, which now covers consumables that include paperboard, ink and even die tooling, printing presses and die cutters. We even have a program with Staples to offer office supplies to our members. To give you an example of our purchasing volume the ICG is the largest purchaser of paperboard from Clearwater Paper. In essence, the ICG is the purchasing arm for our members so they have a lot more leverage in negotiation contracts with vendors. Another benefit of the program is that it gives our members access to long-term raw material contracts that reduce the risk of interruption in the event of a paper shortage.

Karstedt Partners – What do you see as some of the major concerns facing your member companies?

Jay Willie – Our members are very concerned with maintaining margins. The economic conditions and competitive landscape have put a lot of pressure on carton converters. For example, the decrease in paperboard capacity in the US is creating an increase in board prices. The entire industry is faced with how to absorb or pass on these increases to the customer. They are also finding it more and more difficult to find qualified skilled labor on the manufacturing side. Fewer young people are getting into manufacturing related job tracks.

Karstedt Partners – How do you see the outlook for the carton market and for your members?

Jay Willie – Everyone is hoping for the economy to get better, assuming that occurs we see many of our members diversifying their product and service offerings. Many are adding new technologies to their manufacturing facilities that allow them to offer more value added products. Many members are expanding outside of their historic niche offerings to offer more full service capabilities to their customers. This can include offering product inserts along with the cartons.

We are also seeing more companies being purchased by private equity firms. As family owned companies look at succession planning many are offered the added option of private equity purchases, which were not such a viable option just a few years ago.

Karstedt Partners – Where do you see opportunities in the carton sector?

Jay Willie – As I mentioned earlier, I see a lot of opportunity for our members in expanding their product and service offerings. Adding more options in coatings and die cutting as well as new graphic features are being done as members reach outside of their niche offerings. I see the industry taking advantage of the green movement with the strength and “greenness” of paperboard packaging.

This article was originally posted on WhatTheyThink.com on 4/11/13.