Houston, Texas While the economic forecast for the corrugated industry has improved in the past year, William B. Howes, chairman and CEO of Inland Paperboard and Packaging Inc., is losing more sleep than ever.

"After all, haven't we been here before and wasn't it just a short time ago?" Howes asked approximately 75 members of the Fibre Box Association (FBA). Howes was the keynote speaker at the FBA's 59th annual meeting, which took place May 2-4, in Houston, Texas. He pointed to several indicators of a healthier outlook for 1999, including the reduction of capacity through industry consolidation and recent announcements of price increases.

"But I must tell you that in the face of this optimism, I'm even more concerned about our future," Howes said. "There are many troubling questions that sit in front of us today. Will the removal of high-cost capacity be enough to ensure that this industry can earn an acceptable return in future years? Will we learn from our mistakes and think and act differently, or will we revert to the same old behavior [of adding capacity]?

"If we think that taking out capacity alone will solve everything, we are deluding ourselves," he continued. "Demand is also part of the equation, and if you haven't noticed it, the demand side of our business is under siege."

In keeping with the theme of the FBA meeting, which was "Houston, we have an opportunity" and included a visit to the National Aeronautics Space Administration, Howes summed up his thoughts with the famous phrase: "Houston, we have a problem." To put it more bluntly, he said demand has slacked off because today's corrugated industry: has no vision; has forgotten how to market; and has lost its sense of identity.

In the first 25 years after World War II, the corrugated industry demonstrated vision and innovation when it converted manufacturers from using wooden crates and burlap sacks as shipping materials to corrugated containers, said Howes.

"Somehow, however, this industry became enamored with the idea that the incremental mill ton was free, and we built mill capacity to capture those free tons without regard for the market," he said. What has resulted is a disjointed industry that has a lower return on investment than many other key industries. "We quit developing markets and innovative products. In the process, we forgot how to sell," he said. As a result, competitive materials, such as plastic, have taken market share.

Howes urged his fellow FBA members to unite and reinvent the industry's image and vision. The cotton and steel industries did it, he said, as well as the milk industry, which-comparable to corrugated-is an approximately $29-billion industry that pooled its efforts and resources to spend about $216 million in advertising.

"The simple question 'Got milk?' and the now-famous milk mustache have made it cool to drink milk," Howes noted. "And it shows in the numbers. After 20 years of flat sales volumes, the per capita volume of milk consumption went up in 1995 for the first time in decades. " This doesn't mean we have to do a television campaign," he said. "It means we need to open our wallets and give serious support to rebuilding a positive image of our industry."

Members of the FBA also learned about working with younger generations through a presentation by a firm called Bridgeworks, and they were treated to a moving speech delivered by Captain Eugene Cernan, who flew the Apollo 17 space capsule in the nation's last mission to the moon.