CORRUGATED cardboard box maker Corrpak Jamaica is investing $50 million to construct an 11,000 square-foot warehouse that will free up critical factory floor space at its Kingston plant.
"We have grown fairly exponentially and we are now challenged for space," said Corrpak's executive chairman, Howard Mitchell.
The company had long held out hope of acquiring an acre of land toward the west of its plant from the Factories Corporation of Jamaica (FCJ), but that deal failed to materialise when the FCJ decided it did not want to sell. Against this background, Corrpak will expand within its own compound, through a recently acquired 3,000 square-foot building — the second oldest J Wray & Nephew bar — that it had been renting from the rum manufacturing giant.
"So, we had no choice but to be creative in trying to make more space. As a consequence, we are building up on a building that existed on our compound, and that will give us another 11,000 square-feet," Mitchell told the Business Observer during a tour of the plant last week.
"This will at least allow us to have finished goods storage and allow us to better dispose of our raw materials," he said.
In addition to storage for finished goods, which risks being damaged on the factory floor, the expansion will address key safety and occupational health issues at the plant, Mitchell said.
"Our employees don't work in a clear and open environment," he said. "Also, when you have the congested area in the factory, it inteferes with the free flow of air."
While the additional space for Corrpak will also allow it to do some diversication into paper bags, Mitchell bemoans the fact that the company was unable to capture the FCJ land, which it planned to use for major diversification into other packaging products.
"It has delayed and derailed our diversification because we were waiting and hoping to get that space for over five years," said Mitchell, adding: "There are various packaging products we want to get into but we are hampered by the lack of space."
Paper sourced from overseas is converted to cardboard through Corrpak's corrugator machine. The cardboard is then printed and converted into packaging cartons.
Despite operating in a difficult manufacturing environment, Corrpak and another local pioneer, AMG Packaging, has fought valiantly since the mid-2000s in a domestic market for carton boxes that was once dominated by imports — accounting for about 80 per cent of the market up to 2007. The higher cost of shipping and handling packaging material opened the door for the local players to compete on price.
With up to 500 customers (200 constant), Corrpak today claims 29 per cent of the market, with AMG Packaging estimated to have a 21 per cent stake. Half of the market are imports, with suppliers from Trinidad & Tobago accounting for 15 per cent of the products from overseas.
Energy cost and instability in the foreign exchange market are major challenges currently being faced in the industry, Mitchell noted.
Corrpak's energy costs now runs at more than $1.5 million a month in a country notorious for its high electricity rates, at more than 40 US cents per kilowatt hour, compared to competing nations Trinidad and Dominican Republic at three US cents and nine US cents respectively.
"Right away that has an impact on our finished goods," said Mitchell, adding that the "murderous electricity costs" are hampering the company's export thrusts.
Corrpak currently exports to Dominica and Guyana but has eyes on entering Belize and Suriname to take advantage of those countries' fishing industries with its waterproof packages.
"But we have to get this (energy costs) sorted out first," Mitchell said. "It impacts your export plans because it inteferes with your price competitiveness."
The precipitous depreciation of the value of the Jamaican dollar has also had a negative impact on the company.
"The paper industry globally is subject to volatility in prices anyway. That component, with the fact that the Jamaican dollar has devalued by about 20 per cent over the last eight months means that our margins have shrunk, because we can't turn around and increase prices — this is not a price flexible market," the Corrpak executive chairman said.
But despite the cost constraints, the company has refused to fully mechanise and invest in an automated factory because it may mean cutting staff by half. Corrpak employs 100 persons, mostly from the communities surrounding the factory, doing anything from operating machines to baling packages.
"We have declined to do that because the human capital aspect of it is important. We maintain good relationships and we believe the investment we make in human capital is even better than the investment we make in machinery and equipment," Mitchell said.
Corrpak is a recent recipient of ISO certification, the international standard-bearer for manufacturing processes.
Mitchell said that his love for manufacturing and Jamaica — an industry and nation that are together widely believed to be incompatible — keeps him motivated in the business, so much so that he is expanding in a difficult domestic economic climate.
"I was a lawyer for 25 years, but I really like manufacturing because it allows me to produce something tangible, something of value," Mitchell said.
"In addition to that, when I see these people come in off the road with no jobs, and we turn them into machine operators and their confidence level builds, and they are proud of what they do, that gives me more satisfaction than making money," he said
After six years in the carton manufacturing business, with annual revenues in excess of $400 million, the Marcus Garvey Drive company has encountered a challenge to store its finished goods, which now occupies a significant portion of space on the factory floor.
Mitchell shows off a few of the company’s offerings.
