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38 Pallet C e nt ral • S e ptem be r- O ctobe r 2 0 25 exports from Brazil to the USA, the ideal would be a drop in freight rates and a reduction in export taxes." Price Pressure And Customer Anxiety Alongside tariffs, the next dominant theme was pricing pressure from customers. Many members described a race to the bottom on prices, with customers pushing hard to return to pre- pandemic costs despite ongoing increases in materials, labor, and overhead. "Everyone in our industry has allowed the customers to beat us all back down to pre- COVID pricing," said one respondent. "However, all of our costs have gone up except KD-SYP. at's not sustainable." Others echoed this sentiment, explaining how pricing battles are affecting margins, especially with RFQs being sent out more frequently and often structured in ways that obscure meaningful comparisons between vendors. "We're being asked to quote apples-to- oranges comparisons just to stay in the game," one member explained. ere is also a growing concern that customers are hesitant to invest in capital expenditures or new programs. "eir customers are uncertain, so they're uncertain," said one packaging consultant. "We've seen fewer forward orders and more project delays." "...Communica ng with customers and vendors is key so no one's caught off guard by shi s in price or availability." Manufacturing Projec ons: Mostly Stable With Cau onary Signs When asked about manufacturing and sales projections, most members expect relative stability, though with notable pockets of concern: • 62% expect inventory levels to stay the same • 21% anticipate a decline in production • 66% expect sales volumes to remain flat • 20% expect a decline in sales • 66% believe prices will stay steady, while 20% foresee declines A few companies projected increased demand—up to 10%—but not enough to change the overall tone. One respondent summed it up: "We're not cutting back drastically, but we're definitely cautious. It's not the time to overextend." Adapta on Strategies: Leaner, Smarter, Closer To The Customer Despite these challenges, wood packaging businesses are actively adjusting their operations. e overwhelming focus is on efficiency, flexibility, and stronger customer relationships. Strategies include: • Investing in automation to reduce costs and improve productivity • Reducing inventory and improving cash flow management • Diversifying fiber sources and product offerings • Strengthening communication with customers about pricing and market realities • Pursuing new markets, including international trade outside of the US "Staying lean, keeping close with our customers, and watching expenses carefully," summed up Stan Redrick of Phoenix Wood Products. "We're trying to do more with less while staying focused on long-term goals." Several respondents noted that they are buying key materials—such as nails and softwood lumber—in advance of projected cost increases. Others are using published indices—like Random Lengths or Pallet Profile— to help structure contracts that can accommodate market shifts more fairly. Dan Reardon of Reardon Pallet Company added, "We've been increasing our automation and buying materials more aggressively. Communicating with customers and vendors is key so no one's caught off guard by shifts in price or availability." Many described a tactical focus on customer trust. "We're emphasizing our value beyond price," said one member. "at includes reliability, delivery performance, and quality, which are even more critical as customers reevaluate their supplier relationships." Looking Ahead: Challenges, but Also Resilience e most striking takeaway from the 2025 Economic Pulse survey is the industry's ECONOMIC PULSE CONT.

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