Tuesday, May. 28, 2013

Modesto packaging firm undergoing 'landmark expansion'

By J.N. Sbranti

MODESTO -- The walls are going up this week on a $16 million expansion at Modesto's Pacific Southwest Container facility, where massive new equipment soon will start churning out corrugated box material.

"This is kind of a landmark expansion for us, and it's exciting," said company President John Mayol, whose father, Don Mayol, founded the firm 40 years ago. "We view this as a long-term investment for our business."

The new 100,000-square-foot building will hold a 370-foot-long machine that corrugates paper, turning it into sturdy cardboard for packaging.

Pacific Southwest Container has been trucking in premade corrugated sheets from the Bay Area, but it expects to save money by making its own instead.

The company creates assorted packaging materials for everything from wine and candy to computers and medicine. It anticipates about $192 million in revenue this year, and it's growing steadily.

"When we make the right investments in people, process and technology, the end results tend to take care of themselves," said Mayol, explaining the latest investment.

Deciding to expand was a relatively quick move for the privately held company, and the pace of construction there is brisk.

"We committed to doing this around Thanksgiving," said Darin Jones, the company's executive vice president of operations. The firm ordered the corrugating machine from Fosber America Inc. and contracted with Manteca's Dellabarca Design Build Inc., which started construction last month.

Most of the 33-foot-high concrete walls were tilted into place Tuesday, and the nearly $9 million building is expected to be completed in a month or so.

Wells Fargo Bank provided nearly $3.8 million in financing to cover part of the expansion cost.

The new $7 million machine will arrive in early July and is expected to go into operation in early September.

Jones said 12 employees will be hired to run it. The Modesto plant already employs 380 workers.

"We're starting to build the team up now," Jones said.

The project also generated jobs for Dellabarca.

"Our company has had about 25 of our employees working on this project," said Tom VanderVeen, Dellabarca's co-owner. "We also have numerous subcontractors who will be taking part in this project, some for a day or two and some for extended periods. … The total number of employees who will be on the site for various time periods will be around 100."

If all goes as planned, Southwest Pacific Container's staff — and business — will grow even more as its new manufacturing abilities make it more competitive.

"This will enable us to be more responsive to our customers because we'll be in control of (the corrugated supply)," Jones explained. "We have to spend a lot of money to do it, but it's a smart investment."

So instead of hauling in 10 truckloads of corrugated sheets every day from the Georgia Pacific plant in San Leandro, the company will get less-expensive paper delivered by rail directly to its Modesto plant.

"We'll be taking rolls of paper and adding value by turning them into corrugated packaging," Jones said. By creating its own cardboard on site, he said the company will be able to reduce its storage space and inventory expenses. "It will make us more cost-effective."

"We're competing for a lot of growth business right now, and this is a very cost-sensitive business," Jones explained.

So by reducing the price of manufacturing every box, the company can attract more business. It's done a good job of that so far.

"We've more than doubled in employees and revenues in the last 10 years, and we're in an industry that

really doesn't grow much," Jones said.

That's not the case for all Modesto manufacturers. International Paper shut down one of its local plants recently, and Jones said that took an old corrugating machine out of production.

The corrugation process creates flutes — or wrinkles — in paper, which then get sandwiched between two flat linerboards. "Just like the arches on a bridge, corrugating gives paper a lot of strength for boxes," Jones said.

Pacific Southwest Container already runs its own miniature corrugator, but Jones said the new machine "is absolutely state of the art" and will handle material up to 98 inches wide.

The company will use it to make many types of packaging and boxes for mostly consumer products. E.&J. Gallo Winery is its biggest customer, and many of its other clients also are its manufacturing neighbors in Modesto's Beard Industrial District.

"We package the bounty of the Central Valley," Jones said. It produces colorful boxes with high-fidelity printing and varied shapes. "Boxes have more consumer appeal than they used to because packaging has to help sell a product more than it used to."

The company's existing facility at Leckron Road and Codini Avenue in Modesto had 500,000 square feet before the expansion, and it will be 600,000 afterward. Pacific Southwest Container also has 300,000-square-foot facilities in Stockton and Visalia.

Read more here: http://www.modbee.com/2013/05/28/2736907/modest