The Tail That Wags The Dog

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The Tail That Wags The Dog

April 30, 2001 - 21:00


WHEN COMPARING DIFFERENCES between an average corrugated board plant and an exceptional corrugated board plant, think of the tail wagging the dog. In this case, the tail is great equipment. Obviously, the faster orders are correctly processed, the greater the likelihood of increased business.

The corrugator, manufactured by Taiwan-based Long River Corp., boasts a production speed of 396 feet per minute. Plant crews routinely run up to 138,000 square feet in one shift.
The corrugator, manufactured by Taiwan-based Long River Corp., boasts a production speed of 396 feet per minute. Plant crews routinely run up to 138,000 square feet in one shift.

Even new plants in a "monopolizing" situation such as Sweetex, the only primary manufacturer of corrugated board and boxes in Almaty, Kazakhstan, need the best tools. And to think the company is organized, managed and operated by officials with no clue how corrugated equipment worked just two years ago.

How It All Began

Sweetex is jointly owned by a group of 29-year-olds, Eugene Galikhaidarov, Aidos Bazarbaev, and Litvinov Sergey, who have been in business together since 1992. Originally, Sweetex was Kazakhstan's exclusive distributor of European chocolates, biscuits, and imported confectionery from Europe.

By 1997, Sweetex reported annual sales of $10 million, but due to strict import regulations, the diminished value of the local currency, and many companies investing in local manufacturing, the business became less and less profitable.

So the company changed directions after Galikhaidarov discovered through private talks with many businessmen that local manufacturers were importing corrugated materials from Russia or Europe to encase their products. In addition, the only corrugated manufacturer is in northern Kazakhstan, located 683 miles from Almaty, the country's industrial capital, and operates with a nine-year-old corrugator.

The two-color 100-inch printer-slotter that Sweetex purchased from Wisdom Machinery has a production rate of 180 sheets per hour.
The two-color 100-inch printer-slotter that Sweetex purchased from Wisdom Machinery has a production rate of 180 sheets per hour.

After calculating various transport charges, Galikhaidarov believed corrugated packaging should be produced locally so producers could avoid paying additional prices for board in transportation costs.

Equipment Makes The Difference

In 1999, the owners began searching for a corrugated specialist to provide the necessary equipment. By last March, the board plant was up and running.

To celebrate the grand opening anniversary this year, the company ordered a two-color 100-inch flexo printer-slotter with a rotary diecutter and autostacker from Wisdom Machinery. Galikhaidarov says the firm's decision to buy the machine, which has a production rate of 180 sheets per hour, was because there is no rotary diecutter in Kazakhstan.

"When it came to diecutting boxes, you had no choice. You had to import them," he says. "Thus, we occupied the very first steps in this unique and empty niche." And Galikhaidarov was grateful to receive technical and operating advice from Chen Kuan, owner of Wisdom Machinery, as he helped install the printer-slotter in only one week.

"They gave us a lot of assistance," he says. "As you can imagine, we have very limited knowledge on how to operate a converting plant. We're far from specialists in this business."

To compliment that machine, Sweetex purchased a singlewall corrugator this year. While the machine, running B- and C-flute, was manufactured from April to July by Long River Corp., Taiwan, Sweetex built a new 3,300-square-foot addition and ordered more equipment.

Sweetex is owned by a group of 29-year-old businessmen, (from left) Aidos Bazarbaev, Eugene Galikhaidarov and Litvinov Sergey.
Sweetex is owned by a group of 29-year-old businessmen, (from left) Aidos Bazarbaev, Eugene Galikhaidarov and Litvinov Sergey.

The new high-speed folder gluer, dubbed the "Comet" produces up to 15,000 boxes per hour. Also added was a partition slotter, two manual cutting and creasing machines, and two high-speed wiring machines.

The crown jewel finally arrived at the plant last September. A number of Taiwanese engineers, including Chen Yi Fa, Long River Corp. owner and general manager, and 10 Sweetex technicians helped install the machine in only two weeks.

After studying with a Taiwanese technician, crews now run up to 45,000 square feet in one shift, despite a handful of order changes. Though the corrugator is running smoothly, staff members are still trying to learn how to maximize the potential of the 64-inch wide machine, which boasts a production speed of 394 feet per minute, and single knife cut-off computerized slitter-scorer.

"We realize that to learn to produce good board in each and every batch, we need much more than two years," Galikhaidarov says. "It's an enormously difficult task. We've managed to reduce waste 5 to 7 percent, but there is still room for improvement."

Though it is new, the plant's production records are nothing to laugh at, according to the owners. In the first five months Sweetex was operational, it produced 5.9 million square feet of corrugated cases. The firm also signed long-term contracts with three Russian paper mills to guarantee kraft paper for the three plys of board it provides.

Economic Impacts

The Kazakhstan economy is booming at the moment, due to high oil prices that are the country's prime source of income. With more companies reverting to in-house manufacturing, Galikhaidarov says the order book at the firm, which operates three shifts a day and employs 89 people, is growing.

Sweetex concentrates on serving the local food producers of meat, dairy products, beer, wine and vodka. But it does ship corrugated packaging up to 2,485 miles away to a few pharmaceutical manufacturers and international companies like Coca-Cola and PepsiCo. Filling orders up to 140,000 boxes per month, Galikhaidarov hopes to soon serve the local cigarette manufacturers that distribute globally.

"Our market position is unique to us," he says. "Our region is the biggest market in Kazakhstan and we consider ourselves lucky to be situated here. Although it is a far cry from European or American companies, we still produce decent two-color corrugated cases with tricky registrations and tints."

Future Growth

Although Sweetex has a record of 65,000 boxes in one shift, the firm is considering adding more equipment, including a flatbed diecutter and a flexo folder-gluer in-line, Galikhaidarov says. "We need many auxiliary pieces in order to reduce manual labor and modernize our plant."

As a young and rapidly developing company, Sweetex faces challenges such as safety concerns, quality, and investment shortages daily. But none may be as pressing as the other companies beginning to notice the allure of the fast-growing corrugated environment in Kazakhstan.

Galikhaidarov says Russian companies are eyeing the market, and in fact Lawson Marden Packaging Inc. is in the process of setting up a solid board conversion plant to serve those same tobacco firms like Phillip Morris.

"We realize our monopoly position will not last long," he says. "We are working with machine manufacturers who are constantly helping us in all regards of our business, and we are very grateful to our Taiwanese partners."

But the company presses on, focused on reaching its next goal of producing 3.3 million square feet of corrugated board in one month. Galikhaidarov says the firm's key technicians, engineers, and managers work up to 18 hours a day in attempts to become better producers. "Everybody is so inspired and I believe we can reach our goal because we are all so young and strong," he says.