Against the background of exponential growth, Corrpak has encountered a challenge to store its finished goods, which now occupies a significant portion of space on the factory floor.
Corrpak has a staff complement of 100 persons, mostly from the communities surrounding the factory. (PHOTOS: MICHAEL GORDON)
Corrpak line operator Kenrick Badthkan (left) with executive chairman Howard Mitchell at the controls of the corrugator machine, which converts paper into cardboard.
      Mitchell shows off a few of the company’s offerings. #slideshowtoggler, #slideshowtoggler a, #slideshowtoggler img {filter:none !important;zoom:normal !important}  1/4  |
The company had long held out hope of acquiring an acre of land toward the west of its plant from the Factories Corporation of Jamaica (FCJ), but that deal failed to materialise when the FCJ decided it did not want to sell. Against this background, Corrpak will expand within its own compound, through a recently acquired 3,000 square-foot building — the second oldest J Wray & Nephew bar — that it had been renting from the rum manufacturing giant.
"So, we had no choice but to be creative in trying to make more space. As a consequence, we are building up on a building that existed on our compound, and that will give us another 11,000 square-feet," Mitchell told the Business Observer during a tour of the plant last week.
"This will at least allow us to have finished goods storage and allow us to better dispose of our raw materials," he said.
In addition to storage for finished goods, which risks being damaged on the factory floor, the expansion will address key safety and occupational health issues at the plant, Mitchell said.
"Our employees don't work in a clear and open environment," he said. "Also, when you have the congested area in the factory, it inteferes with the free flow of air."
While the additional space for Corrpak will also allow it to do some diversication into paper bags, Mitchell bemoans the fact that the company was unable to capture the FCJ land, which it planned to use for major diversification into other packaging products.
"It has delayed and derailed our diversification because we were waiting and hoping to get that space for over five years," said Mitchell, adding: "There are various packaging products we want to get into but we are hampered by the lack of space."
Paper sourced from overseas is converted to cardboard through Corrpak's corrugator machine. The cardboard is then printed and converted into packaging cartons.
Despite operating in a difficult manufacturing environment, Corrpak and another local pioneer, AMG Packaging, has fought valiantly since the mid-2000s in a domestic market for carton boxes that was once dominated by imports — accounting for about 80 per cent of the market up to 2007. The higher cost of shipping and handling packaging material opened the door for the local players to compete on price.
With up to 500 customers (200 constant), Corrpak today claims 29 per cent of the market, with AMG Packaging estimated to have a 21 per cent stake. Half of the market are imports, with suppliers from Trinidad & Tobago accounting for 15 per cent of the products from overseas.
Energy cost and instability in the foreign exchange market are major challenges currently being faced in the industry, Mitchell noted.
Corrpak's energy costs now runs at more than $1.5 million a month in a country notorious for its high electricity rates, at more than 40 US cents per kilowatt hour, compared to competing nations Trinidad and Dominican Republic at three US cents and nine US cents respectively.
"Right away that has an impact on our finished goods," said Mitchell, adding that the "murderous electricity costs" are hampering the company's export thrusts.
Corrpak currently exports to Dominica and Guyana but has eyes on entering Belize and Suriname to take advantage of those countries' fishing industries with its waterproof packages.
"But we have to get this (energy costs) sorted out first," Mitchell said. "It impacts your export plans because it inteferes with your price competitiveness."
The precipitous depreciation of the value of the Jamaican dollar has also had a negative impact on the company.
"The paper industry globally is subject to volatility in prices anyway. That component, with the fact that the Jamaican dollar has devalued by about 20 per cent over the last eight months means that our margins have shrunk, because we can't turn around and increase prices — this is not a price flexible market," the Corrpak executive chairman said.
But despite the cost constraints, the company has refused to fully mechanise and invest in an automated factory because it may mean cutting staff by half. Corrpak employs 100 persons, mostly from the communities surrounding the factory, doing anything from operating machines to baling packages.
"We have declined to do that because the human capital aspect of it is important. We maintain good relationships and we believe the investment we make in human capital is even better than the investment we make in machinery and equipment," Mitchell said.
Corrpak is a recent recipient of ISO certification, the international standard-bearer for manufacturing processes.
Mitchell said that his love for manufacturing and Jamaica — an industry and nation that are together widely believed to be incompatible — keeps him motivated in the business, so much so that he is expanding in a difficult domestic economic climate.
"I was a lawyer for 25 years, but I really like manufacturing because it allows me to produce something tangible, something of value," Mitchell said.
"In addition to that, when I see these people come in off the road with no jobs, and we turn them into machine operators and their confidence level builds, and they are proud of what they do, that gives me more satisfaction than making money," he said