Wed | Sep 26, 2018

Corrpak acquires property to expand

Published:Wednesday | April 8, 2015 | 12:00 AMTameka Gordon
Ian Allen/Photographer General Manager of Corrpak Jamaica, Vanburn Mitchell.
Boxes produced by Cosspack Jamaica at its factory in Kingston.

Corrpak Jamaica Limited has acquired adjacent property that once housed a gas station and will be expanding its box manufacturing business to meet what the company says is rising demand for locally made cardboard packaging.

Corrpak is investing $110 million in an improved production line, as well as additional warehousing space to be sited on the newly acquired property that belonged to the operators of the Total service station that once sat next to its 154 Marcus Garvey Drive base.

The warehouse will add 15,000 square feet of space, and boost the complex to 46,000 square feet.

Corrpak will upgrade its corrugators used to manufacture the cardboard, and replace its industrial printer and auto folder machines as it looks to improve its production efficiency and cut electricity consumption.

The plant upgrades should be completed by year end, the general manager, Vanburn Mitchell, said. He said the improvements should allow Corrpak to cut its electricity bill by 20 per cent, which would amount to savings of roughly $200,000 to $300,000 monthly.

To aid its expansion plans, the nine-year-old company has taken on loans amounting to $50 million, backed by cash resources, to finance the $110-million capital programme on which outlay began 13 months ago, Executive Chairman Howard Mitchell told Wednesday Business. The cost includes the property acquisition.

"What we are doing with the $50 million is that we are bringing in new equipment to increase our production efficiencies," Howard Mitchell said.

out of space

He said the new warehouse located on the grounds of the old service station will be partially covered with new roofing in the short term, at a cost of about $5 million.

"We have acquired the gas station area because we have run out of space and we couldn't get land anywhere else," he said.

For now, Corrpak stacks bales of cardboard scrap at the newly acquired site, as well as its main complex, which are then collected in container loads and shipped overseas to be recycled into new cardboard.

"We sell it (the scrap) for USD," Mitchell said, while noting that it is also an eco-friendly initiative that avoids contributing waste to the Riverton City dump.

Corrpak has seen increased business - though "not as much as we would like" - and hopes to ride the tide of the improving business environment, Mitchell said.

"It is clear that there are efforts being made to improve the business environment, and we feel that we either have to grow or we are going to die. So we have put all our marbles in the ring; we have borrowed money - $50 million," he said.

Corrpak is one of two local cardboard manufacturers. It sells only to the local market "and there is enough business here for us that we don't even have to go overseas," said Mitchell.

With at least 30 per cent of the market, the company has competition from West Indies Pulp & Paper, Red River Limited, Jamaica Packaging Industries and AMG Packaging & Paper Company, but is hoping that with the improved plant, it can grow its market share by about 10 per cent.

Corrpak purchases reams of liner paper overseas, bonds the liner with another type known as medium, then cuts the finished product into the various sizes to form cardboard boxes.

With a current staff of 83 working on three shifts, the improvements will not necessarily mean new staff, Mitchell said. The company expects to be reduced to two shifts, he said.