Northwest Packaging

March 1, 2000 Daniel Vance

Photos by Kris Kathmann

Artie Ayers hunted geese and duck in the swamps of Maryland’s Eastern Shore with Curty Gowdy, was a “wudderman” who owned seven crab and oyster boats on the Chesapeake Bay, ran fishing expeditions out of Ocean City, had his own national TV show called Sportsman’s Showcase, but none of it prepared him for Minnesota’s harsh winters – only the people of Minnesota did, who warmed his heart so much he left a Maryland he loved for them.

Today he lives in Rapidan Township, six miles south of Mankato, on a farmette light years from an Eastern Shore culture that had been becoming more and more dangerous for his wife and four children. He woke up one morning, saw a newspaper photo of dogs sniffing high school lockers for drugs, glanced over at his children and realized it was time. Racial problems also seemed ready to boil over on the DelMarVa peninsula, where Delaware, and Eastern Shore Maryland and Virginia are a thin finger of land smack dab in Dixie, isolated, connected to the outside world by just two long bridges and a highway to Philadelphia.

Artie had visited Minnesota while performing marketing work for ex-Viking Bud Grant and figured it would be a much safer place for his children, especially if he, now 61, ever died and his wife had to raise their children alone. The more he learned of Minnesota, the more he realized he had, in his words, “found another place besides the Eastern Shore where most of the people still had integrity.”

After moving to Minnesota in 1994, Artie learned of St. Paul-based Northwest Packaging and its president, Art Durand. From what he had heard of him, Durand felt Artie could be the person to take his Mankato distribution center to the next level as a full-blown “sheet” plant that buys raw corrugated from a paper mill and adds value to it. So he hired him.

Artie Ayers had walked away from seven successful Maryland Eastern Shore businesses for the sake of his family, and in order to do it had to revive a box industry career he had abandoned in 1975.

“I had my first taste of the cardboard box industry in 1969 with Container Corporation of America (CCA),” said Artie, now general manager for Northwest Packaging in Mankato, a Winston twitching between his fingers. “It was an integrated paper company which takes trees and manufactures raw corrugated from them. I was with CCA during the 1970 ‘paper shortage.’ This shortage was man-made, of course, created by the integrateds in order to eliminate surplus and drive up prices. With CCA, I sold to sheet plants before I went national account.”

Integrated companies, such as Inland Container, who Artie began selling for in 1974, preferred “running” national account beer trays, for example, and gearing all its machinery for that specific, high-volume task. “If you asked them to run a standard 12x12x12 box, they wouldn’t do it because it wasn’t what they were set up to do,” explained Artie. “They weren’t selling value-added product, like a sheet plant would, but were simply trying to find an outlet for a commodity.”

After five years with CCA and one with Inland Container, Artie tired of the corporate “bull” and went into business for himself in 1975, eventually founding seven exciting ventures: from an oyster and crab harvesting fleet, and a cable TV show, to fishing expeditions out of Ocean City, Maryland. “I knew there had to be a better life than shuffling papers and going to meetings wearing a three-piece,” he said.

After leaving Maryland and being hired in 1995 by Durand, Artie seemed to pick up right where he’d left off twenty years earlier, with some box industry battles even resembling those of the ’70s. “Plastic made a real attack on corrugated recently, through the Wal-Mart stores,” he said, pointing to an article from a January, 2000, trade magazine. “By the end of 2000, Wal-Mart will receive all its produce in returnable plastic containers. It’s much like my claim to fame in the corrugated industry with fruit and produce. In the early ’70s, I took many wood customers and put them into paper. Now plastic is trying to muscle out paper.” According to Artie, changing paper to plastic won’t be as easy as when he helped change customers from wood to paper. Basically, he said, paper costs have remained the same since 1985.

His Mankato plant performs services other plants, especially integrateds, won’t touch. Unlike huge integrateds that crank out a commodity, “we are a value-added, full-service company. A customer can come to us with six-color printing or with full-color laminating. We have special die cuts, without nails, glue or stitches, for retail floor displays,” he said, pointing to a floor display set up in his office. “And if a stocking customer calls us today, we can fill that need by tomorrow morning. In essence, we have just-in-time delivery.”

Two other services not offered by an integrated: Northwest Packaging has a small truck for in-between order deliveries; and a CAD design lab, which is run by two MSU graduates introduced to Northwest Packaging through an internship program.

Along with moving his wife (a Norwegian farmer’s daughter), children and his mother from the Eastern Shore, he also brought a love for crabs, oysters, lacrosse, and a Maryland favorite: Old Bay Crab Seasoning. He coaches lacrosse at MSU and Mankato West – and swears he will put MSU lacrosse on par one day with out East powerhouses Maryland, Johns Hopkins, North Carolina, Syracuse and Virginia – buys Maryland oysters from Chip Steak in Mankato, has crabs flown in, and buys Old Bay off the shelf at Cub Foods.

