Trend Watch: The Next Generation

October 1, 2016

Brian Isard

The next generation of business owners and managers in our industry is essential to the long term vibrancy of the wood packaging industry. It is a good sign to see new and younger entrants coming into our industry because it is important for the overall sustainability over the longer term. While new entrants to an industry cannot replace the immense amount of knowledge that is lost as industry veterans retire or move on, new entrants to the wood packaging industry bring with them a whole new skill set and a fresh perspective  that is critical to the evolution of the industry as it sets out to meet with ever changing consumer demands. The next generation is better equipped to face the challenges of new technologies and disruptive forces such as the digital transformation. New entrants have a significant part to play in developing and changing the competitive landscape of any industry. The shift to a new and more youthful demographic is becoming quite evident. Recently, our AGM and Western Focus Meeting brought many new faces to the table, and we are very frequently adding new names to our CWPCA contacts roster. 

Traditionally, young manufacturers have entered the industry through intergenerational succession, which is typically also interfamilial succession (i.e. transfer from a parent to their son or daughter). But we have seen a number of new entrants start up over the last few years by acquiring business from existing owners or new start-ups because they see an opportunity to for growth. 

Some more established companies are concerned about new entrants because more competitors will fight for the same amount of business. Competition increases sales and redistributes market share. There may also be an effect on price and product quality.

A new firm can enter a market in a number of ways:

Demand- Increased demand for product or underserviced markets will often allow new entrants to become competitors to more established companies. Over the last few years demand for wood packaging has been strengthening both domestically, driven by a heathy local economy and relative stability in raw material costs, as well the export trade, with the Canadian dollar trading at a steep discount to the US dollar. As a result the pallet and container markets have remained resilient and in many markets demand is outstripping supply, allowing new entrants an opportunity to grab market share.

Take-over - When someone from outside the industry takes over an existing firm they often bring new and innovative expertise to the industry, thereby changing the competitive dynamics. Thus we have in recent years seen new entrants in major markets acquire businesses and make large capital investments to secure manufacturing equipment with high capability for both block and stringer manufacturing. 

Diversification – New products or services added to existing businesses such as the provision outsourcing services to the multinational pallet pooling companies has been an entry point for many new to the industry

Competitive advantage – Development of a specific technology which gains a competitive advantage over existing business, such as the dismantling and repair of block pallets, which  is a growing market niche in North America.   Another example would be reverse logistics services offered to large retailers where access to the retailer’s supply chain provides a crucial supply of cores for resale. 

Knowing that our industry is attractive to talented people is a huge advantage to ensuring that it remains competitive in the global packaging and logistic services industries. 

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