Triad

Lee Shillito, president and chief executive officer of Bristol, Tenn.-based Triad Packaging, has developed a motto that he lives by--you must have a passion for the business to be successful. He has pioneered Triad Packaging from three employees and no orders to more than 140 employees and 250 regular customers.

After struggling but getting by for years, Shillito's determination, hard work and talented management team led Triad from small beginnings to a flourishing, profitable business. That is, until fall of 2000 when the effects of the incoming recession hit close to home. Shillito, who has been in the corrugated business for more than 35 years, was interviewed for a 2001 Wall Street Journal article that previewed the tough times ahead for the U.S. manufacturing base, especially for corrugated converters.

"We started our new year in September 2000, and lost money five months in a row. That will get your attention. After being very successful for a long time, you had to start asking yourself why," he said in the front-page article.

After that steady decline in growth, Shillito's passion for the business could have been tested but he didn't waver. He went into action mode to save his company. He led a bottoms-up process that involved everyone in the company developing a strategic plan to deal with the downward spiral Triad had just entered.

Now the entire organization is aligned on the same goals. Shillito's passion for the business guided Triad out of crisis mode, into continued evolution and therefore success.

Shillito, the incoming chairman of the Association of Independent Corrugated Converters (AICC), started in the industry at Boise Cascade, in an Alabama plant. After a successful 15-year run there, he left the company to venture out on his own. He has always loved the Tri-Cities Mountain Empire Region (the region around Bristol) and knew he could develop a flourishing business there without competing with Boise, a company has was still loyal to.

So in 1984, Shillito, his mentor and industry veteran Harold Craddock and another industry veteran Lou Wetmore started Triad Packaging Inc. of Tennessee. Craddock and Wetmore had started another corrugated company, also known as Triad Packaging, in North Carolina 10 years earlier. After a few years, Craddock sold his interest in the North Carolina Triad to Wetmore and Wetmore sold his interest in Tennessee Triad to Shillito and Craddock.

The Ideal Market

Bristol is split down the middle with one half of the city in Tennessee and the other half in Virginia. Shillito loves the area, which is a great market for Triad, and knew that he always wanted to build his company there.

The Bristol facility, the company headquarters, is a 100,000-square-foot building built on eight acres. The facility has recently undergone a $2.5 million expansion as part of its 20th anniversary celebration. Not only does the expansion include the physical building but the investment of new machinery, including a J&L specialty folder-gluer from Alliance Machine Systems International.

Each of the company's four locations (Bristol; Gastonia, N.C.; Athens, Ala.; and Wilkesboro, N.C.) is customer focused and Shillito says each was acquired as a strategically focused growth initiative.

Shillito's first acquisition was 14 years ago when the company bought the Athens facility. Triad's most recent acquisition is Gastonia-based Chambers Containers in 2003. The plant is still run by Chambers president Randy Chambers, and Triad's 20-year veteran Roger Powers as general manager. Chambers Containers still operates under its own name but as a division of Triad.

The Wilkes Packaging division, based in Wilkesboro, was set up for one of Triad's major customers. The plant makes boxes and related products to supply this customer on a daily basis, says Customer Service Manager Sherry Lee, a 19-year veteran of Triad. The building was bought in 2003 as a warehouse but since January, it has been the home of the company's Wood Products Division.

The company has approximately 250 customers, including Bristol Compressors, Rockwell Dodge, Gardner Glass and Mirror, Pelton and Crane, and Philips. The end use markets Triad serves include the home decor, industrial parts, heating and air, medical furniture, and consumer electronics.

The company's growth has been modest but it has been very deliberate. Its existing customer base fuels the growth. "We are very selective with who our potential customers are," Shillito says, adding that Triad is very conscientious about finding additional packaging services that its customers value.

"What value do we bring to them?" is something Shillito constantly asks. "How do we distinguish ourselves so we don't become a commodity?"

Shillito believes the term "value-added" is often overused in this industry. "We do what our customers want and need in any way, shape or form," he says. "We do that with every customer, potential customer and even supplier."

That commitment and loyalty travels to its suppliers, in and out of the industry. For its most recent expansion, Triad stayed with its banker even as he moved to a different bank. "He really became part of our team," Shillito says. "He really took the time to understand our business. That brings a lot of value to the relationship.

"We try to buy like we sell," he says. Triad has a great strategic relationship with its suppliers. Ninety percent of its sheets come from Weyerhaeuser Co. The excellent working relationship with its suppliers carries over to its customers also. "Our suppliers are an integral part of our customer's relationship with us," Shillito says. "If we can't bring real value to the relationship, we won't last very long as a supplier.

"We really need to help our customers compete--otherwise, it's a dog eat dog world and we will all become a commodity," Shillito says.

The company prides itself on doing whatever its customer perceives as value, says Charles Byrne, regional sales manager. It's not always easy but it does pay off. The company has gotten into more contract packaging, working with more wood and plastics to offer the customer the complete finished product.

"Service leads to packaging," he says. "If you sell more services, you sell more packaging."

