Are Super-corrugators The Wave Of The Future?

Implications: Box plants were formerly strategically located near customers which required custom graphics, new/novel shapes and sizes and just-in-time service.  These smaller plants were nimble and placed great emphasis on customer service.  Now, however, economies of scale and new technology have caused Smurfit-Stone to get a jump on the competition and head in a new direction.  Two new super-corrugator plants are being created....this one in Cerritos, CA and the other in a suburb of Chicago.  These plants are designed to supply huge, mass produced volumes for the likes of Whirlpool, GE, P&G, KC etc.  One of these new plants will replace 3 or 4 existing plants.  Small and mid-size customers may have to adjust to a new kind of supplier who may provide lower prices but at the expense of all the service oriented benefits they had come to take for granted in the past.  

Analysis: A decade ago smurfit-Stone had something in the neighborhood of 160  local box plants scattered across the country and located close to  major customers.  In the past 5 years over 40 have already been closed and now S-S has announced that another 25 are schedule to be closed.
Now only is the container industry consolidating (i.e. IP acquiring Weyerhaeuser's linerboard mill and 83 box plants for $6.2 billion) but a second form of consolidation is occuring as super-corrugator plants replace the smaller plants. These huge, high volume plants are focusing on the beverage, consumer goods, medical, food and produce, garment and distribution businesses.  They are high-tech operations with sophisticated equipment designed for standardized repeatable processes.  Each of these new plants will cost approximately $42 million and employ 120-125 people.  Producing 350 boxes/minute will undoubedly make these plants more efficient than any box plants in the world.  High volumes are needed, standarized designs are a necessity and customers will have to learn to become more accomodating.   Lower prices and greater uniformity in quality will be offered in return for the resulting drop in customized designs, special graphics and 24 hour service.  If Smurfit-Stone choses to go in this direction, can all the other box producers afford to stand still?  Obviously not!  The industry may be on the threshhold of a major shift in the way business is conducted and what customers can expect from their suppliers in the future.