Pick A Platform

How often does the average person buy a container of horseradish? It was the consideration of this question that led Mark Graham, an insurance salesman from South Dakota pursuing the dream of personal business ownership, to opt in 1976 to purchase Bell Paper Box Company instead of a local horseradish farm that was also for sale. While Graham may have opted not to pursue the expanse of a farming operation, significant growth would prove to be in the cards for his chosen venture.

Fast forward nearly 35 years later, and Sioux Falls-based Bell Incorporated is flourishing as one of the ten largest independent folding carton manufacturers in the United States. Mark Graham retired from the business in 2010, assuming the role of chairman, and handed over day-to-day leadership responsibilities to his son Ben, now president and CEO, and son-in-law Ben Arndt, now executive vice president and COO. Ben Graham assumed his leadership role after 17 years of varied operational positions including vice president of finance, sales, and supply chain, while Arndt joined the company in 2005 and previously served as vice president of operations. Mark Graham's tenacious focus on growth is at the root of Bell Incorporated's consistent upward gains today—even in the current climate of struggle for many converters.

Ben Graham relates that Bell started out as a "run-of-the-mill regional producer of sheetfed cartons"—essentially one of the many smaller carton shops populating the marketplace in the mid-1970s. However, it gradually built up growth momentum under his father's guiding philosophy that "you can't be a low-cost seller unless you are a low-cost producer." Graham says the continued tweaking of his father's low-cost seller/producer strategy has been vital to the company's development into one of the largest independent carton producers in the United States.

Currently, Bell Incorporated's carton converting operations in Sioux Falls includes two production facilities—one for offset printing and one for flexo printing—that add up to 500,000 square feet of plant space, and host just shy of 300 employees, along with a combined equipment corps of five printing presses. A new Sioux Falls-based 64,000-sq.-ft. distribution center that opened in July 2011 increased Bell's warehousing space by 40 percent. With its facilities situated at the intersection of interstates 29 and 90, a junction which Graham describes as "the dead center of the country," Bell is able to provide two-day delivery to any U.S. destination.

Standing apart by standing alone

Bell Incorporated's status as an independent carton converter status is a vital factor in the company's ability to achieve and benefit from the low-cost supplier, low-cost producer tenets of Mark Graham's original operating philosophy. "As our industry continues to consolidate, there are only a handful of suppliers who can service the needs of the larger CPGs," Ben Graham says. "Our strategy is to be a viable complement to the big guys. We have the same cost-structure, with the stability of a family business. That is, we are long-term players, versus the short-term private equity investors." Free of the possibly competing interests of external stakeholders, Bell "can grow over time, organically," he says. "The company can focus on the fundamentals, including a long-term business strategy of prudent growth through investment. It doesn't have to worry about the quarterly earnings report."

As an extension of the elder Graham's low-cost seller/low-cost producer mantra, Bell's strategic cost control measures, such as optimized operational efficiency and supply chain management, have enabled investments in the technologies necessary to steadily expand its customer base. For instance, Ben Graham notes in the early 1990s Bell ascended to become a national provider of web-based flexo-printed cartons, an achievement he refers to as "a game-changer" that propelled the company from a regionally focused sheetfed operation to a nationally focused long-run producer. Additionally, after Bell solidified its presence as a long-run niche producer of cartons, the company made investments in 2002 and 2003 to add mid-web offset printing capability to its repertoire, a move that Graham says "widened the sphere of applicability" for the firm. Finally, in 2010, Bell's purchase of the first Heidelberg Speedmaster XL 162 VLF (very large format) sheetfed offet press to be installed in North America pushed the company's expansion of its carton printing services "across the gambit," Graham says.

Pick a platform, any platform

The end result of Bell's deft combination of cost-cutting and capital investment is that its customers can essentially "pick a platform—we have the cost structure and the technology," Graham states. Food packaging is the largest market Bell serves—including frozen food, prepared food, and cereal carton applications—followed by quick service restaurant containers for customers such as McDonald's, and overnight delivery packaging for clients including the United States Postal Service. (Bell reports it is the world's largest producer of overnight envelopes.) A third major component of Bell's customer base is general consumer packaging, which includes hardware carton products for customer General Electric.

According to Graham, customers can and do opt to use different print processes across carton packaging lines—a decision that could be dictated by the marketing objectives for individual brands within a company. Flexo continues to hold high appeal "because it has changed dramatically in the past 15 years," he explains. "It allows us to produce long run—in the millions—of consistent size and style, and offer in-line rotary diecutting with 150-plus linescreens." Graham further adds that flexo "excels in consistency in cutting."

With web offset, he observes, customers can realize a combined advantage of inline rotary cutting and the advent of higher-end graphics, while enjoying the benefits of low makeready cost and an overall cost structure similar to that of flexo. Finally, Graham notes large-format sheetfed offset holds appeal for customers seeking a comparable production cost structure, yet needing to print wider and larger for optimal throughput; he's seen particular interest from private label food and promotional mailer companies. He further remarks that large format sheetfed offset "really excels in delivering quality of graphics on food packaging, such as matching colors across the package."

With such a wide spectrum of carton production solutions standing-at-the-ready, Bell is more strongly positioned to help customers resolve their own packaging production issues. As an example, Graham notes that many customers have automated form and fill lines, and look to Bell for assistance in optimally designing and producing packaging to help maximize the speed and efficiency of those lines. Bell also provides service 24 hours per day, 7 days per week through its technical field support team.

Rooted in efficiency

For Bell Incorporated, Ben Graham's and Ben Arndt's continued adherence to Mark Graham's growth-oriented roots and low-cost operating philosophy should continue to yield stability during the next few years. "We will stay very focused on improving efficiencies," Graham maintains. "We've got the assets for printing in place, including automation, finishing, and a new ERP system [EFI Radius' MIS/ERP software]. We've spent 28 million dollars in the past two to three years." In the near-term, Graham expects food packaging to hold significant growth opportunities for Bell, and believes the best way to capture that growth is to focus on using the company's latest equipment to deliver optimum value.

Projecting a few years farther out, Graham is optimistic that Bell's roots focussed on efficiency will again open a window for investment and expansion in accordance with customers' expressed needs. "We are one of the few stable mid-sized providers of printed folding cartons," he states. "In three-to-five years, we should be in a good position to see where the market is going."

According to Graham, Bell's response to those market developments could include investing in digital technology or expanding the company's geographic footprint. For now, the company is digging deeper into its firm operational groundwork, readying for its next spate of growth. One aspect of these preparations is a recent uptick in hiring at both the administrative and plant floor levels, to the tune of nearly 40 positions. So never mind the horseradish farm—at Bell Incorporated, the second-generation leadership team of Ben Graham and Ben Arndt are fine-tuning a growth formula that has endured in even the harshest conditions. pP