Out of the box

Out of the box

by JIm Martyka  

Creative Carton continues to grow because CEO Mike Sime promises his customers they’ll get their cardboard boxes and other packaging products faster and cheaper than they will with anyone else.

Yeah, yeah, everybody’s heard that one before — especially when it comes to sales.

“You don’t believe me?” he asks. “Try us out. That’s really what we ask our customers to do. Just try us out and we’ll show you why you want to work with us. A lot of times they do, and then they stay with us.”

These days, Sime and his employees don’t have to ask that much. Having spent years working to become one of the Twin Cities’ top packaging product manufacturers, the company has a lot of long-time customers, a number of referred customers and a reputation as an industry leader.

Its sales growth is most notable: Creative Carton has spent the last few years growing at record rates while the rest of the industry (and much of the economy) took a big hit. Sime traces it all back to that guarantee.

“We’ve said from the beginning that we’re going to always give the customer what he or she wants and that we’re going to do it quick,” he says. “As long as we stay dedicated to that mission, we’re going to grow. That’s what has worked for us. Well, that and a whole lot of prayer.”

A religious man, Sime, 47, points to an underlying faith among employees that the company can succeed, even in tough times. He credits, too, the age-old success formula of hard work plus dedication. Then he gets specific: The company jumped on a new tax rule that is geared toward helping small companies, but which few use.

“Success comes from hard work and doing something different,” Sime says. “And from taking advantage of opportunities when they present themselves.”

From an initial investment of a few hundred thousand dollars in the late 1970s, and revenue of a few million just a handful of years ago, Sime’s company is on pace to do $33 million in revenue this year. Even as recently as a year ago, the company was at about the $22 million mark, but a new commitment to expanding capabilities and quicker turnaround has the firm rolling.

Sime expects the record growth to continue, a bold prediction in these tough economic times, but one his company’s sales figures can support.

Creative Carton’s record is not evident at other local box manufacturers, although specific figures are hard to come by because most companies are privately held. But of the 30 or so corrugated box manufacturers in the Twin Cities, none can match the success of Creative Carton. And such factors as tougher economic times, corporate layoffs and consolidation, companies slashing external expenses, an increasing reliance on electronic correspondence and more restrictions on shipping packages have all taken their toll on the business.

“Everybody’s suffered over the past few years, just like a lot of other industries,” says one local industry player. “The demand isn’t there as much as it was a few years ago. Plus, there’s more competition. Now, everybody’s looking for ways to kickstart business again, but it could take a while.”

Sime says Creative Carton’s kickstart has come from the fast turnarounds the company guarantees. A long client list, including everyone from mom-and-pop shops to major players like Best Buy, means that one sector’s slump can be offset by another’s.

It’s enough to make the box business look good.

“Making packaging products isn’t exactly a glamorous industry,” Sime says. “It’s not exactly where I thought I’d be when I used to dream in grade school. But now, I love it. For us, we take pride in the fact that we’re doing a huge service and we’re doing it well.”

A Twin Cities resident for just about all of his life, Sime always felt he had a knack for sales and for numbers. He originally went to St. Cloud State University for a mathematics degree, but, as he says, the professors spent too much time working on math theories and not enough time working with actual numbers. He later switched to marketing.

After graduation he stayed in the Midwest, selling flooring and ceiling tiles in Wisconsin and Michigan. But his opportunity came in 1981 when he found out his father and his business partner were looking to sell their small corrugated box manufacturing business. Launched in 1976, the company had a fairly strong reputation but wasn’t growing as quickly as it could.

Sime came in around 1981 and started selling — and picking up his company’s philosophy from his father.

“We were doing any quantity of corrugated boxes in about a one- to two-day lead time while the average lead time was about a week or two,” he says. “We would do it quicker and that set us apart. It was the same back then as it is today.”

Sime eventually took over the business in 1985. While he doesn’t really think of it as a family business, he says some of the initial pressures did apply. “This was my dad’s business, so I knew I couldn’t coast. I had to keep it strong,” he says.

Sime and his team made some key strategic moves to better position the company to become an industry leader. In 1988, Creative Carton bought a small firm called Rapid Packaging that made package-related products, such as dividers and labels. This acquisition made Creative Carton more than just a box manufacturer. Now, the company was a one-stop shop for all packaging and mailing needs.

