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Box Stars: At 50-year mark, SMC is equipped for packaging surge

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A half-century ago, Ross Ausburn and Chuck Bachus, two local employees of corrugated box manufacturer Hoerner Waldorf Corp. had the same idea at the same time.

Bachus had been flown to the St. Paul, Minnesota, headquarters of the company, which was interested in hiring him as a regional sales manager. He came back and told his friend Ausburn that he maybe would rather start his own company instead.

That’s when Ausburn opened a desk drawer full of plans and cost estimates for just such a company.

Eventually, 18 employees from Hoerner Waldorf came to start Southern Missouri Containers Inc., the precursor to SMC Packaging Group. The first box rolled off the line on April 1, 1972 – decades before a rise in e-commerce created a boom in the packaging manufacturing industry.

It’s a story Rich Bachus, president of SMC and Chuck’s son, likes to tell. Rich’s brother Randy Bachus is the executive vice president, and Kevin Ausburn, Ross’ son, is chair and CEO.

Fifty years later, the sons carry forth the vision of their fathers with four SMC locations in Springfield, plus satellites in Kansas City, with Arrowhead Containers Inc.; Conway, Arkansas, with Wonder State Box Co. Inc.; and Tulsa, Oklahoma, with Sooner Packaging Inc.

While the pandemic stalled some industries, the opposite is true for corrugated packaging, which surged with the increase in e-commerce. Randy Bachus noted the corrugated industry value is up 45% in the last 18 months.

For its part, SMC is on pace to sell $200 million in the fiscal year ending Oct. 31, 2022, according to Ausburn, and 1.5 billion square feet of corrugated boxing material will be produced by SMC’s 600 employees.

Box boom
Research firm Mordor Intelligence reports the worldwide corrugated board packaging market was valued at nearly $173 billion in 2021, and it’s expected to reach $212 billion in 2027.

In addition, Shopify reports global e-commerce was projected even before the COVID-19 impact on the market to hit nearly $5 trillion in 2021. That’s almost a 400% increase in seven years.

SMC serves some 2,000 companies, almost all of them in the United States, Canada or Mexico. Local firms make up less than a third of customers, Rich Bachus said.

SMC’s website lists a handful of customers, such as Smith Titanium, Empire Candle Co., Munro Shoes, Big Blanket Co., Snap-on, Red Monkey Foods and Vital Farms.

Shopify notes one of the market drivers in the corrugated surge is convenience foods. Additional drivers, according to market research firm Technavio, are a heightened demand for packaging as more tech-savvy customers move to online shopping.

Another trend is a rise in boutique online sales and subscription services, many of which use printing both inside and outside their boxes for a bespoke touch. Rich Bachus said boxes are an important part of the marketing for companies that are sold solely online instead of in retail stores.

SMC made a fortuitous purchase of its 145,000-square-foot plant at Partnership Industrial Center East and added 20,000 square feet to the building, increasing its size to 415,000 square feet. The plant opened in February 2020. The facility was purchased in 2018, before COVID-19. Rich Bachus said in March 2020 and for two months after, SMC, like other companies, took a step back, but then customers worldwide ramped up e-commerce purchasing, and the company found itself busier than ever.

Expansion work finished in July with some equipment purchases, and he noted it was just in time.

“If we hadn’t gotten it, we wouldn’t have been able to handle the surge,” he said.

New equipment included a high-speed rotary die cutter and a flexographic folder gluer, with each machine valued in the $4 million to $6 million range; another high-speed four-color folder gluer, valued at $5 million to $6 million, is on order with an expected delivery of 2023, Ausburn said.

“Due to supply chain challenges, the lead time on equipment that once was nine months has now stretched out to 18 to 24 months,” Ausburn said.

The paper industry has shifted dramatically toward packaging and away from newsprint and fine print, according to Rich Bachus. Companies are not prone to invest in those technologies with packaging applications so lucrative.

50 years in
SMC today is markedly different from Southern Missouri Containers 50 years ago, according to company executives. While lavishly printed and die-cut boxes are now ordered by customers, Randy Bachus remembers when there were two color choices, black or red, and outside markings were limited to “fragile” or “handle with care.”

Rich Bachus recalls the early 1990s as the period when manufacturers began to pay more attention to box designs.

The siblings and Ausburn were all involved in SMC from their teen years. Randy Bachus got his start mowing lawns outside the factory around 1977, then moved indoors to run a baler in 1979.

“It would be really hard to mess that up,” he said.

There are no 14-year-olds employed at SMC today, he said, and that probably wasn’t legal even in the 1970s, Randy said.

“It’s a fun business – very challenging,” he said. “I love to hate it sometimes, too.”

The three leaders all remembered working in the plant through their college years in summers and on holidays. Randy Bachus joined the company full time in 1987 in sales.

Rich Bachus worked for Frito-Lay in central Indiana – at the time, the largest snack chip manufacturer in the world – until 1982. His title – no surprise – was packaging supervisor.

Ausburn also came back to SMC in 1982 after having worked as an accountant.

Ausburn has two children who are involved in the business. His son, Matt Ausburn, is chief financial officer and a member of the board, and his daughter, Melissa Ausburn, works in the digital graphics department as social media coordinator and branding lead.

“We are fortunate to have a seasoned group of employees that are transitioning into leadership positions and a growing bench of younger talent that are assuming more and more responsibilities,” he said. “We are always on the lookout for future leaders.”

Making boxes
On a recent tour of the PIC East plant, three machines were rolling off boxes. Rich Bachus said the plant handles 250 to 400 different items per day and runs 24 hours, five days a week.

The factory fills a truckload every 30 minutes, he noted.

In a comparatively quiet area of the plant, the design team was at work on products. One member of the team was fashioning yellow-printed corrugated boxes into a banana shape.

“If you can draw it, we can cut it,” said Jeff Hole, senior designer.

Some corrugated display pieces were being worked on, among them a sturdy shelving unit designed to hold 75 bags of plant food at 4 pounds apiece.

Randy Bachus was philosophical about the work, noting packaging is often an invisible part of the customer experience.

“You grab a product and you’re not even looking at this, except subliminally,” he said, gesturing to the unit.

Still, he said, there’s a method to packaging, and it’s one that SMC has refined over the years.

It’s not his father’s company, in other words – but then again, for the Bachuses and Ausburn, it is.

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