The 1930s & 1940s
Caraustar’s first manufacturing facility was established in 1938 in Charlotte, NC by Ross Puette, who led a group of private investors. This facility, incorporated as Carolina Paper Board Corporate, was North Carolina’s first recycled paperboard machine and was capable of producing 25 tons per day of boxboard for the folding carton market. The initial investment was $225,000 with a total of 45 employees at startup.
By the end of the decade, the Carolina Paper Board mill had increased its production rate by 40 percent to 35 tons per day and had developed a highly skilled work force of 60 employees. By 1940, sales had increased to $374,000, operating income improved to $41,000, total assets climbed to $299,000 and production of recycled paperboard reached 8,000 tons.
The decade of the 1940s witnessed the startup of Caraustar’s first two recycled paper processing plants by affiliated companies in Charlotte, NC (1941), and Greenville, SC (1946), to provide a secure source of low-cost, recycled fiber to the Charlotte mill.
The growth in demand for recycled paper in the Southeast was such that Caraustar decided in 1947 to build its second recycled paperboard mill (complete with a converting department and an on-site recycled fiber processing plant) in Austell, GA. The Austell location offered close access to customers and low-cost supply of recycled fiber in the Atlanta market. The Austell mill started up in 1949 at the production rate of 45 tons per day and served both the folding carton market and other specialty markets. By 1950, production at the Austell mill had increased by over 50 percent to 70 tons per day; at the same time, production at the Carolina mill had also increased by over 50 percent since 1940 to 55 tons per day. Future improvements at these two mills would see production rates in 1995 at the Austell mill climb to 190 tons per day and 150 tons per day at the Carolina mill.
The 1950s & 1960s
By 1950, net sales for the combined operations had risen to $2.3 million on volume of 30,000 tons. Operating profits increase by tenfold to $400,000, total assets reached $1.8 million and employees totaled 140.
Throughout the next decade, Caraustar entered into the tube and core market with the acquisition of a minority interest in Star Paper Tube, a single tube and core converting plant in Rock Hill, SC. By 1958, Caraustar had controlling interest in Star and had opened two new tube and core converting plants in Danville, VA, and Austell, GA, to serve the growing textile market in those regions.
By 1960, Caraustar had become a diversified recycled paperboard manufacturer for the folding carton, other specialty, and tube and core markets. It had become significantly integrated into converted products in the other specialty, and tube and core markets. Total facilities grew to two paper machines, three converting plants and three recycled processing plants.
Combined company sales were $6.4 million in 1960 and volume had improved by two-thirds to 50,000 tons through continued reinvestment in the company’s paper mill facilities. Operating profits continued their steady advance by doubling to $800,000, total assets reached $4.2 million and total employment rose to 285.
Business conditions in the 1960s provided an environment for Caraustar that was much more conducive to growth than the conservative decade of the 1950s.
At the company’s mill division, production increased by over 150 percent to 128,000 tons in 1970 from 50,000 tons in 1960. In 1964, the company began production at a third paper mill location in Greenville, South Carolina, designed to serve three primary recycled paperboard markets. By 1967, the rapid growth in the tube and core markets and the addition of a fourth tube and core converting plant led to the need for additional paperboard manufacturing capacity. Caraustar’s fourth paper machine, located at the Austell, GA, mill site, began production in mid-1969 at an initial production rate of 200 tons per day.
The year 1966 saw a profound shift in Caraustar’s participation and strategic direction in the folding carton marketing with the acquisition of its first folding carton plant, Atlanta Coast Carton Company, located in Charlotte, NC.
The 1970s & 1980s
By 1970, combined sales reached $24.5 million, and operating profits grew to $3.1 million, both a four-fold increase over their 1960 levels. In 1970, total assets stood at $13.1 million and employment at 870. Integration levels between the mills and converting plants approached 30 percent.
The vigorous growth of the 1960s continued into the 1970s through both acquisitions and Greenfield startups. During the decade of the 1970s, the company acquired eight and built five tube and core converting plants, acquired an additional folding carton plant and built its fifth paperboard mill.
The addition of Caraustar’s fifth paper machine, located at the existing Austell, GA, mill site, launched the company into the fourth major market for recycled paperboard: the gypsum facing paper market. The startup capacity for the mill was the equivalent of 100 tons per day of gypsum facing paper. With three paper mills now located at the Austell site, the company further secured its supply of low-cost recycled fiber in the Atlanta market through the acquisition of two recycled fiber processing plants and the construction of a third plant in close proximity.