Also, in 1991, the company, which had called Plymouth and Edina home, moved into its current headquarters in Brooklyn Park, increasing space by almost 40 percent. That meant room for more workers and more equipment. Buying new equipment has led to growth, and also pushed up the employee count in recent months from about 100 to 150.

“We tend to buy at least one piece of new equipment a year, and I mean something large that’s going to bring in new business,” Sime says. This could mean anything from machines that build larger boxes to machines that make glue sheets to jumbo presses. “We’ve kept doing this and we’ll keep doing it. Right now, there is really nothing in this industry that we can’t do.”

The company’s product lines include stock boxes, pads and partitions, packaging products, foam, displays and custom-made boxes. The company can also help with design.

“They take care of all of our needs and in large orders,” says Dionne Conniff, purchasing assistant in Chanhassen with Menasha, Wisconsin-based Banta Corp. Banta has worked with Creative Carton for the past four years. “Also, it costs us a lot of money to sit around and wait for these products to be delivered. Creative Carton promises delivery will be fast and then they deliver on that promise. That’s why, despite the number of calls we get from other manufacturers, we’ve stuck with them.”

Sime says about 60 percent of the company’s orders are met and delivered within two days or less, with about 30 percent done in less than 24 hours. At press time, the company had gone 41 months in a row meeting same-day orders.

In 2001, Creative Carton did take a hit along with just about everybody else. The company had double-digit growth up until that year, when it suddenly dropped a bit. But the Creative Carton team didn’t use the down economy as an excuse. In fact, they took responsibility for the poor sales.

“That year was really a missed opportunity,” Sime says. “We weren’t really seeing or hearing what the customers wanted or needed. We could have done a better job. But we simply used that year as a wake-up call.”

The company did a couple of things to get back on track. First of all, officials launched a survey campaign to find out what exactly were the needs of their customers. They found out that they had to improve pricing and they had to be a bit more reliable on time. The company found it was at about 90 percent reliability and Sime wanted 110 percent.

The company also took a chance on a new loan and tax law that was offered to small businesses after September 11. Working with U.S. Bank, Sime took out a $2 million loan to buy new equipment. Under President Bush’s 2001 tax bill, the company could write off 44 percent of the cost in the first year of the loan (the standard 14 percent, plus 30 percent thanks to accelerated depreciation rules).

While these rules can be applied to other businesses, not many small-business owners are taking advantage because the payments on the loan can be a bit higher after the first year.

“This loan essentially gives the borrower a year to make some profit or to benefit from the equipment or whatever the loan went for,” says Tim Jordahl in Edina, vice president with U.S. Bank. “If your business increases, the loan pays for itself. Basically, these rules were passed to help get small companies investing and growing their business.”

That’s what’s happened with Creative Carton. Since 2001, the company has once again seen double-digit growth. As far as the loans, Sime says he’ll keep using them for as long as he can.

Creative Carton’s success has also come from a lot of faith, Sime says. A devout man, Sime says he has prayed for the company’s success. He also says that faith is a big part of working for the company.

“But it’s underlying faith,” he says. “We’re by no means forcing religion here. It’s just that we’ve been lucky and there has to be a reason for that part as well.”

 “There is a pursuit of excellence and a team attitude that is encouraged enough that it makes us want to achieve that excellence,” says Christine Madsen, human resources director with the company. “Everybody here checks their egos at the door. I mean, that’s why we don’t even have titles on our business cards. Everybody helps everybody. And also, we’re recognized for our work. That’s why nobody who works here ever wants to leave.”

Sime says that is important to him. The company takes a number of steps to ensure that employees are happy at work. Examples include quarterly management surveys, paying people for new ideas, recognition and awards for top employees, holiday parties and group outings, and a community action team that organizes volunteer activities and charity donations.

While employees at the office are recognized, the ones who get the most glory, Sime says, are the delivery personnel.

“The drivers end up being heroes to our customers when they deliver on time or early,” he says. “They’re like the quarterbacks, getting all the glory for a team effort. That’s why none of our truck drivers ever quit.”

Sime can’t see himself quitting anytime soon. While he does talk about his wife and three children and his love for golf, skiing and coaching, he very quickly returns to the subject of his company. That dedication has helped grow Creative Carton to where it is today. And, according to Sime, that is what will keep the company growing.

“I’ve watched this company go through more of an evolution rather than a revolution,” he says. “And it’s still happening. We’re happy with where we are, but we can always do it better.”