The history of Sonoco reaches back to the 1890s, but its involvement in the global packaging and recovered fiber markets have helped make it a worthy competitor into the 21st century.
The Hartsville, S.C.-based company was founded by Major James Lide Coker in 1899 as the Southern Novelty Company, with its original product line consisting of paper cones designed to hold yarn.
A sense of industriousness that started with Coker has continued. Today, the company is a force in the global packaging industry and also ships and consumes more than 3 million tons of scrap paper each year.
A CENTURY OF GROWTH. The portrait of Major James Lide Coker that can be found on the Sonoco Web site (www.sonoco.com) presents an image of what one would expect a Southern gentleman from the late 19th century to look like.
The 19th century appearance, however, belies a very 20th and 21st century approach taken by the company toward innovation, business expansion and global trading.
When Major Coker started the Southern Novelty Co. in 1899, he already co-owned a separate company that made pulp and paper.
Southern Novelty, based then in Hartsville as Sonoco is now, saw its sales zoom from $17,000 in 1900 to more than $900,000 in 1920. After these two decades of growth, the company adopted the Sonoco name in 1923 and began affiliating with or acquiring plants in North Carolina, New Jersey and even the United Kingdom.
Even the economic woes of the 1930s could not slow the company’s growth, and by 1940 Sonoco was a company with $5 million in annual sales.
Continued expansion increased the company’s presence in Canada and brought it to Mexico with the formation of Sonoco de Mexico in 1950. Between 1950 and today, the acquisitions and new location openings become too numerous to mention, as Sonoco formed itself into the global consumer and industrial packaging company it is today.
Sonoco is now a company with $3.2 billion in annual sales employing some 17,100 people in more than 300 plant and office locations in 35 countries serving customers in 85 nations. Converted paperboard products and paper account for a majority of the company’s sales. However, Sonoco also has divisions making rigid plastic containers, flexible packaging, point-of-purchase displays, a variety of ends and closures and a gamut of packaging services.
With paper being its primary raw material, the procurement of secondary fiber has long been a crucial part of Sonoco’s operations, and is a reason why Paper Stock Dealers Inc. is among the company’s wholly owned subsidiaries.
There are two dozen Paper Stock Dealers plants in the Southern United States (and nearly 30 consuming plants worldwide) that combine to collect and process some 3.5 million tons per year of scrap paper, according to Sonoco Vice President and General Manager–Global Recovered Paper Jim Hines.
Hines is part of a team of Sonoco and Paper Stock Dealers employees who help not only supply the fiber for Sonoco’s own mills, but also gather enough paper to ship a majority of it to outside consumers, helping Paper Stock Dealers operate as a free-standing profit center for the company. "Sonoco began recycling paper in 1917," says Hines. "We’ve been at it a long time and now we’re seeing a demand for fiber that is greater than it has ever been."
BEHIND THE SCENES. By the nature of what it does, Sonoco is a company that to a great extent operates behind the scenes.
The company’s industrial products, such as large paper cores and tubes and wire and cable spools, are not generally visible in retail or home settings. And its consumer products, which include rigid paperboard containers for snacks, nuts, candy, frozen concentrates and refrigerated dough and rigid plastic and flexible packaging for dozens of other retail items, are inevitably branded with the logo of a much more familiar food, beverage or household cleaner company.
While products from the quiet company can be found in almost every aisle of the grocery store, the Sonoco name itself is not a household name. Even further away from the limelight is the Paper Stock Dealers subsidiary that provides feedstock to Sonoco’s paper mills and other mills around the world.
Within the paper and recycling industries, however, the two names are well known and well established. When Sonoco purchased Paper Stock Dealers in the mid-1970s, the company had already been buying scrap paper for more than 50 years.
Since buying Paper Stock Dealers, Sonoco has grown the subsidiary to its present size of 25 plants, four satellite trucking operations and five additional brokerage offices.
The company’s operating focus remains in the Southeast, with most of its plants located in a belt between Florida and Maryland. The company now also has two plants in Kansas and brokerage offices in South Carolina, Georgia, Canada and the U.K.
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Outsourcing a portion of company operations is always a temptation for managers looking to shift costs, but Jim Hines is glad that Sonoco Products Co. and its Paper Stock Dealers subsidiary have an in-house trucking operation to call upon. "We’re probably more heavily involved directly in trucking than most recycling companies," says Hines, Sonoco vice president and general manager–global recovered paper. "We spend a lot of time focusing on transportation and being directly responsible for it to provide good service. We’re running more than 175 tractors right now," he notes. Sonoco’s fleet can provide less-than-truckload (LTL) pick-up of bales, can pick up loose material or can pick up a full trailer from customers who generate scrap paper and other recyclables. Sonoco mill procurement team member Johnny Newsome says the fact that the company runs many of its own trucks and performs much of its own maintenance makes it unique. But considering that for most of the past three years, other recyclers have lamented a shortage of rail cars and a shortage of trucks and/or qualified drivers, Sonoco has been favored with an advantage. "The transportation issue is crucial right now," says Hines. "I am absolutely glad that we have our own trucking arm," he states. |
Less than one-third of the paper moving through those plants goes to 14 Sonoco mills (11 in the United States and three in Canada). Hines says the company’s recycling subsidiary "was initially set up to ensure a secure supply for Sonoco mills—that’s why the plants are in the Southeast, where we have our heaviest demand for recovered paper."