Meanwhile, the rapid growth of Caraustar’s Star Paper Tube division lessened the company’s dependence on the textile industry and broadly diversified the product mix of tubes and cores into the paper, construction, film and metal industries. With the acquisition of its second folding carton plant, Caraustar maintained a reasonable balance of business among the four primary recycled paperboard markets: tubes and cores, gypsum facing paper, folding carton boxboard, and other specialty boxboard. Integration between the paperboard mills and converting plants exceeded 40 percent by 1980.
The 1980s & 1990s
The 1980s marked the fifth consecutive decade of above average growth at Caraustar.
By 1980, sales had increased by 284 percent from 1970 to $93.8 million and operating profits had climbed 313 percent from 1970 to $12.8 million. Total assets grew to $55.2 million in 1980 and employment stood at 1,649. Tons produced by the company’s paper mills more than doubled from 128,000 tons in 1970 to 264,000 tons in 1980.
Until 1980, the company had operated as six affiliated corporations, with common management and ownership. In that year, the company consolidated its operations under the holding company, Caraustar Industries, and relocated its headquarters to its 150-acre Austell site. The newly incorporated company continued the internal and external expansion set during the previous decade. Between 1981 and 1986, the company built three tube and core converting plants and acquired two folding carton plants, a plastic extrusion and injection molding plant, three tube and core converting plants, and four recycled paperboard mills. In the late 1980s, Caraustar acquired only one recycled paperboard mill, in Camden, New Jersey. The company also backed into another acquisition, that of Standard Gypsum Corp., a maker of gypsum wallboard, after that company was unable to pay its paperboard bill. In 1996, however, Caraustar sold 50 percent of its interest in Standard Gypsum and relinquished the directorship of that business.
Despite the slowdown in the company's growth, Caraustar managed to post a 187 percent increase in revenues during the 1980s, raising net sales to $141 million by 1990. Operating profits grew still more strongly, gaining 272 percent to reach $47.6 million. The company's 2,567 employees, meanwhile, had increased mill production to 565,000 tons.
At the start of the 1990s, Caraustar's holdings had swelled to 44 facilities, including 11 paperboard mills located in Texas, North and South Carolina, Illinois, Ohio, New Jersey, and Tennessee. The company had grown to become one of the top ten recycling companies in the United States. The company's Star Paper Tube subsidiary had grown to become the second largest tube and core producer in the country. As the recession of the early 1990s took hold, Caraustar formulated a newly aggressive strategic plan, which called for the company to step up its vertical integration and diversification in its key market areas. Part of that plan included taking the company public, to alleviate the debt load incurred during the 1980s. The company made an initial public offering (IPO) of 11.1 million common shares in December 1992, raising approximately $90 million.
Part of the funds raised in the company's IPO was earmarked for stepping up the company's acquisition program. Between 1991 and early 1997, Caraustar added some 30 facilities to its recycling empire. During 1992 and 1993, the company acquired two recycled paperboard mills, Buffalo Paperboard and Manchester Board and Paper, which was renamed Richmond Paperboard Corp. Caraustar bought two tube and core converting plants in Salt Lake City and Phoenix and acquired Federal Packaging Corp., a maker of composite containers using paperboard and injection-molded plastics. The following year, the company added to its folding cartons capacity with the acquisition of Mid-Packaging Group Inc. and that company's two Tennessee-based folding carton plants. While investing in upgrades and maintenance of its existing facilities, Caraustar also built two new tube and core converting plants, in Lancaster, Pennsylvania and in Mexico City, as well as a new production facility for the company's Star-Guard product in Lancaster, South Carolina.
In 1995, the company added GAR Holdings, with two specialty products plants and a folding carton plant, and Summer Paper Tube of Kernersville, North Carolina, with two core manufacturing plants. Summer also manufactured specialty adhesives used in the tube and core and paperboard lamination production processes, helping the company further solidify its diverse operations and integration within the paperboard industry. Toward that end, Caraustar also entered a joint venture with Tenneco Packaging Co., which involved a $114.5 million purchase of an 80 percent interest in Tenneco's clay-coated paperboard mills in Rittman, Ohio and Tama, Iowa, expanding Caraustar's capacity in that high-growth area of the paperboard industry.
By 1996, the company's revenues had almost doubled since 1992 and, at 9.6 percent, had almost reached a double digit profit margin with a net income of nearly $58 million. Its company's flexibility, vertical integration, and diversity had clearly enabled the company to outpace its competitors, many of whom struggled through industry downturns and booming paperstock costs.
