Business Spotlight: Smurfit-Stone Container Corp.

Owners: Publicly traded (Nasdaq: SSCC)

Founded: 1998

Address: 2705 W. Battlefield Road, Springfield, MO 65807

Phone: (417) 881-3525

Fax: (417) 881-4956

Web: www.smurfit-stone.com

E-mail: trowden@smurfit.com

Products/Services: Paperboard and paper-based packaging and paper recycling

Employees: 157 in Springfield; 21,000 companywide

2007 Revenues: $7.42 billion

Smurfit-Stone Container Corp., a national paperboard and paper-based packaging manufacturer and paper recycler, is wrapping up a three-year transformation plan that invested $7 million in its two Springfield plants.

“We have a lot of buy-in with employees. The crews are sinking their teeth in and making this a place where they want to come to work every day,” says Dean Frey, production manager of Smurfit-Stone’s two Springfield plants. “The new equipment is nice, too. It spruces up the place and boosts morale.”

Springfield’s Smurfit-Stone plants at 2705 W. Battlefield Road and 460 N. Belcrest Ave. employ 157 combined, and according to Frey, the plants have average production compared to Smurfit-Stone’s 150 manufacturing facilities nationwide. The Battlefield plant produces about nearly 700 million square feet of corrugated containers each year, while the Belcrest sheet plant produces 100 million square feet annually.

“We make shipping containers. Not the box your cereal comes in, but the shipping containers that 10 boxes of cereal come in,” Frey explains. “Corrugated means containers have two liners with one medium sheet in the middle.” Company policy prohibits the release of client names.

Other Smurfit-Stone facilities include paper mills and recycling plants. Companywide, 95 percent of Smurfit-Stone’s $7.42 billion in 2007 revenues came from containerboard and corrugated containers, and 5 percent came from recycling.

Springfield management works from 200,000 square feet on West Battlefield, and the sheet plant on Belcrest has 150,000 square feet. The Springfield plants were competitors since opening in the 1950s, until 1998, when the Jefferson Smurfit Corp. and Stone Container Corp. merged.

“There was a lot of growth in the 1980s and 1990s in our industry,” explains Tim Rowden, manager of corporate communications and media relations for Smurfit-Stone, which has headquarters in Chicago and Creve Coeur. “The industry needed to consolidate to balance.”

After the merger, Frey says the Springfield plants still operated independently until 2006, when the corporate transformation plan eliminated duplicate management positions. According to Frey, the Belcrest sheet plant streamlined management to two supervisors from 15.

Frey has been with the company since 2000, and last year, he took on management of both plants when the former manager relocated.

Even with all the changes, Frey says the average longevity of employees at the Battlefield plant is about 15 to 18 years, while employees at the Belcrest plant have stayed an average of 20 years.

“We have a great team. We just completed a 16-week training program that helped us standardize our plants and processes,” Frey says.

John Bilin, regional technical sales account manager for Portland, Ore.-based Graphic Sciences, supplies about $15,000 to $20,000 monthly to the Springfield plants in environmentally friendly inks and coatings. Bilin also trains Smurfit-Stone employees on these inks twice a year.

“They’re really striving to upgrade equipment to get the best-produced job out the door while still streamlining and training, so they can have good quality for the customer,” Bilin says.

Besides the challenges that consolidation brings, Frey says keeping up with automation is tough.

Customers used to pack boxes by hand, but now machines assemble and pack them, making box requirements different.

Rowden says the economy also has greatly challenged the company with inflated costs for adhesives caused by higher corn prices, increased cost for lubricants used on machines, rising fuel costs and the overall slowdown in shipping.

Smurfit-Stone reported an adjusted net loss of $31 million in the second quarter mainly due to these increases, but also because of the company’s large capital investments as part of its transformation plan. Sales of $1.8 billion were still comparable to both the prior year quarter and first-quarter 2008.

“We started our three-year transformation plan because growth had topped out, and we needed to make the company more efficient,” Rowden says. “The plan was undertaken before the economy slowed, and we’ve continued it regardless of what is going on.”

In June 2007, the Springfield plants went to two shifts from three shifts and reduced staff by 20.

Frey says his most important goal is finding more production work to get the third shift up and running again. With typically busy third and fourth quarters ahead and recent new customers, he is optimistic.

As is Rowden: “We believe we’re on the right track, and we’ll see much improvement on the other side.”[[In-content Ad]]