But from the start, the recycling division has been given the freedom to procure all grades of paper—and even non-paper recyclables—in order to serve customers both on the generating and consuming sides of the business.
"There might be a misconception that we deal only in bulk grades or ‘brown’ grades, but that is not the case," notes Andrew Bell, Director, Sales and Marketing, Recovered Paper Division, and part of Sonoco’s mill procurement team. "We deal in high grades and work with all sources of recoverable fiber."
Bell and Hines list industrial, retail and commercial generators as important customers, but the company will also buy from printing plants, material recovery facilities (MRFs), municipal programs and independent haulers and collectors.
Johnny Newsome, U.S. mill supply manager, who is also on the mill procurement team, says the Paper Stock Dealers subsidiary handles some 80 grades of recycled materials, including paper, plastic and metal containers.
Paper Stock Dealers’ Director of Operations Marilyn Quattlebaum helps oversee operations at the 25 plants, each of which operates either one or two balers as they process anywhere from 2,000 to 12,000 tons per month of fiber.
The company strives to keep operations costs down and quality levels high. "We pack a high-quality bale in whatever grade we’re shipping," says Hines. "We think that’s very important as a supplier."
Bell credits the regional managers (Lane Cook, Kenny King and Pressly Coker) for maintaining consistent quality at all 24 plants, and Newsome notes that the company’s concentration on industrial and retail accounts also gives it a leg up in achieving a high-quality pack.
CHANGE AND CONSISTENCY. As Sonoco has entered its second century of conducting business, managers such as Hines, Bell, Quattlebaum and Newsome note that while the new century has brought changes, there are also consistent touchstones to doing business the Sonoco way.
One of those consistent focuses is safety. "Safety is number one; it really is," says Hines. He says 100 percent participation in safety meetings and programs is required of all employees. "Employees have the opportunity to conduct meetings and be on plant inspection teams, and we do a great deal of safety auditing."
Quattlebaum remarks that safety sub-teams promote safety "throughout the division, and every plant manager participates."
Some of the changes in the wider industry can be a source of challenges for Sonoco’s recovered fiber team. "For us, the most challenging part of the business right now is on the procurement side," notes Hines. "And we think it’s essential that our plants, once they have that fiber, are low-cost producers. We have to be mindful of that on a daily basis."
The growth of global scrap paper trading has also brought about changes to the way paper recyclers in the U.S. must operate. "The whole trading pattern change has been hard to comprehend at times," says Hines. "It’s especially difficult to adjust to knowing that you can ship to China cheaper than you can to a number of points in the U.S., in some cases maybe even cheaper than 100-mile legs in the U.S. It definitely makes the export market a lot more viable."
In terms of operations, Quattlebaum says the export market "can change the way bales are packaged." She says the Paper Stock Dealers plants may have to re-bale some of the baled material picked up at generator locations to prepare it for the export market.
Transportation and shipping has thus become a critical part of the operations equation, and Hines says he is grateful that Sonoco and Paper Stock Dealers has maintained its own fleet of trucks.
By providing timely service and a high-quality product, Sonoco says it can distinguish itself in a competitive industry in which recyclers must maintain good relations on the procurement and consumer sides.
"If you look at this whole business we’re engaged in, it’s kind of unique in that you have customers on both sides of the equation," Hines remarks, noting that both scrap paper generators and consuming mills must be treated as customers.
For such a high level of customer responsiveness to be maintained, the quality of the people who work for Sonoco has to be commendable, each of the managers seems to agree. "I think what makes Sonoco unique for me are the people," says Quattlebaum. "The people at all levels of the organization are great to deal with," she notes.
"I would say the ethics and the integrity of the people who work here are admirable," says Bell. "The people say what they are going to do and then they do it."
Hines and Newsome point out that Sonoco has been recognized on lists such as Fortune magazine’s list of "Most Admired Companies" and as a "Top Ten Corporate Citizen in Environmental Stewardship" by a socially responsible investment firm. "We stress good service to all of our customers and a high level of integrity in all of our business dealings," says Hines. "We’re fortunate to be in a position where we can consider expanding at some of our existing plant sites and being open to look at other opportunities wherever they might be."
The author is editor of Recycling Today and can be contacted at btaylor@gie.net.
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