At the turn of the 20th century, Little Falls, a tiny city in upstate New York, was a place where fortunes were being made. Today, though its impressive neoclassical architecture harks back to the city's glory days, the city is hardly a hive of economic activity. Most local manufacturers have either gone out of business or shipped their production overseas. Burrows Paper Corporation, a specialist paper manufacturer founded in 1919, during Little Falls' heyday, is one of the few that stayed.
Located in the same place for nearly 100 years, still owned by the founding family and operating in an industry not commonly associated with innovation, Burrows might seem to be something of a relic. Only it is not. The company ships its products to 50 countries in six continents, has facilities in Europe and Asia, and recently increased its headcount by more than one-third to a total of 1000 employees.
“When I joined the company, we established a strategic plan with an objective of doubling sales and achieving desired net income through a combination of organic growth, joint ventures, acquisitions and partnerships,” says Rose Mihaly, the company's president and chief operating officer since 2011.
Burrows' plans are ambitious, given that growth in the paper industry in the US can be described as sluggish at best, while consumers increasingly replace paper with smartphones and computers. Yet the company seems to have found a strategy that hedges against industry woes. Instead of focusing on commodity paper, Burrows specialises in producing lightweight paper used mostly in food and medical industries. “You cannot produce commodity grades and be competitive. You have to produce something that is being purchased because of the engineering of the paper,” says Ms Mihaly.
As a privately owned firm, Burrows does not disclose financials, but according to Ms Mihaly, two other important revenue streams for her company are packaging production and renewable energy. “We are vertically integrated, so we produce paper that we use in our packaging facilities. We supply ourselves, but as is a common scenario in this industry, we also sell to companies we compete with on the packaging side of business,” says Ms Mihaly. The same is true for the energy that Burrows produces, which is partially used by the firm and partially sold back to the grid.
Burrows’ creates a diverse range of products, from paper bags through to food containers and paper mats. Depending on the capabilities of its packaging facilities and demand at local markets, the company varies its offering, says Ms Mihaly. “Markets are different and our facilities are different, and we take that into account, so, for example, in the Netherlands we make napkins and we do not make them in any other market we operate in,” she says.
The bulk of Burrows’ business comes from sandwich boxes and paper wraps sold to fast-food restaurants. “We have established relationships in these markets and our clients know what our capabilities are,” says Ms Mihaly. One such relationship spans nearly 60 years. In 1955, Burrows struck a deal with McDonald’s, then an ambitious start-up with a handful of restaurants. Now Burrows delivers paper wraps to nearly 75% of the company's 14,000 US outposts, as well as supplying McDonald's globally.
McDonald’s and other fast-food chains are not just a major source of revenue for Burrows, but a key to the company's future growth, especially in developing markets. “Quick-serve restaurants and what attracts people to them is one of the things that attracts us to the markets,” she says. “People are getting wealthier in emerging markets. When people have more disposable income, they begin to enjoy small luxuries. Eating out at a quick-serve restaurant would fall into that category.”
Executives at McDonald’s seem to share Ms Mihaly’s optimism, as the company is reported to be looking at doubling its presence in China to 4000 establishments in the next three years.
For that reason, in 2008 Burrows added to its portfolio a packaging facility in Guangzhou province and in 2010 opened a sales office in Shanghai. “China is certainly a growth market for us. Western brands such as KFC and McDonald’s are prominent there, but there are also many national brands that we serve [in the country],” says Ms Mihaly. Apart from China, the company seeks to grow in markets in India and the Asia-Pacific region, as well as in developing economies in Europe, the Middle East and Africa.
While Burrows increases its international presence, it still produces paper exclusively in the US in three paper mills in the state of New York and one in Mississippi. The company has no plans to move paper production overseas. To cut production costs, in 2005 the company decided to source its paper pulp externally rather that produce it itself, but apart from that the company is unlikely to change the way it produces paper, says Ms Mihaly.
“Our roots are [in upstate New York] and it simply makes sense for us to be here. We are not going to simply pick up our machines and leave, especially given that paper mills are very capital intensive and highly regulated,” she says.
“We look very judiciously and strategically at how to leverage our capital to be able to penetrate high-growth markets. Growth in the case of our industry is more complex than simply launching more physical locations.”