Green boxes: how to make billions on waste paper

Australian Anthony Pratt avoid competition with other paper mills by starting to recycle their products.
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When Anthony Pratt, a red-haired billionaire Australian owner of the largest US company that produces cardboard packaging from recycled materials, personally conducts a tour of his factory in Valparaiso (Indiana) he certainly brings guests to the copper plate "Open Muhammad Ali July 15, 2000 ". "I like to say that we are the second greatest boxer of all time - Pratt joked, referring to the box (English box.), Which he produces.

Pleased with 55-year-old businessman is not only banal jokes and familiarity relationship with Ali. Belonged to him a public company Pratt Industries - one of the fastest growing companies in the production of cardboard packaging (in America is a market of $ 35 billion) and the only one who makes it entirely from recycled materials. Recycling newsprint and boxes of pizza in the cardboard, Pratt multiplied his fortune to $ 3.4 billion. At the same time it saves by cutting 50,000 trees per day. "We are engaged in the manufacture of recycled long before environmental concerns became fashionable," - says Pratt.

Only in the last 15 months, the company from the state of GeorgiaIt has invested nearly US $ 450 million, mainly in the construction of the factory (now the fourth in a row) in Valparaiso, not far from the one that was consecrated in the name of Ali. Pratt appreciates that a breakthrough in Chicago, at the largest US packaging market. Now EBITDA Pratt Industries is $ 260 million (with sales of $ 2 billion), and Pratt believes that with the introduction of new production in September, it will exceed $ 300 million. In total the company operates more than 130 objects, including paper mills, container plants, distribution centers, located in 26 US states and Mexico. In its daily capacity of 3000 tons of paper produced, from which it is possible to produce 12 million boxes. "Suddenly, it was a key player in the industry - confirms Mark Wilde, director of BMO Capital Markets. - Amazing story. "

Pratt started this business in 1991, buying a paper mill in the city of Macon, GA. He came to the US from Australia, where his family ran the company Visy, which was founded by his grandfather in 1948. (Today, Pratt Industries and Visy - related companies, both controlled Pratt.) Was founded in America, he quickly found an unoccupied niche. All were doingUmag from wood and waste paper were taken to landfills. Why did it not recycle? Visy Australia just that worked. Soon Pratt shut obsolete plant in Macon and began processing the products of competitors. This decision taken by Pratt more than ten years before the boom in "green" technologies, proved to be correct. Competitors are placed closer to plants wood resources, and then transported to the paper mills near the major cities, where from it made the box. Pratt also has manufacturing facilities in accordance with the requirements of logistics - about cities where a lot of and recycled, and consumers. Thus it was possible to reduce the transport costs.

And since he was a freshman in the US market and created his factory from scratch instead of buying old, as did competitors, the production he was modern and efficient. Construction cost the comparatively cheap - at Pratt had his own construction company, which specialized in low cost manufacturing facilities. Newer technologies, combined with the relative simplicity of the secondary processsecond processing can reduce the staff by three quarters compared to the traditional production of competitors. "We are building space shuttles, and they compete with aircraft from the Second World War" - says Pratt. And yet, it depends on the competition - because they produce a paper that later throw, collect and send its plants as a raw material. But paper can not be infinite process, sooner or later it starts to decompose. American paper market is large, and the majority of its members with both hands holding on to the old technology (they still make money), so Pratt is optimistic about the future.

He expects Pratt Industries, which controls less than 5% of the US market in the next seven years to double sales in the country to $ 4 billion, while worldwide sales increase to $ 10 billion. However, he estimated at $ 1 billion in revenue in California subdivisions company - a contribution to the growing of fruit and vegetables market. Pratt also hopes to earn a contract with a major mail order operators, such as the Amazon and the Federal Postal Service US Postal Service. He firstComrade bet that the further development of online trading will lead to increased demand for "green" boxes of recyclables. And he continues to develop one of the most successful areas - production of light packaging.

It also depends on those American companies that produce products that need packaging, that is, from the entire US manufacturing sector. This makes it a vulnerable position, but still he was pleased that it is closely connected with the sector, which many discounted. Manufacturing in America is growing and Pratt believes that it gives him a chance to win a few rounds. "My policy in America was founded on the belief that stable growth - it's forever, - he says. - Efficient use of resources - a wave that will subside more soon. "