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Trying to make box joints in shop-grade plywood is an exercise in frustration. I used waste boards on both sides, I used the best all-carbide up-cut bit I could buy, I made my jig with as much precision as I could muster, and I still cut hundreds of failures. Mostly because of tear out. The shop-grade ply glue is not good enough to hold the laminations together under the cutting stress, and the voids in the ply ruin the fingers.

If you insist on using plywood, use high quality Baltic Birch (Russian) plywood and as Stick says, clean your cutter frequently.

Best of luck!
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