A Texas Packaging Firm with a Global Reach
Austin Foam Plastics
Austin Foam Plastics (AFP) designs, manufactures and sources protective packaging for products to ensure they are not damaged in transit. The company perpetuates a global reach, a family-like corporate culture and initiatives for sustainability that have earned the firm industry kudos.
AFP’s Pflugerville, Texas (a suburb of Austin, TX) headquarters features over 500,000 square feet of production space. From the heart of Texas, the firm has customers across the United States and abroad. “We’re expanding more into China and Mexico,” says AFP President Rick Lange.
AFP has clients in the computer, automotive, appliances, electronics, military, retail and medical sectors. Among its many capabilities, it produces custom packaging for weapons and other equipment for the army and law enforcement.
AFP is located in the Austin, Texas area and also has locations in El Paso and Carrollton (Dallas) in Texas, Columbus, Ohio and La Vergne (Nashville), Tennessee. The company also recently opened manufacturing operations in Mexico.
“We are starting to do some manufacturing in Mexico. Due to timing, creating an operation in Juárez presented challenges when we set up in El Paso. We initially chose to do manufacturing on the US side and send that product into Mexico. We had to look at how to become more cost efficient in that model. While we’re still predominately doing most work on the US side, we’re incorporating final assembly in Mexico to remain competitive,” explains Lange.
AFP can provide custom corrugated boxes, case inserts, foam, crates and pallets, and such customized packaging is becoming particularly important as online business booms. “A lot of customers are buying product off the Internet. This is a change from the normal retail method of going to a store and buying product, putting it in your car and driving off,” says Lange.
A product purchased via an online store will go through a long shipping process before it gets to the customer, a process that might involve being dropped off a steep conveyor belt and mishandled by multiple workers and machines. All of which increases the need for protective, cushioned packaging.
Corrugated is one of many packaging products employed by AFP in packaging designs, but it is hardly the only material the company uses. The company also uses various kinds of foam including polyethylene and polyurethane, as well as a molded pulp material derived from recycled office paper, corrugated and newspapers that are then molded and formed and put through a drying process.
Given that AFP specializes in custom design work, it is no surprise the firm has had a few odd requests over the years. Lange recalls a client that wanted to ship fifty-pound gaming systems. The system was shaped like a spacecraft, and the contract required an outside container that mimicked the same design contours.
AFP came up with packaging that “literally looked like a space capsule, Apollo 11 or whatnot,” recalls Lange.
AFP has also made packaging for plants growing out of the side of vases. “To transport and ship a product like that, where you’re not breaking the plants off, is quite challenging,” he states.
In addition to designing, creating and sourcing packaging, the company does some logistics work, offering what Lange calls a ‘trailer program.’
The trailer program assists customers that do not have a lot of warehouse space to house packaged goods. AFP allows customers to store such products on transport truck trailers that travel to the client’s locale. Customers can then ship the packaged goods from AFP’s trailers.
AFP has a logistics vehicle fleet and does short-haul deliveries with its own drivers. That said, it aligns with logistics providers, particularly for cross-border shipping. When moving through customs, it makes more sense for the company to hire a logistics carrier experienced with all the rules and regulations involved than to try to handle the task on its own, says Lange.
Last year, AFP’s revenues came to around $100 million. For 2016, “we’re projecting a little lower in the US, a little higher in Mexico and China,” says Lange, who gives an overall revenue forecast “in the $105 million range.”
The company was founded in 1978 by “five gentlemen from two different companies who got together and recognized the need in the Austin area for a custom packaging company,” states Lange.
The firm’s first employee, Tim O’Hearn, eventually became majority owner. O’Hearn died in an automotive accident in June 2013, but his legacy continues. His three daughters are now the majority owners. AFP is in the WBENC (Women’s Business Enterprise National Council) certification process to become recognized as a WBE (Women’s Business Enterprise). “People aren’t just going to give you business [because we’re woman-owned] but it opens doors for us, [and allows us] to be able to prove what we can do,” says Lange.
O’Hearn developed a corporate culture based on openness and caring for employees. Lange describes the former owner as “very gracious … he took care of the employees; the employees took care of the customers, and the customers took care of him.” Under O’Hearn, the firm “became more of a family-type environment.”
Its positive corporate culture is one reason so many employees have spent decades working at the firm. The average tenure of an AFP employee is seventeen years.
At present, the company has roughly 225 permanent employees. At different times in the year, the workforce swells with temporary employees, pushing peak employment to around 1,000 people. These surges depend on the workflow of AFP’s clients. Many of them in sectors such as retail, experience dramatic swings in sales volume throughout the year, “so you have to have flexibility within your workforce to handle those peaks and valleys,” explains Lange.
The company likes to establish long-term relationships with its partners and suppliers and has worked with some of the companies in its supply chain for twenty to twenty-five years.
AFP particularly likes teaming up with partners to work on new projects. Together with a company called Sealed Air, AFP developed a recycled polyethylene product, a type of transport packing foam. The product consisted of sixty-five percent recycled content. In addition to being better for the environment, the new packing foam reduced shipping costs because it was lighter than previous material.
In 2010, the product earned AFP and Sealed Air a silver DuPont Award for Packaging Innovation. A DuPont press release called the recycled polyethylene packing foam “an excellent example of responsible sourcing.”
While AFP is not currently ISO-certified, the company aims to maintain ISO level standards. The firm at one point was ISO certified, but felt the certification body “started going down a path we didn’t necessarily agree to,” concentrating heavily on “a hyper-focus on documentation, not necessarily the quality of your product,” explains Lange.
AFP does not do a huge amount of promotion, as much of its work is business to business (B2B). The firm is taking steps to develop a social media presence, however. In addition to the company website, AFP is now on LinkedIn Twitter and Facebook.
The firm has big goals. Within five years, AFP hopes to double in size from where it was in 2015. “Part of that may be through acquisition; part of that may be through organic growth, but it’s also going to be through expanding our product and our offerings and our customer base,” says Lange.
“I can’t say we’re looking to invest in a particular technology right now. The reason is, technology is changing very quickly … I don’t want to invest in a technology that may be obsolete in two years.”
One potentially huge development is arising from the changing freight pricing policies of many courier firms. Instead of charging a fee based just on weight, shipments will be priced according to their “dimensional weight” (which is based on the width, height and length of packages). On January 1, 2015, FedEx Ground switched to dimensional weight pricing for all packages (previously, dimensional pricing was only applied “to packages measuring three cubic feet or greater,” explains a May 2, 2014, FedEx press release).
Under these changes, a lightweight product in a big box might become more expensive to ship.
“Our big focus for customers is to really work with them to explain how the logistics costs impact them more so than the packaging costs. If we can help reduce the logistics costs, by changing the dimensions of the box – by half an inch, a quarter-inch – we can save them significant money in logistics costs,” says Lange.