By that year, the company was operating 14 paperboard mills in North Carolina, South Carolina, Georgia, New Jersey, Virginia, Illinois, Ohio, Iowa, Tennessee, New York, and Pennsylvania. Its paperboard mills recycled paperstock, reducing it to pulp, then cleaned, refinished, and processed the pulp into various grades of uncoated and clay-coated paperboard. Each of Caraustar's mills had the flexibility of producing paperboard for two or more of the company's four key markets, allowing the company to react quickly to market conditions and maintain high plant productivity rates. Approximately 33 percent of the resulting paperboard was used internally by Caraustar; the remaining 67 percent was sold to other manufacturers of paperboard and related products. External sales of paperboard typically accounted for 36 percent of Caraustar's annual sales.
The company and its subsidiaries operated some 40 converting facilities directly serving Caraustar's primary markets. The company's largest and oldest subsidiary, Star Paper Tube, Inc., operated 28 tube, core, and can converting plants, providing cores for the carpeting, textile, paper, plastic film, and other industries. In 1996 alone, Caraustar produced some 268 thousand tons of tube and core products, which, together with sales of unconverted paperboard to other tube and core manufacturers, represented 36 percent of the company's net sales. In that same year, folding carton operations at ten plants in North Carolina, Ohio, and Tennessee provided 27 percent of Caraustar's net sales. Also, its 13 gypsum wallboard facing paper plants shipped 263 thousand tons, capturing roughly 17 percent of the North American market, for 17 percent of the company's net sales. The company's sales of specialty paperboard products--for the bookbinding, printing, games, puzzleboard, furniture, and other industries--accounted for 14 percent of Caraustar's net sales. Caraustar was then operating five specialty converting plants in Georgia, North and South Carolina, and Texas. Sales of injection-molded and extruded plastics and external sales of paperstock each accounted for approximately three percent of the company's net sales.
Caraustar continued its expansion drive through the rest of the decade and into the next century, resulting in revenues that climbed from $602.7 million in 1996 to $963.4 million in 2000. In the same period, it increased its workforce from 4,048 employees to 6,255. The company's commitment to growth was reflected in the fact that between 1994 and 1999 it was expending an annual average of $33.3 million in capital outlays.
In April 1997, the company reached an agreement to acquire General Packing Service, Inc. of Clifton, New Jersey, adding that company's pharmaceutical, medical, and health, beauty, and personal care packaging products to its product line. In the same year, it purchased all the common stock of Oak Tree Packaging Corporation, whose operations consisted of three folding carton plants located in Versailles, Connecticut; Thorndike, Massachusetts; and York, Pennsylvania. Additionally in 1997, Caraustar and its subsidiary, Star Paper Tube, Inc., acquired substantially all of the assets and business of Baxter Tube Company, a manufacturer of spiral-wound tubes and a subsidiary of Cleveland, Ohio-based The Tranzonic Cos. Baxter Tube's four facilities were located in Ware Shoals, South Carolina; Perrysburg, Ohio; Minerva, Ohio; and Leyland, Lancaster, United Kingdom, where the company operated as Unity Paper Tube, Ltd.
In March of the next year, 1998, the company acquired Chesapeake Paperboard Company and its wholly-owned subsidiary, Chesapeake Fiber Packaging Corporation. Chesapeake, operating in Maryland, processed uncoated recycled paperboard in Baltimore and manufactured folding cartons and specialty corrugated products at its converting facility in Hunt Valley. In the same year, Caraustar purchased all of the outstanding common stock of Etowah Recycling, Inc., which operated recovered fiber plants, one in Canton, Georgia, and the other in Hardeeville, South Carolina. Additionally, the company bought out Tenneco Packaging's 20 percent share of CPI, making Caraustar the sole owner of CPI's operations. Late in 1998, it also acquired all of the outstanding stock of Boxall, Inc., a Birmingham, Alabama manufacturer of folding cartons. Boxall, which had revenues of $4.5 million in 1997, was slated to operate as a wholly-owned subsidiary and become part of Caraustar's newly-formed specialty packaging group.
Caraustar continued its aggressive growth in the next two years. In 1999, it acquired a handful of small companies, including Carolina Component Concepts, Inc. ( a specialty paperboard converting operation), International Paperboard Company's Sprague boxboard mill (a maker of clay-coated recycled paperboard), Halifax Paperboard Company (a producer of uncoated recycled paperboard and a specialty paperboard converter), the Folding Carton Division of Tenneco Packaging, Inc. (a folding carton manufacturer), and Carolina Converting, Inc. (a specialty paperboard converter). This last-named company, the nation's leading manufacturer of jigsaw puzzles and coin folders, reflected Caraustar's ongoing interest in diversification. In addition to outright acquisitions, in 1999 the company entered an equal share venture with Temple-Inland, Inc., with whom it formed Premier Boxboard Limited LLC, a producer of a new lightweight gypsum facing paper and other grades of containerboard.