Northwest Packaging has nine sales people: eight in St. Paul; and Artie in Mankato. The Lone Sales Ranger believed his success in driving the Mankato plant to well over $2 million in sales – and fifteen employees – could be attributed to an “old Eastern Shore ingenuity that won’t take no for an answer. I become a piranha when it comes to service and new customers. We’re not the cheapest or most expensive, but I will match anyone for quality and service. Just ask Johnson Worldwide Associates: we were their 1999 Supplier of the Year.”

Rather than referring to customers as “customers” or “clients,” Artie called them “neighbors.”

Northwest Packaging, The Company

Art Durand, 70, president of Northwest Packaging, after sitting across the desk from Artie Ayers and listening to him wax positive for an hour, took an approving draw off his own Winston before leaning into his story. “We started Northwest Packaging in 1987 with nothing,” he said, proudly, tapping ashes into a tray, “and today we’re running about 15 million square feet of paperboard per month.”

His connection with Mankato began in the ’80s when he helped open a plant there for Twin Town Box. After he left that company in 1987 to found his own, the Twin Town Box plant closed in 1991, never reaching what Durand felt was its true potential. In 1992, buoyed by an optimism, he opened a Northwest Packaging distribution center in the Ramy building on Mankato’s North Riverfront and later built a “sheet” plant on nearby Industrial Drive.

The Twin Town Box plant petered out in Mankato because it was at the low end of the food chain of an “integrated” paper company – a “tree to box” company – with its sales and distribution functions dictated by the whim of an overbearing parent, a paper mill. Integrators view cardboard as a commodity, while “sheet” companies, such as Northwest Packaging, purchase the raw cardboard sheet from a supplier – theirs being Willamette Industries – and convert it to a value-added box.

Durand entered the “box business” in 1951, nearly fifty years ago with Waldorf Paper, and transitioned to Twin Town Box in 1960, where he labored the next twenty-eight years. Near the end of his stay with Twin Town Box, its owner became sick and its then-partner, a large paper company Durand competes with today, exercised an option and bought out the company. Two years later, in 1987, then 57 and vice president of sales, Durand figured he could build a better box than his integrator employer.

Eyeing a market niche, Durand, current partner Tom Klinger, and another who has since sold out, began Northwest Packaging as a sheet plant in St. Paul – and also began a very positive relationship with a bank that offered a substantial credit line.

Northwest Packaging met two needs. “I saw a dire demand for a good sheet plant,” he said. “No question about it: a sheet plant can do more for a customer’s needs than any integrator because it has less red tape, no bureaucracy, and it can offer a value-added product rather than a commodity, and have quicker response time.”

Today, between its St. Paul and Mankato plants, Northwest Packaging employs seventy, has sales climbing past $15 million – up over 34 percent versus 1998 – and rolls out some fifteen million feet of finished boxes monthly. The Mankato plant contributes twenty percent of sales, and St. Paul the rest, along with being the Metro area’s largest sheet plant. Mankato runs one shift and St. Paul one and a half, but Durand added that “we could add a second shift immediately.” If one plant becomes clogged with orders or a customer asks for a process not available at one location, the two plants may send work to each other. They have nearly 900 customers throughout the Upper Midwest and in southern Minnesota service the likes of JWA, National Poly, PerfecSeal, Coloplast, Carlson Craft, Corporate Graphics and others.

Durand paused for his next answer while blowing smoke through pursed lips. “We can do anything,” he said confidently. “We’ll do whatever it takes. We recently added $3 million in equipment. And we out hustle the big integrator.”

At 70, any retirement plans? “I will probably die in my chair at the office,” he said. “I have no desire to retire. To me, this business is as fulfilling and exciting as the day I started in it fifty years ago. My only regret is that I didn’t begin a sheet plant at 25.”

Faux Paper Shortages

“In our industry, about every five years, it seems, the paper mills create a paper shortage,” said Art Durand, president of Northwest Packaging, the man who had hired Artie Ayers. “Supply outstrips demand tremendously, so the mills cut back on their productivity.” To help them through these “shortages” in order to maintain customer service levels and delivery times, Northwest Packaging signs a long-term contract with its integrated supplier for the raw product. Therefore, the supplier must deliver the product, though lead time and price may be affected significantly.

The 1994 “shortage” was precipitated when the major paper mills shut down to clear out one million tons of excess supply. “They had to do something,” Durand explained, “so the integrators got together and curtailed mill production in order to bring supply back to a happy medium. By doing this they drove prices back up.”