SAN FRANCISCO, 21 September 2015 (RISI) - US Corrugated is partnering with Los Angeles-based distributor Oak Paper Products in its large new $30 million, 2 billion ft2/yr corrugated box plant in Santa Fe Springs, CA, which is now starting up.
The new partner is a major California distributor of stock boxes and other packaging materials through its Acorn Paper Products subsidiary and also has small corrugated sheet plant in the Los Angeles area, AMD Packaging & Display.
Oak/Acorn will take 40% of the output of the new Santa Fe Springs plant on a multi-year basis, reducing risk of starting up a new plant in the competitive Los Angeles corrugated box market.
"The key was to have committed volume before we committed the capital," US Corrugated CEO Dennis Mehiel told the Los Angeles Business Journal. He said Acorn buys in quantity and knows how many boxes its thousands of packaging customers are going to buy.
The new 215,000 ft2 facility called "USC/AMD" will include a new 110-in Fosber corrugator capable of running 1,200 ft/min. Additional equipment includes two three-color Isowa flexo-folder-gluers and a 3-color Apstar rotary die cutter. It will have ACS automated conveyor system and Alliance robotic technology.
Santa Fe Springs will have significantly more box-making capacity than Acorn's existing 13-year-old, 50,000 ft2 AMD plant in Vernon, located just south of Los Angeles. The new plant is located about 28 miles east and is on the site of a former Stone Container box plant.
"Manufacturing costs will be reduced greatly due the fact that the (Vernon plant's) machinery was quite aged while the new equipment is state of the art," David Weissberg, CEO of Oak Paper Products, told Business Journal.
"There's more consolidation in the industry," he added. "In order to compete, you need to be cutting edge in the manufacturing sector. You have to be either the best or you shouldn't do it."
Oak Paper Products' roots in the Los Angeles market date back to 1946, when founder Jack Bernstein, Weissberg's grandfather, founded the business.
The company distributes stock boxes and other packaging materials throughout California and is beginning to expand into other states with total revenues now more than $100 million.
The Santa Fe Springs plant will have 100 employees, a benchmark for receiving a $500,000 tax credit from the state's office of Business and Economic Development.
"Some people would say, 'You have to have your head examined to manufacturer here,'" Weissberg told the magazine. "California is still one of the best states as far as business opportunities go. We want to be part of that."
The new Santa Fe Springs plant would be US Corrugated's first box plant on the West Coast. The Coal Center, PA-headquartered company currently has three full service box plants, two sheet plants and is a "strategic partner" in several other plants. It has been looking for additional expansion opportunities in various regions.