Staff Photo: John Bohn Oscar De la Cruz, is a printer operator at the RockTenn Company corrugated packaging plant in Norcorss. The plant specializes in the manufacture of corrugated boxes of all size and shapes.
NORCROSS -- Nearly 40 years ago, this city was home to a family-owned business of paperboard and box manufacturing with sales of $23 million.Today, RockTenn Co. reports $10 billion in net sales, and is one of the crown jewels of the business community in Norcross and Gwinnett County.
This month, RockTenn announced the acquisition of Smurfit-Stone, one of its competitors, and subsequently made a $5 million local investment that would create 500 jobs in the next two years.
In an economic climate where business expansion is rare and job creation is not often delivered, RockTenn is proud to be an aberration to recent trends.
"It's fun, because it makes you proud," said John Stakel, a RockTenn vice president and the company's treasurer. "It's energizing, rewarding from a professional standpoint."
RockTenn, which has a presence in Canada, Mexico, Chile, Argentina and China, has operations in Norcross, Lithia Springs, Columbus, Duluth, Hartwell, Covington, Atlanta, Augusta, College Park, Lithonia and Marietta. It boasts more than 26,000 employees.
The new jobs will come from Chicago and Creve Coeur, Mo., a suburb of St. Louis, but Stakel said RockTenn would still have a presence in those cities.
"Mergers and acquisitions are difficult, because at the end of the day people are impacted by it, both positively because RockTenn is more successful," he said. "But if you're maybe in Creve Coeur or Chicago, for them it's not, maybe, the same end result, but hopefully they find great professional opportunities."
While this kind of job creation has been called "monumental" locally, it's also atypical around the state. Chris Cummiskey, the commissioner of the Georgia Department of Economic Development, said in an email message that there have only been two other companies to add this many jobs in the state in the last 18 months.
Gulfstream added 1,000 jobs in Savannah, and Toyo Tire added 500 jobs in Bartow County.
"Today, everybody is concerned with job creation, and keeping jobs," said Bucky Johnson, in his fourth year as mayor of Norcross. "So it couldn't be any more timely."
Locally, FedEx announced in February that it would add 240 full-time and part-time jobs in Norcross. Hyundai Construction Equipment Americas Inc. has said it would add more than 100 jobs in Norcross by the end of the year.
Part of the reason RockTenn decided to keep its headquarters in Norcross was the $15.7 million in incentives it received from the state and Gwinnett County. It also received $700,000 in property tax incentives from the city of Norcross.
And because the new jobs will have a pay scale that's considered above average, RockTenn will receive $12.5 million in Quality Job Tax Credits.
The new RockTenn space will be in the current Duke Realty building in Duluth, which has more than 68,000 square feet.
Cummiskey said incentives play a role in a company's decision to come to the state, or stay, but they aren't the most important factors.
"All the incentives in the world won't do you any good if you can't meet what a company needs to operate profitably -- factors like workforce and infrastructure, access to markets," he said.
Gwinnett is within a two-day truck haul to 80 percent of the markets in the U.S., Cummiskey said, Hartsfield-Jackson International Airport provides efficiency for company officials, and the Georgia coast is home to the fastest-growing port in the country.
"We love being headquartered in downtown Norcross," Stakel said. "That could have changed, but the right situation was for corporate headquarters to stay here and rent the satellite space."
Added Cummiskey, "RockTenn is a great example of how important it is to cultivate our existing companies. The company's experience here certainly helped pave the way for its decision to consolidate its functions in Georgia after it acquired Smurfit-Stone."
RockTenn's history stretches back to its original CEO, Worley Brown's father-in-law, Arthur Morris. Morris bought Rock City Box Company in 1945 after it was founded in 1898. In 1953, the Norcross roots were planted when Morris purchased Parks Box and Printing Company in Norcross. Morris then persuaded Brown in 1964 to join the company.
RockTenn was formed after Rock City Box Company merged with Tennessee Paper Mills in 1973. Tennessee Paper Mills was founded during World War I, and survived the Great Depression and World War II while Morris established a friendship with the grandson of the company president.
"For a company like that, that grew up in Norcross and chose to stay is monumental," Johnson said.
Johnson said generally when companies relocate, about 30 percent of the employees make the move.
The new jobs will make RockTenn the ninth-largest company in Gwinnett County, with more than 900 employees. It would also be in the top 10 of the largest publicly traded companies in metro Atlanta by revenue.
Stakel said RockTenn would project to be in the Fortune 260 among Fortune 500 companies in the next fiscal year.
Stakel pointed to the vision CEO James Rubright brought when he joined the company in 1999 as a reason for the company's growth within the paperboard industry. RockTenn makes boxes and consumer paper and cardboard-based packaging boxes for products from microwavable meals, to fast-food boxes, to bubble gum. That vision is based on principles of low-cost prices, efficient manufacturing and great customer service, Stakel said.
As Johnson noted, and Rubright referred to in earlier news reports, RockTenn prefers to stay in the background, yielding to its clients' brand or product identity.
"You have to invest for competitive advantage," Stakel said. "A lot of companies get to be low cost by slash and burn, just cutting costs. We actually invest in technology and people and processes and systems to help drive costs out of the business."
Stakel said in the 2012 fiscal year, the company would invest $480 million in business and capital expenditures.
Since it formed, RockTenn has made about a dozen acquisitions, but three are considered major since 2005.
It acquired Gulf States Paper Corporation in 2005 for $540 million, Southern Container Corporation in 2008 for $993 million, and Smurfit-Stone for $3.5 billion.
In the first five trading sessions since the Smurfit-Stone acquisition was announced, RockTenn's stock was up 17 percent.Before the acquisition of Smurfit-Stone, RockTenn held 2 percent of the container-board market, and Smurfit-Stone owned 17 percent. But in 2009, Smurfit-Stone filed for Chapter 11 bankruptcy protection. In June of last year, it emerged from bankruptcy, and reported improved profit margins last fall.
Stakel said RockTenn monitored Smurfit-Stone's quarterly reports, and the acquisition became official in January, which made RockTenn North America's second-largest container-board company behind International Paper.
The only remaining connection to the Brown family in the company's leadership team or board of directors is Brown's nephew, J. Powell Brown, who sits on the board, and is president and CEO of Brown and Brown, Inc., an insurance broker in Daytona Beach, Fla.
"It's a larger business at the end of the day, but it's all about investing in our business," Stakel said. "Hiring good people, executing the many processes a day to make your business successful. It's really just more of the same, just on a larger scale."
The gravity of the jobs addition wasn't lost on Johnson, who said if RockTenn chose to leave the area, "it'd take us 100 years to make up for that."
"It's probably the biggest economic headline in the 140-year history of Norcross," Johnson said.