Does Darwin’s theory relate to pulp and paper?

By Graeme Rodden, Executive Editor, Pulp & Paper International magazine

LONDON, July 6, 2009 (RISI) - Let me first stress that the title does not in any way refer to the evolution/creationism debate. Rather it refers to his survival of the fittest theory, a quote which Charles Darwin himself acknowledged was first used by one Herbert Spencer.

But I digress. I attended the recent TAPPI PaperCon '09 and the reference came about during an excellent presentation by Joseph Morone, president and CEO of Albany International, during the Executive Panel Discussion.

Morone pulled no punches in his talk and skipped the usual platitudes you often hear in these types of sessions. Morone asked how a company can preserve its ability to innovate, differentiate and hold on to the talent that would lead the innovations in an environment where it is imperative to cut costs and preserve cash.

Morone noted that although Albany still derives 70% of its revenue from traditional paper machine clothing, the company is evolving into an advanced textiles and materials (engineered fabrics, aerospace composites) company.

Morone said that the current recession will accelerate the underlying trends: e.g., decline of printing & writing papers and newsprint, the shift of economic power to Asia.

No relief

"For every industry, it will be Darwinian," Morone stated. He believes there will be bankruptcies up and down every supply chain. For North America, he said it will force permanent change: smaller markets, more demanding customers and greater price sensitivity. And don't expect relief anytime soon. He believes the current recession will last well into 2010.

How to respond? You can't sit and wait. Morone admitted that Albany is assuming a 15-20% permanent drop in revenue. It will have to restructure to achieve its pre-recession profitability, to strive for permanent cost cutting. The chances are excellent that Albany is not the only company being forced to do this, but who wants to admit it?

The solution is to in a low-cost position. This presents the problem of trying to innovate, which means employing talented people who generally deserve and demand more. Still, Morone said that a company has to strive to employ the best talent who must be better because there will be fewer of them. "We must upgrade our talent even while downsizing and restructuring."

It will mean hiring from the outside. Morone even said it will mean Albany will try to "grab" the best in the industry.

The value of the skilled and talented worker cannot be overstated. This edge in talent can give a company a lead over its competition that can be impossible to overcome. A seven-year head start according to one study, Morone added, compared with a 60-day lead if one tries to do it through pricing.

In closing, Morone said that the post-recession economy will be like the recession. Everyone will be low-cost so differentiation is the key.

An outsider's eyes

In the question period that followed the panel discussion, one delegate asked what could be done to promote the industry. This debate has raged on for ages and it seems we are spinning our wheels and always asking the same question. One person, Thomas Easterday, senior vice president, secretary and general counsel of Subaru of Indiana Automotive, who had just given an excellent keynote presentation of his own, said the industry should get involved with literacy programs; make the connection to the paper. This struck a nerve with delegates.

Yet, does anyone remember the superb series of advertisements that International Paper ran beginning in 1979, a long-term program called The Power of the Printed Word. I still have my bound copy of 12 ads that won the 1982 Stephen E. Kelly ward for the best magazine advertising campaign of the year. That's right, won by a paper producer, not a software maker, not a perfume company, not a sportsware company, not a fashion maker, but a papermaker!

It was brilliant. Among the guest authors: Malcolm Forbes on how to write a business letter; the actor Tony Randall on how to improve your vocabulary; Bill Cosby on how to read faster; Kurt Vonnegut on how to write with style; James Michener on how to use a library; Steve Allen on how to enjoy the classics; George Plimpton on how to make a speech; author John Irving on how to spell; r u listening all you Twitterers?

So we do have it in us. We need someone to step up, but more on this in a later blog.