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Calvin Kortman was one of six founders of Holland-based ITB Packaging LLC, which developed a system of glued fabric packaging dividers for use in shipping small parts. The company just completed developing its proprietary production equipment and plans to follow customers by expanding outside the U.S. Calvin Kortman was one of six founders of Holland-based ITB Packaging LLC, which developed a system of glued fabric packaging dividers for use in shipping small parts. The company just completed developing its proprietary production equipment and plans to follow customers by expanding outside the U.S. PHOTO: Mark Sanchez

ITB Packaging eyes global growth to meet growing demand

BY Sunday, February 03, 2019 08:54pm

HOLLAND — The $6.7 million that ITB Packaging LLC raised from private investors will go to support developing new production equipment and expanding into markets outside of the U.S.

In the years ahead, the company aims to accelerate growth, penetrate new product markets such as consumer goods, electronics and the beverage industry, and establish production for overseas customers in Mexico and Europe. The first step is to complete in-house development on the next generation of automated production equipment to produce the packaging dividers.

Existing customers with production in Mexico and Europe also want the Holland-based ITB Packaging to ramp up production near their facilities, said Calvin Kortman, one of six co-founders of the company.

“It’s hard to service Mexico from Holland, Michigan, so we have customers waiting for us,” Kortman said. “We just need the equipment ready.”

That should occur by the end of 2019 and enable ITB Packaging to scale production elsewhere, either on its own or through contract manufacturers in target markets, Kortman said.

The road ahead represents a bold next step for the Holland company that began nearly eight years ago with a simple premise: To “change the world of packaging,” an industry that was ripe for innovation.

Kortman started with the idea that he wanted to create better packaging for shipping small parts. The packaging dividers he developed are made from fabrics that are glued together rather than sewn. They flex to provide the parts with better protection from the vibration that occurs during shipment, and enable clients to ship more small parts per box or container.

The higher density per package increases the number of parts shipped per load and generates cost savings for customers.

“Because we can increase density, we can literally take trucks off the road,” said Gene McClain, a co-founder of ITB Packaging.

The six initial partners formed ITB Packaging in 2011. The company signed early customers, including Johnson Controls Inc., and set up production in the former Reddi-Whip plant on the north side of downtown Holland.

In 2012, ITB Packaging won a DuPont Award for Packaging Innovation from Dow Chemical Co.

After nearly eight years in business, and with the new capital investment as well as a new CEO who’s building an executive management team, ITB Packaging is “where we wanted to be,” Kortman said. Through the capital rise that closed in December, the company is preparing for the next stage and expanding the business globally.

“This was our goal. This was our next step,” Kortman said. “We planned on this.”

ITB Packaging largely serves the automotive industry and has some customers in the office furniture and appliance sectors, Kortman said. He sees the potential with the growth capital to pursue business in consumer goods, a massive industry that ITB Packaging has not had the scale to target.

“It’s too big for where we are,” Kortman said. “The company has to get to where it can take on those opportunities.”

Accessing capital

The initial plan for ITB Packaging was to grow the company over five to seven years and then begin expanding globally. To do that, the company needed growth capital.

That’s where Paul Shain came in. Shain is a friend of Mark Kortman, Calvin Kortman’s brother and also a co-owner of ITB Packaging.

The CEO of a Madison, Wis.-based software firm, Shain is part of a group of private investors who put their money into Upper Midwest companies with disruptive innovations. For years, he had been following ITB Packaging’s progress.

Shain organized the group of investors who put $6.7 million into the company. He likes that ITB Packaging has achieved customer acceptance, reduced risk by creating its own automated production equipment, and created savings and better shipping protection within an end user’s supply chain.

ITB Packaging also is a “pretty simple” business with good intellectual property protection.

“We like to find companies that have something unique in the marketplace, and ITB certainly fits that,” Shain said. “It’s a disruptive innovation into a business that hasn’t changed all that much in a fairly long time. They figured out a better mousetrap.

“When you think about the goods in this country that are moved on trucks and shipped in boxes, the change in capacity due to the reconfiguration of that inner liner is a pretty disruptive piece of technology.”

Packaging markets for ITB Packaging are “mind-bogglingly sized,” Shain said. One research report issued last summer put the global industrial packaging market alone as growing to $95.6 billion by 2026, from $50.3 billion in 2017.

Shain sees potential for ITB Packaging to get into specialty markets such as electronics and beverages where “the protection of the product is very important” during shipment.

New leader

Along with the growth capital came new executive leadership for the company. Jeff Tischleder, who’s worked in the packaging industry, became CEO in January. Partners who led the company since its founding, including Calvin Kortman and his wife Julie, are taking on new roles.

The new executive team can elevate the company to its next stage, said Julie Kortman, who’s been ITB’s office manager. In bringing on a new CEO, founders were recognizing their own limitations.

“We’re in a very good position to bring in people that know more than us,” she said.

Tischleder, who connected with the company through acquaintances, was working as an M&A adviser in Chicago when he was approached about joining ITB Packaging. In looking at the opportunity, he found a company with a “great concept and a great foundation for the business to scale and expand.”

ITB Packaging has recorded double-digit compound annual growth rates in recent years, including a “very high-growth year” in 2018, Tischleder said. He believes the company could potentially double in size quickly.

“Our in-bound calls are very frequent,” Tischleder said.

Read 5261 times Last modified on Thursday, 19 September 2019 08:43