It's one thing to turn around a business in good times. But add the challenges of an anemic economy, customer consolidation, corporate fraud, and the effect of Sept. 11, and most entrepreneurs might reconsider.
Fox Packaging uses a traditional printing press specially-adapted for corrugated to produce FoxPrint.
While admittedly disconcerting, none of these factors stopped Nicole Saunders from pushing ahead and purchasing a near bankrupt sheet plant in Houston almost two years ago.
After taking possession of the former Wyatt Triangle plant, Saunders, 30, president and chief executive officer, re-named it Fox Packaging & Display. She is the driving force behind the company's transformation from strictly brown box to a state of the art, high-end graphics facility.
Saunders, who has worked in the production end of the business since she was a teenager, has a good teacher and mentor. Her father, Jim Hartman, a 34-year industry veteran, worked for several integrated companies and was the former owner of a sheet plant in Reading, Pa. Hartman, currently an industry consultant, specializes in turnarounds.
Two years ago, Hartman was consulting for another Houston corrugated plant and became familiar with Wyatt Triangle. The plant, the result of a 1998 merger of Wyatt Packaging and Triangle Packaging, was on the verge of bankruptcy. Saunders, whose background is marketing, expressed interest in buying the plant, seeing it as an opportunity to get back into the corrugated industry.
On a more personal level, Saunders wanted to carry on the legacy her mother and father started at their Pennsylvania business. Six years ago, Saunders and her husband were in a car accident that killed her spouse and left her in a coma. Her parents sold their company in order to move to Texas to be with her.
"I broke my back and I had a severe head injury. I was in a coma for a long time, and they didn't expect me to be able to walk again," she says. "The quality of my life has been better after the accident. I'm pushing myself more, and getting more out of everything. So that's the best and the worst that ever happened to me, all wrapped up in one."
Gaining A Foothold
Getting Fox Packaging off the ground has been slow going. "The economy has been really tough. Also, we had to weed out a lot of accounts that Wyatt Triangle had because they weren't paying their bills," Saunders says.
Initially, she was forced to write off more than $250,000 in bad inventory, invest more than half a million dollars in equipment and office renovations and pare down the staff from 50 to 35 full-time employees.
Locating a proactive banker willing to invest in a turnaround company was high on the priority list. The company formed a relationship with Wells Fargo which provides up front cash flow and only costs Fox between 1 and 2.5 percent.
"If we had rolled (Wyatt Triangle) into bankruptcy, that would put all of our suppliers out and that's not a good way to start a business," Saunders explains. "So we thought we'd better just suck it up and take it as it is and work down the Wyatt Triangle debt as well as manage Fox. It's almost like we're supporting two companies with one income and in a slow economy after 9-11."
The redesigned salsa package on the left, which was produced using FoxPrint", saves the customer money and is more graphically-appealing.
Saunders is banking on her company's unique capabilities to win over customers. What sets it apart from other sheet plants is its ability to serve a variety of needs, beyond producing boxes. "One of the competitive advantages is that we're one point of contact for your design, tooling, manufacturing, fulfillment, printing, and drop shipping," Saunders says.
The company is aggressively cultivating a client base that includes larger international companies, such as Hallmark, Kodak, Hewlett-Packard, and DuPont, as well as smaller local companies.
Saunders says many of the larger firms are committed to doing business with minority-owned companies, such as Fox Packaging, which is WBENC (Women Business Enterprise National Counsel) certified and HUB certified by the TBPC (Texas Building and Procurement Commission) in the state of Texas.
The current product mix is about 95 percent brown box, however, the plan is to serve primarily the higher-end graphic display market.
Most of the equipment in the 55,000-square-foot facility is from Wyatt Triangle. It includes a General folder-gluer; a 64- by 148-inch Langston press; a 50- by 98-inch Hooper press; two 38- by 54-inch Thompson diecutters; a series 76 Miehle diecutter with a Rebuiltco conversion; and a homemade rotary diecutter;
Recent investments include a Hewlett-Packard Mylar machine and Imaginera software from Amtech, Bensalem, Pa.
"Amtech helped us get a handle on what our costs were," Saunders says. "We pulled a report to find out who our biggest customers were on a revenue basis and it really surprised us. That's important for the sales team to know so that they can be budgeting their time appropriately."
All on One Machine
The turnaround of Fox Packaging hinges on a proprietary direct print process called FoxPrint. Originally built for screen printing materials other than board, Hartman adapted it for corrugated.
With FoxPrint, the company can provide small quantities of highly specialized boxes. It's ideally suited for companies that need regionalized packages for different languages or markets, custom boxes for test market pieces or the liquidation of discontinued product, or those that want graphically appealing displays at stock display prices.
The press uses specially-formulated inks and is capable of producing near litho-like print quality. It runs about 1,500 sheets per hour in one color per pass and uses no printing plates. It can print on a variety of substrates, including chipboard, SBS and F-, E-, B-, or C-flute. The image area is 43 by 65 inches.
The ease of operation - one person can operate it - and flexibility are two qualities that attracted Hartman to this type of press, which also was used at the family business in Pennsylvania.
"If you put a multi-color job on press and the traps and bleeds aren't right, you can burn another set of film and in 30 minutes, be back on press," he says. "You don't have to throw away plates and take a week and a half to get new plates."
Saunders says FoxPrint levels the playing field for smaller customers who can't afford high-end graphics packaging. "Customers can e-mail us a graphic image and we can send them displays later that afternoon. It's a stock base, but we put their graphics on it in FoxPrint and it looks fantastic."
Fox has a fully-equipped design department run by one graphic and one structural designer. The company has captured the attention of many a prospective customer by providing completely unsolicited samples of their products packaged in a FoxPrint box.
"We'll pull the artwork off the Internet, make a sample and show up at the appointment. It really wows them," Saunders says.
Oftentimes, Fox Packaging can offer a more graphically-appealing package than what a customer is currently using at a better price because there are no plates involved.
Nicole Saunders (right) purchased Fox Packaging almost two years ago. Her parents, Jim and Jan Hartman, are industry veterans who are assisting her with the turnaround.
Another strength is Fox's rapid turnaround. Last month, the company received a phone call from a prospective client who was in a bind because her box supplier missed a delivery date. She called at 11 a.m. to say she needed boxes, and the printing plates and cutting dies were at the box plant in Colorado.
"We picked up a sample at 11:30 and by 4:15, we made a delivery of 500 printed (one-color) and diecut boxes," Hartman says. "There isn't anyone in this market that has the full range capability of being able to do the graphics, the structure and be on press in 30 minutes. We can do it because we handle everything in-house."
Fox Packaging picked up 100 percent of the customer's business as a result.
"This is a real competitive advantage for us because it allows us to have control over as many things as possible," Saunders says. "We only have to go out for board and ink, so it drives our costs down as well as speeds up our turnaround time."
Saunders is the first to admit that her company is not out of the woods yet. It did not make a profit last year. However, she says her strong drive to succeed, her passion for the industry and sheer "sweat equity" are what will see her through.
"My dad has a saying that when it's Friday, there are only two more work days in a week. It's necessary that we work long and hard right now," she says.
Saunders is up front about the challenges she faces, including her age and the fact that she's a woman in a male-dominated industry.
"I don't know everything about the corrugated industry, but I have a passion to learn and I've been faced with an opportunity to educate myself," she says. "This is my parents' legacy to me, the education I am getting through running this operation.
"Forming yourself in such a touch environment really hardens your skin, so I think we're going to be very competitive and formidable shortly," She adds.