Early in the next year, Caraustar took steps to build its brand identity by dissolving all of its subsidiaries and renaming the Caraustar groups. For example, one of its principal subsidiaries, Star Paper Tube, was redesignated as Caraustar's Industrial and Consumer Products Group. The net result was that the company organized itself into four groups: (1) the Mill Group, concerned with the manufacturing of recycled paperboard, gypsum facing paper, and laminated paperboard products; (2) the Industrial and Consumer Products Group, concerned with tubing, core, and composite containers; (3) the Custom Packaging Group, concerned with carton and custom packaging; and (4) the Recovered Fiber Group, Plastics and Adhesives, comprised of recovered paper recycling centers, plastics manufacturing, and adhesives production.
In early 2000, Caraustar purchased MilPak, Inc., a contract packager. MilPak, located in Pine Brook, New Jersey, produced blister packaging, cartoning and labeling, as well as other contract packaging for various consumer products.
The company also retrenched, however. It closed down operations at two paperboard mills, first at Baltimore in February, then, in September, at Camden, New Jersey. The first was a permanent move.
During 2000 it had become obvious that, despite sales that continued to grow at a very healthy clip, operating expenses and debt service called for greater efficiency and, perhaps, a slowing down in capital investments. The result was a kind of balancing act between continued expansion through acquisitions and further cutbacks in the company's operations. After the earlier closure of two plants and the cutbacks at another, Caraustar completed the purchase of Crane Carton Co., the Chicago manufacturer of large folding cartons. The company paid $24.8 million for Crane, which in 1999 had logged revenues of $41 million.
The balancing act continued into the next year. In January 2001, because of a lack of market demand, Caraustar shut down its Chicago, Illinois, uncoated recycled paperboard mill. In March, the company put in effect a plan to combine the operations of its Salt Lake City, Utah, carton plant with those of its Denver, Colorado, carton plant, trimming its work force in the process. Caraustar maintained a focus on its core competencies and ability to grow, and in May 2001, the Stevens Point Composite Container “greenfield” facility began operations. The company also took strategic steps to consolidate its Mill Group into one legal entity and the divisions were renamed along functional rather than geographic lines. Within the new Caraustar Mill Group, a new operating unit was formed, Paradigm Chemical and Consulting, a division of the company that would have all of the Group’s facilities purchase specialty chemicals.
During 2001 through 2002, the company took action to better utilize its facilities’ capacity by closing its Mobile Tube Plant in Mobile, Alabama and moving the business to other Caraustar locations. At the same time, Caraustar combined its Archdale Carton Plant and Randleman Carton Plant, closing the Archdale facility.
In an effort to strengthen the company’s tube and core business, in July 2002, Caraustar purchased all of Smurfit-Stone’s Industrial Packaging Group business, which consisted of 17 paper tube and core plants, 3 uncoated recycled paperboard mills and 3 partition manufacturing plants located in 16 states and Canada. The addition of the 17 tube and core facilities from Smurfit-Stone required Caraustar to consolidate duplicate operations and maintain the most effective. The initial closures included the Philadelphia and Saginaw Tube plants in late 2002.
Having grown the company to more than 100 facilities, with the bulk of the acquisition activity throughout the ‘90s and into early 2000, management was carefully monitoring the contributions of all of its locations and made it clear that it would take action if a location was not justified in remaining open or as part of its core business. It was also seeking ways to lower costs and in 2002, the company implemented a transformation plan that had four key initiatives: right-sizing its operations, reducing SG&A, consolidating its procurement and reduce the company’s debt.
The first of Caraustar’s transformation initiatives to be completed was in 2003 with the centralization of its previously autonomous accounting and finance operations at all of its locations to the company’s headquarters in Austell, Georgia. The company began to scrutinize all of its operations and began the closure of underperforming or logistically duplicate operating assets that included the Cedartown, Jacksonville, Eufaula, Columbus and Houston tube plants, Buffalo Paperboard and its Ashland Carton Plant, and announced the indefinite idling of the No. 2 coated recycled paperboard machine at its Rittman, Ohio facility.
Despite right-sizing as part of its transformation plan, management did not turn a blined eye at opportunities to advance as one of the industry’s leaders and, therefore, completed the purchase of the remaining equity of Caraustar Northwest, LLC located in Tacoma, Washington in 2003.
In 2004, with the eminent retirement of Thomas V. Brown, who had served in the industry for 43 years, of which the last 14 were at Caraustar, Michael J. Keough, a veteran in the industry who had joined the company in 2002 as its chief operating officer, began transitioning to the position of president and chief executive officer.
