There’s no better example than Channeled Resources – a company that has expanded beyond its long-standing role of recycler for the industry. They’re still focused on recycling and sustainability, but they’ve also evolved into a company with three successful niche lines – release liners, pressure sensitive roll labelstock, and industrial adhesive tape.
I have a deep respect for Channeled Resources, as it’s a family business and I’m a second generation owner in a family business. And, I’ve always been passionate about the printing and print-related industries. When you talk about passion, few can rival what founder Calvin Frost brings to Channeled Resources. In the same breath, you can also say he’s passed that drive on to his daughter, current CEO Cindy White, who has added her considerable business acumen to the mix.
When it comes to family businesses, their story is the kind I like to tell. It’s a situation where the emotions of a family don’t overwhelm the business side of the operation. It’s an example of value of compromise and compassion. And it all started with...garbage.
The Ultimate Entrepreneur: Making Money From...Garbage?
The story of Channeled Resources starts with Calvin Frost, who has been banging the recycling and sustainability drum long before “going green” ever became a movement.
Frost founded Channeled Resources Group (CRG) in 1978 to purchase and process paper fibers for the printing industry. In 1985, the company shifted to processing non-recyclable – including coated, treated and/or laminated – paper and films.
“My father is the ultimate entrepreneur,” White explains. “He’s always been driven to find markets for things that are undesirable.”
Back in 1985, there was nothing quite as undesirable as the thousands of pounds of waste paper the printing industry was sending to the landfill. Frost didn’t see the paper as waste, however. He saw it as opportunity.
He made a deal with printers to ship their waste for recycling. The waste paper was shipped to paper mills for repulping. “It’s tough to pull off unless you have thousands of tons of waste material coming in every month,” White says.
One truckload of waste paper was worth $100 to Channeled Resources. You have to sell a lot of truckloads per month to make a decent living.
“I Thought He was Nuts”
Shortly after White joined the company in 1987, Frost ventured into seconds. He found coated, treated, and laminated paper and films that were all being landfilled. Starting first with release liners, then moving into pressure sensitive labelstock, CRG began selling seconds.
The seconds side of the business isn’t easy nor is it very profitable. Channeled Resources has to sell into countries all over the world, including China, the Philippines, Mexico – anywhere and everywhere people are looking for less expensive stock.
In the late ‘80s, the company was recognized as the world leader in developing alternatives for landfills and incineration of non-recyclables. There was just one problem: It was proving very difficult to turn a profit.
“There are few companies that do this,” White says. “My father has been trying to do it for years. When we first started, I thought he was nuts. I can’t tell you how many things we’ve tried that haven’t worked.”
It’s led to plenty of frustration for Frost and the team over the years, but the Ultimate Entrepreneur would not back down. Today, as sustainability is becoming a bigger issue and climate change becomes a real (yes, it is) problem, Channeled Resources is starting to see much larger players focused on waste and alternatives.
However, White also sees supply dwindling as companies reduce waste simply as a means of becoming more efficient. “Eventually, they will figure out how to reuse it,” she says.
So where does that leave Channeled Resources? Well, as I’ve often said in this column, a business cannot stand still. You’re either growing or you’re shrinking. Channeled Resources is definitely growing.
Time for Reinvention
“Every company has to use their knowledge to reinvent themselves,” White says. “The world is changing, and we have to change with it.”
That’s been White’s viewpoint ever since she joined the family business. After graduating from college, she worked at Procter & Gamble, then became part of Channeled Resources. Describing herself and Frost as both “salespeople who are people oriented,” it’s been White’s quest to find methods to grow Channeled Resources so that, in part, her father could continue to follow his passion.
The company has long sold pressure sensitive labelstock to converters all over America. Some are mom-and-pop shops that enjoy the good pricing. Others are larger organizations that see the value in seconds, even if they have to run a little slower.
But relying on seconds is tough work – and White has pushed Channeled Resources into new directions. These include:
Thermal Transfer and Direct Thermal Shipping Labels
The rise in shipping products from companies like Amazon has led to a huge increase in the need for thermal labels. Channeled Resources purchased an ETI Machine and now can produce the labels.
“We can laminate and diecut inline,” White explains. “All first quality blank shipping labels.”
Channeled Resources then sells to its converting clients, who don’t pursue this type of work. The margins are low on the product but because Channeled Resources has such an extensive network built up through their sale of seconds, the company is able to achieve tremendous volume.
“We didn’t want to compete against our label converter customers, so we picked a low margin product that would complement their offerings,” she says.
Being experts in the paper business allows Channeled Resources to buy the raw materials at an advantageous price. “We’ve been talking to paper mills for 45 years. We have an advantage because we understand how to buy paper and how the markets work,” White adds.
The company has also branched out into release liners. Once again, Channeled Resources didn’t want to compete with its customers, and release liners proved to be an ideal outlet.
“It’s sold in so many different markets,” White explains. Different verticals include the roofing, craft and furniture industries, as well as manufacturing – which includes medical devices such as bandages and EKG pads.
Because it’s so ubiquitous, Channeled Resources has been able to pursue a variety of different verticals, and in the process, made itself less reliant on seconds.
Acquisitions Help Fuel the Transition
Another reason I admire Channeled Resources is its ability to use mergers and acquisitions as a method to grow strategically.
Consider two of the company’s acquisitions:
GMC Coatings: In 1994, it acquired GMC Coatings, a silicone coating manufacturer specializing in paper release liners. That acquisition propelled the release liner niche, enabling the company to focus on quality, custom-coated release liners.
Atlas Adhesive Tape: In 2014, it acquired Atlas Adhesive Tape, a manufacturer of specialty tapes that is allowing the company to further its expansion into new, profitable markets.
Again, trying to provide products for its current converter customers, Channeled Resources started selling splicing, double-sided, and a variety of other tapes that customers can use. The company also offers diversified tape lines for the artist frame market, gaffers tapes, and bonding tapes for signs.
While the diversity of the acquisitions and the strategic focus of the new niches has allowed Channeled Resources to tap into new markets, it still faces an uphill battle in one area: its brand.
Shaking the “Recycling” Tag
When you’ve spent decades focusing on an area like recycling, you establish a reputation throughout the industry. And anyone who is in the label business knows Calvin Front (whose byline graces this magazine) appreciates their contribution to the industry and the planet. It’s ironic that as so many companies are clamoring to become more sustainable. White is working diligently to make people aware that there is more to Channeled Resources than recycling and seconds.
“My father has been so vocal and has done such an amazing job on the environmental side that I think people don’t realize all we do,” she says. “Ninety-eight percent of our revenue comes from products other than recycling. We are truly a labelstock and release company.”
Two Systems that Coexist
Perhaps the big takeaway from the Channeled Resources story is that two worlds can coexist. From a family business perspective, the two worlds that coexist are the business side and the family side. White acknowledges her father’s passion and helps to fuel it, which is not only a commitment to being green but also to supporting a family member.
Frost understands that going green requires some green currency to move forward, and so he acknowledges and supports White’s efforts to drive the company into new directions. It’s a nice symbiotic relationship between the green and non-green aspects of the business. An environmentally-focused company does not have to die upon its sword to save the planet. It can use a capitalistic bend to keep pushing forward.
I’m sure there are tough times and struggles ahead for Channeled Resources. There are for any business and any family. But by adapting, growing and learning together, they’re realizing the true potential of a family business. It is truly a pleasure to behold.
Rock LaManna, President and CEO of LaManna Alliance, helps printing owners and CEOs use their company financials to prioritize and choose the proper strategic path. Rock can be reached by email at Rock@RockLaManna.com.