Lake Forest, Illinois based Packaging Corporation of America (PCA) confirmed during its second quarter earnings call that it was in the process of replacing its corrugated box plant facility in Phoenix, Arizona.
The greenfield box plant is expected to be complete in the spring of 2025. CEO Mark Kowlzan said that the company has been looking at moving out of some of its older, inefficient operating facilities and that the new plant in Arizona would more than double its existing capacity.
“Some of you may have seen news about an investment we made in the Phoenix, Arizona area. In order to serve a growing market and to grow with our existing customers, we are in the process of replacing our current Phoenix corrugated products plant with a modern state-of-the-art facility,” said Tom Hassfurther, PCA Executive Vice President of Packaging, during the call.
“Like many of our strategic projects, the Phoenix project improves the capacity, technology and equipment in the plant gets us aligned properly in the right marketplaces addresses the needs of our customers so that we both grow profitably and improves the efficiencies and cost within our system.”
More specifically, Hassfurther said in the call that they have had to pull from a lot of different plants, most far away in the Los Angeles region, to service the local market.
“And that’s not sustainable long term,” Hassfurther said. “So with the opportunities we have and with the customers that we have in that marketplace, they’ve indicated that we need to do significantly different things which we will do. And that will give us some — obviously, some great opportunities in that region.”
Kowlzan said that the new plant in Arizona is a big opportunity to take care of the entire region. Over the past six years, Kowlzan said that they PCA has taken a lot of older plants that needed to be recapitalized and tripled and quadrupled productivity with less costs and labor hours.
Kowlzan also reported strong market conditions resulting in PCA setting a new corrugated shipments-per-day record for the month of June, up 9.2 percent over last year’s second quarter and total shipments. Containerboard production was 1.2 million tons and containerboard inventory was up 16,000 tons compared to the second quarter of 2023 and up 20,000 tons versus the first quarter of 2024.
“We were also able to build some inventory ahead of what we expect to be a busy second half of the year. Packaging segment prices and mix moved higher from first quarter levels as we continue to implement our announced price increases. Results also reflect our constant focus on minimizing inflationary cost increases through efficiency and usage initiatives and capital project benefits throughout our mills and converting facilities,” Kowlzan said. “Looking ahead as we move from the second and into the third quarter, prices and mix in both our Packaging and Paper segments will move higher as we continue to implement previously announced increases along with higher containerboard export prices,” Kowlzan said.
PCA says it is the third largest producer of containerboard products in North America. The company operates eight mills and 896 corrugated products plants and related facilities.