In an effort to match supply with demand, the company closed Cedartown Paperboard and furthered its right-sizing with the closure of its Charlotte Carton Plant, Georgetown Plastics, and the puzzle manufacturing component of its specialty converting plant in Mooresville, North Carolina. Caraustar sold its interest in Paradigm Chemical & Consulting, an entity that was no longer a core component of its business.
The new housing was robust with a 33-year high and, combined with anticipated rebuilding associated with devastating hurricane destruction in the South, all expectations were a promising expansion and exceptional growth in the company’s gypsum facing paper business. Initial expectations were achieved; gypsum facing paper tonnage rose by 13.7 percent in 2005. With the technologically advanced light-weight gypsum facing paper production capabilities at its joint venture mill, Premier Boxboard Limited (PBL), and the diverse grades products at Sweetwater, the company was positioned to meet demand. Furthermore, it infused $1.3 million capital into its Sweetwater mill to upgrade the quality and efficiency of its gypsum facing paper production. At the same time, Caraustar remained steadfast with its right-sizing and closed its Palmer carton plant, and the Mobile and Dequincy tube and core facilities.
In early 2006, Caraustar sold its 50-percent partnership in Standard Gypsum to its joint venture partner, Temple-Inland, for $150 million plus the assumption of its one-half of Standard’s $56.2 million in debt obligations. The proceeds from the transaction enabled Caraustar to significantly reduce its debt by redeeming $257.5 million plus accrued interest of its 9.875% Senior Subordinated Notes. It marked another achievement in the company’s transformation plan and reduced annual interest payments by $25.3 million, but it still left $265.9 million of debt on the company’s balance sheet.
The economy began showing signs for concern as the year progressed. Caraustar had to meet challenges by focusing on its core businesses and doing more with less. It was determined that Caraustar exit the CRB market and focus primarily on the URB markets. The result was the sale of Sprague Paperboard to Cascades, and later in the year Rittman Paperboard’s equipment and its customer list to them. Tama, the company’s remaining CRB facility, would stay with Caraustar.
Caraustar had additional tasks to complete that were part of its transformation plan as well as a result of a rapidly declining economy. The company eliminated all non-essential spending, reduced headcount and installed an ERP system to enhance operational efficiencies. At the close of 2006, additional progress to reduce SG&A continued and declined to 12.9% of sales in 2006 versus 13.4% the prior year.
Accomplishments in 2006 were complimented by the introduction of new products, including SafeFace MR™, a revolutionary mold, mildew and moisture resistant gypsum facing paper. The company launched Kolumn Form™, a superior state-of-the-art, weather resistant column form developed specifically for the increasing demand for the construction industry. Caraustar’s specialty business continued to lead the industry with the introduction of Binder Tex 45™, an exceptional recycled paperboard grade used in the manufacture of hardbound text books, law books and library binding books. Caraustar also made significant capital improvements with the addition of a Man Roland press at its Charlotte, North Carolina folding carton facility, a Drent Goebel Variable Sleeve Offset Printing (VSOP) press at its Grand Rapids, Michigan carton plant and a major upgrade to its paperboard machine at Austell Boxboard#1.
In 2007, Caraustar celebrated its 70th year in business and the company had now re-positioned itself through right-sizing facilities and exiting non-core businesses. It had made exceptional progress with its transformation and now operated a combined total of 71 mills and converting facilities (69 in the United States and two in Canada).
The industry was facing challenges, primarily overcapacity due to offshore competition, primarily associated with China’s production and demand for recycled paper (fiber), that was compounded by the rapid decline in the new housing market and the subsequent onset of a global recession.
The credit markets disappeared with the home mortgage crisis and the demise of Wall Street firms, which sent the economy into a whirlwind downward spiral in 2008. This led Caraustar, as well as other industry peers, to seek ways in which to strengthen and support their balance sheets to achieve growth and be positioned for a return to a better economy.
In 2009, the company sought support from its constituents and implemented a Plan of Reorganization and received to strengthen its financial posture for future growth as a leaner, privately-held company.
Despite the opportunity for distraction throughout the reorganization process, the company continued to show its position as one of the leaders in its industry by introducing exceptional new products such as: Snap-Right, a unique perforated edge protector for use with point-of-purchase and display-ready packaging ,and the launch of a new branding campaign for KlimatePRO/easy-Pour™ construction tubes.
On August 20, 2009, Caraustar re-launched its brand capabilities as one of North America’s largest integrated manufacturers of 100% recycled paperboard and converted paperboard products, and one as a financially stronger company that is steadfast on its growth opportunities.