Sooner or later, nearly everything is shipped in a corrugated box: nuts and bolts, roofing shingles, soft drinks, auto parts, and Christmas toys.
Although the government doesn't include corrugated boxes in its index of leading indicators, some economists believe the box market is a good short-term indicator of the future direction of the economy. Notes Norma Pace, senior vice-president and chief economist at the American Paper Institute, ''There is never an upturn without some change in the box market.''
The improvement usually occurs only a short time before a general recovery in the economy, however, since businessmen order their boxes only a few weeks before using them. ''It depends on how long businessmen think they will have to wait to get their boxes,'' says Ms. Pace, adding the longer the wait, the healthier the economy is.
Currently, there are plenty of boxes available and businessmen are ordering them only slightly before using them. There has been a steady improvement in the business since March or April, however. Unfortunately, Ms. Pace says, the improvement has been so small that it only confirms that ''the economy has scraped bottom.''
Thomas J. Muldoon, executive vice-president of the Fiber Box Association, in Chicago, agrees there has been some improvement on a month-to-month basis. But he adds that each month of 1982 is behind the same month last year. For the year , he expects the business to be about 5 percent behind '81.
One of the larger corrugated box manufacturers, St. Regis Paper Company, confirms that the rate of decline has eased. ''Business has gotten progressively less worse,'' states L.David Moore, executive vice-president for operations. Since June, Mr. Moore said in an interview, St. Regis's corrugated container division has seen an increase in orders. Prices have held firm, indicating its order increase was not the result of price reductions.
Mr. Moore says many of the orders have originated from companies in the so-called Rust Bowl - Ohio and Pennsylvania - indicating industrial activity in this area might be picking up somewhat. Ironically, in Texas, which was stronger than the general economy during the start of the recession, orders for corrugated containers remain weak, reflecting the problems of the petrochemical business, which uses the containers to ship polyurethane pellets.
Orders have been stronger from users of lightweight cardboards, compared with heavyweights. This suggests the recovery is stronger among such users as food stores and fruit shippers than it is for the automakers and heavy furniture producers.
At International Paper, which is the among the largest manufacturers of corrugated products, Victor Casebolt, vice-president for operations in the industrial products group, says the company feels the corrugated market has plateaued. ''It's not getting better or worse,'' he said.
He says some strength in the marketplace might have been artificially produced because of a strike affecting Canadian box producers. But that strike is winding down.
Looking to the future, Mr. Casebolt says he sees no imminent sign of recovery. ''I welcome it when it comes,'' he said, adding, ''We've invested over shape to take advantage of any upturn when it occurs.''
Prices for linerboard, the raw material for boxes, have been weak all year, a benefit to the non-integrated producers of boxes, since they can shop around for their raw material. According to industry sources, linerboard is currently discounted by about $40 off the list price of $300 per short ton. Box prices have slipped less. According to the Bureau of Labor Statistics, linerboard prices are off 10 percent this year, while box prices are down only 1 to 2 percent.
But since 70 to 80 percent of box production comes from integrated producers, who start with the tree and end up with the box, this price differential hasn't helped. One industry source, in fact, says pressure has been building on linerboard prices again. This could spell problems for producers, says the industry source, since the average linerboard mill is not profitable at $260 per short ton. He also expects to see some price pressure on corrugated boxes, since the winter is traditionally a slack period for the industry.
Exports won't blossom this year, either, since the recession and the strong dollar have knocked out a good portion of overseas sales. In addition, notes William Mies, editor of Pulp & Paper Week, a Miller Freeman publication based in San Francisco, the recent spate of devaluations by the Scandinavians has hurt US producers.
The only reason the Scandinavians are not selling more product in Europe, and taking sales away from US companies, he notes, is a complaint by European linerboard companies to the European Commission. The companies have filed a dumping complaint against a large group of producing countries, including the United States and Scandinavia. Mr. Mies says he expects a ruling by year-end. It could set a higher floor price for linerboard - which Mr. Mies says would be ''a boon to the North American producers.''
Normally, when the corrugated box business picks up, the ink manufacturers, who produce the inks that go on the paper, also see an upturn in orders. But Gary Winters, a vice-president for Inmont Corporation, in Clifton, N.J., says the industry has yet to experience that pickup. He notes that Inmont has increased its ink sales by 50 to 60 percent, though this has come from taking away other manufacturers' business. As for its customers, he said, ''We haven't noticed they are any busier than before.''