That go-to attitude has served Triad well, Shillito says. "Any company in the area knows Triad can provide honest, real answers."

Strategic Designs

The company's engineering department was created out of the company's strategic planning process. The engineering department also is the design department. Designers work with Dimensional Impressions' Score! CAD software and a Data Technology DT 3000 samplemaker. The department is very active in the sales process. The engineers/designers not only create several designs and boxes for clients and prospective clients, but one designer, Scott Shupe, also goes on sales calls with the salesmen to fully grasp what clients want and how Triad can meet their needs.

As another proactive benefit to its customers, the Triad management and production team evaluated potential growth areas for the company and found that with the purchase of its 150-inch J&L specialty folder-gluer, the machine could literally impact the bottom line by hundreds of thousands of dollars. Triad is now targeting potential customers, who previously viewed boxes as a commodity item, and show them the value Triad can bring.

"It [the J&L folder-gluer] has opened new markets," Chief Operating Officer Mike McFerrin says. "We are now able to put total solutions in front of our customers. We're not just a box company--we're a solutions provider."

One of Triad's design engineers, Erik Karlsson, who started as a consultant and now works solely at Triad, also has a mechanical engineering background so he was instrumental in the redesign of the production floor. Since the company's recent addition to house its J&L folder-gluer, the production has been reworked to resemble a horseshoe design.

Tapping Into Lean

Far before lean was the buzzword in the corrugated industry, McFerrin was attending lean manufacturing training in Triad's customers' facilities. This propelled not only Triad's transformation into a lean plant but it helped the company understand its customers.

The company has integrated its customer service and sales departments, giving them the ability to work faster and coordinate better. Triad's customer service department has taken managed inventory to a new lean level. The company spends some time at its customers' facilities to see what they actually need on a daily and weekly basis. Triad integrates its HRMS computer system to meet customers' box demands.

"We are continuously striving to take us to the next level and satisfying our customers more and more," says Customer Service Manager Lee.

Another key sales tool is Triad's team selling approach, Byrne says. The company will bring manufacturing, design and sales people into client meetings. It's the "wave of the future," Byrne says. "We have to bring something to the table that no one else has brought."

That team approach is very fundamental throughout the plant and that makes change easier at Triad, Byrne says. "Change definitely happens quicker at Triad because of that teamwork we all have," he says.

Longevity has been key in developing that team rapport. Most employees average 10 years or more, often in different departments. Production Manager Josh Powers has been with the company for almost 20 years, but not always working inside the plant. Powers started working at the plant when he was 13 years old when he mowed the lawn. He is now 30 years old and has worked his way up the ranks at Triad to production manager.

Triad is preparing to become an ESOP company within the next four years. It is part of the strategic plan Shillito and McFerrin created a few years ago. The company will be going to a hybrid ESOP, which means it will sell for a lot less over a longer period of time, Shillito says.

"The company is going to outgrow me and that's good," he says. "It needs to do that for it to be a meaningful force in this community, the region and the industry.

"Within the next nine years, we'll have a whole new independent company."

Committed to Training

Lee Shillito, president of Triad Packaging, believes in constantly training everyone in the plant. As incoming chairman and an active member of the Association of Independent Corrugated Converters (AICC), Shillito also is part of AICC's CEO Advisory Group. He has sent almost everyone in the plant to some type of AICC training.

Employees have attended controller's workshops, customer service and maintenance programs and press operators have been to Clemson University for training.

With the advent of AICC's online seminars, Triad has taken even more advantage of the programs. Its training doesn't start and stop with AICC. The company takes full advantage of any training its suppliers may offer too. The company's design department recently attended Score! CAD upgrade training from Dimensional Impressions at its headquarters in California.

A few years ago, Triad hosted the AICC seminar, Selling to Print Capability, at a country club in Bristol, Tenn. Taught by Clemson Professor Emeritus Page Crouch, the course covers all aspects of printing to help sales staffs gain the technical knowledge they need. Triad also invited its ink and tool and dye suppliers to the training.

"We've seen lines of our packaging become pivotal marketing tools for consumer products," Shillito says. "The right box can invite a consumer in and really help close a sale. We want every facet of the packaging process to understand this."

Motoring Full Speed Ahead

The Tri-Cities area around Bristol, Tenn., is peacefully serene with rolling green Appalachian Mountains. It is very quiet except when the NASCAR racecars zoom around the Bristol Motor Speedway.

Since the company is located so close, Triad Packaging is very active in the speedway. Not only does the company own a box at the speedway, but it also sponsors a racecar there. For the 2004 season, the company returned as an associate sponsor of the Rockwell Automation No. 20 NASCAR Busch Series entry.

"It was hard to look past NASCAR as a means to advertising and entertaining customers," Shillito says. "A key component of our motor sports program is entertaining our customers at the spring and fall Bristol Motor Speedway events. It is important to have a car to cheer for particularly at those races."

The bumper from Triad's sponsored NASCAR racecar hangs in the employee break room.

COPYRIGHT 2004 Advanstar Communications, Inc.
COPYRIGHT 2005 Gale Group