Caraustar Industries thinks outside the box in order to make new ones. The company makes 100% recycled paperboard and converted paperboard products for end-use markets such as tubes/cores, folding cartons, gypsum facing paper, and specialty products. Caraustar's four business groups include Recovered Fiber, Mill, Converted Products, and Industrial Packaging. It purchases about half of its own recovered fiber, selling the other half to independent converters and to the textile, paper, metal, bookbinding, printing, and furniture industries. The company's carton and packaging products are used to box a variety of consumer goods. Caraustar emerged from Chapter 11 bankruptcy in 2009 as a private company.
The company got ripped up during the economic downturn. Not only was the US paperboard industry as a whole taking a beating from foreign competition, primarily from China, but the US housing and construction markets were tanking due to the global recession.
In its "pre-packaged" bankruptcy reorganization, the company reached an agreement with most of its lenders on a restructuring that included Chapter 11 filings by Caraustar and its US subsidiaries. The company eliminated about $135 million in debt through a debt-for-equity exchange, and closed on a $75 million revolving credit facility with General Electric Capital that provided liquidity for working capital. Hedge-fund manager Wayzata Investment Partners is its controlling shareholder.
Another element of the company's transformation included a new CEO. Caraustar appointed Michael Patton as its new chief in midi-2010. Patton, who served previously as a senior VP at Greif, took over the position from former Caraustar CEO Michael Keough. The company is looking to Patton to lead operational improvements and growth plans, as well as to target cost reduction.
Along with cost reductions, Caraustar hiked its prices in 2010 and 2011 for the majority of its paperboard products. Additionally, it opened a new facility in Augusta, Georgia, in mid-2010, to serve its customer base better in that region. However, along with the new start in Augusta comes the 2011 closure of Caraustar's paperboard plant in Connecticut.
Caraustar's restructuring measures to cut costs and boost profits have been ongoing since 2007 due to unfavorable market conditions. In an effort to focus on core operations, the company closed its fiber container and plastics businesses. In 2008 and 2009 the company stopped production of uncoated recycled boxboard and closed its paperboard mills in North Carolina, Tennessee, and Virginia.
Caraustar continues to function through a number of subsidiaries and about 50 operating facilities in North America. Because of the relatively high cost of shipping tubes and cores, these facilities generally serve customers within a relatively small geographic area. Accordingly, most of its tube and core converting plants are located close to concentrations of customers.
Besides providing over 2 million tons of paper products annually through its recycling services conducted at fiber recycling plants and paperboard mills, the company also provides consumer packaging services. Offerings in this area include graphic design, digital imaging, and structural design and mechanical packaging engineering. Additionally, Caraustar has the distinction of being the only major company that produces all four grades of paper product. Those grades constitute the company's business segments.
The paperboard segment is Caraustar's principal manufacturing business. Uncoated and clay-coated recycled paperboard is converted into tubes, folding cartons, gypsum wallboard facing paper, and specialty paperboard products. Recovered fiber (derived from recycled paperstock) is the most significant raw material used in mill operations. Caraustar's paperboard mills purchase approximately 96% of recovered fiber from its own recovered fiber segment, which operates fiber recycling and brokerage facilities that also sell to external customers.
The principal applications of the tube and core division products are textile and paper mill cores, yarn carriers, carpet cores, construction tubes, and foil and metal cores. The folding carton business makes rigid boxes, which are used as containers for candy, frozen and dry foods, paper goods, hardware, sporting goods, and other industrial applications.
In 1938 the company was established by Ross Puette in North Carolina as Carolina Paper Board Corporate. – less