This story appears in the August 16, 2015 issue of Forbes. Subscribe
When Anthony Pratt, the affable, orange-haired Australian billionaire behind America's biggest maker of fully recycled cardboard boxes, takes you on a tour of his factory in Valparaiso, Ind., you're bound to stop for the bronze plaque outside: "Dedicated by Muhammad Ali on July 15, 2000." "I like to say we're the second-greatest boxer of all time," Pratt chuckles.
Well-worn jokes and a friendship with Ali aren't the only things he has to be happy about. His privately held Pratt Industries is one of the fastest-growing players in America's $35 billion corrugated packaging industry and the only big boxmaker using 100%-recycled paper. By taking the nation's paper trash--yellowed newspapers and greasy pizza boxes--and turning it into new packaging, Pratt has helped bolster a personal fortune FORBES estimates at $3.4 billion, while saving some 50,000 trees a day. That's especially significant in today's world of online shopping, where everything comes in a box. "We were in recycling before recycling was cool," says Pratt, 55.
In the past 15 months alone the company, based in Conyers,Ga., has invested nearly $450 million in America, most notably constructing a $260 million paper mill (the company's fourth) next to the Ali-autographed box factory in Valparaiso. The firm does $260 million in Ebitda (on $2 billion in sales), and Pratt thinks it will surpass $300 million once the new mill--driving his first big push into nearby Chicago, one of the largest box markets in the U.S.--comes online in September. In total the company operates more than 130 sites, including paper mills, box factories and distribution centers, across 26 states and Mexico, churning out more than 3,000 tons of paper every day. That's enough to create 12 million boxes, all without cutting down a single tree. "They're the upstart player in the industry," says Mark Wilde, managing director at BMO Capital Markets. "It's a remarkable story."
Pratt's journey began at a single wasteful paper mill in Macon, Ga. in 1991. That's when he was dispatched to the U.S. from Australia, where his family operated Visy, a recycled-packaging juggernaut founded by his grandfather in 1948. (Today Pratt Industries and Visy operate as sister companies, both run by Pratt.) Arriving in the country he quickly saw a gap in the market. Everyone was making paper from trees. Why wasn't anyone just recycling the stuff heading for the landfills, as Visy did in Australia? He soon shuttered the Macon mill and focused on recycling the waste produced by competitors.
That decision--made more than a decade ahead of the recent consumer-driven outcry for greener products--unleashed a domino effect of efficiency. Unlike his rivals, who must operate mills close to timber sources and then send the paper to factories near cities, where it's turned into boxes, Pratt situates operations where they make the most logistical sense: near cities, which are full of waste--and customers--thereby cutting transportation costs.
And because he's relatively new to the U.S. market and builds his own factories--rather than acquiring existing plants, like most of his competitors--Pratt's facilities are some of the most advanced and efficient in the industry. He builds cheap by owning his own construction company, one that specializes in making mills on budget. Newer technology and the relative simplicity of the recycling process allow his mills to employ just a quarter of the staff his competitors do. "We're building the space shuttle competing against other people who are still flying Spitfires," he says.
Still, he's dependent on his competitors to keep pumping out more paper to be thrown away, collected and sent to his mills. After all, paper fiber can be recycled only so many times before it starts to disintegrate. But given the size of America's paper market and how entrenched his competitors are in the standard (and profitable) method, he's bullish about the future.
He sees Pratt Industries, which controls less than 5% of the U.S. market, doubling in size to more than $4 billion in sales in the next seven years while global sales grow to $10 billion. That includes $1 billion from his newly launched California operation, a play into the state's massive fruit and vegetable market. Pratt is also cozying up to big shippers like Amazon and the U.S. Postal Service, betting that the rise of online retailing will translate to more boxes being sent directly to consumers who want to see sustainable products. And Pratt continues to expand one of his most successful product lines: lightweight packaging.
He's also dependent on U.S. companies to keep pumping out products to be boxed, tethering him to American manufacturing. That puts him in a position many might find uncomfortable, yet Pratt is happy to rely on a sector many once counted out. Industry is booming, according to Pratt, and the country's regenerative nature is more than enough to carry a young boxer a few more rounds. "My policy in America is 'steady growth is forever,' " says Pratt. "We think sustainability is a wave that's not going away anytime soon."
