Finding the courage to invest

With mills closing, energy prices soaring, and the dollar remaining strong, it seems that survivability of the North American paper industry eventually becomes a topic in any gathering of papermakers. While the vast majority of mill managers responding to Pulp & Paper's annual survey (P&P, December 2000) feel our industry will remain competitive for at least the next ten years, the sky seems grayer on the more distant horizon, where a black cloud surrounds the area of technology.

TECHNOLOGICALLY CHALLENGED. Speaking to union leaders and human resources managers from mills at the Southern Pulp and Paper Industry Labor-Management Council's conference on best practices, Georgia-Pacific CEO A.D. "Pete" Correll commented on the condition of papermaking technology in North America.

"I don't know of a single industry in this country where the technology has changed so little in 30 years," stated Correll. "I became a mill manager in 1970, and I can still start up any paper machine in our company or run any winder. Isn't that tragic? I shouldn't even be able to understand how it works, much less how to run it."

Correll continued outlining more challenges facing the North American paper industry, including a need for the industry to "collectively develop the courage to close" mills that are losing money in a way that is as "humane as possible to our employees and as beneficial as possible to our shareholders." If not done, he noted, this will eventually "hurt all the people in our industry."

Despite the problems he outlined—from technology to shareholder returns—Correll is not pessimistic about the North American paper industry.

"I believe we have a unique role to play in American manufacturing," he said. "We know what we need to do; we just need to do it."

JUST DO IT. On the flip side of closing unprofitable mills, however, it also appears that paper companies need to find the courage to take a longer-term view of the remaining facilities with potential. This courage involves investing in new, or at least promising, technologies that might change the course of existence for those mills in the future.

For example, Jack Carter, manager for SP Newsprint's Dublin, Ga., mill that is featured as the cover story of this issue, feels that "a lot of paper machines could be saved with a shoe press." Marking the first such North American application for newsprint, this technology has allowed his mill's No. 2 paper machine to achieve world-class speeds.

A major factor in SP Newsprint's successful rebuild was the willingness of company owners to commit capital for a project that carried some technical risk. The upgrade was supported by a philosophy of developing assets that are cost-effective for the long haul. Carter sees such corporate perspective as rare within the North American industry.

"The CEOs of our paper companies need to decide if they're going to take risks and stay in this industry," states Carter. "They've got to find a way to look longer term than this quarter or calendar year, because you can't accomplish the results we've had in that time frame. If they don't, one day it will be cheaper to buy paper from Sweden than it is from Richmond."

As Carter insinuates, achieving world-class status takes more than capital. It also requires a corporate-level understanding of the fact that achieving top-notch results with new technology takes time. For SP Newsprint, fine-tuning the No. 2 machine took two years. Exploiting the technology entailed adherence to sound papermaking practices and a dose of American know-how, according to Carter.

"North America needs to remember what allowed us to achieve the success we've had, which, in my mind, was practical papermaking, not just technology," explains Carter.

In his speech, Correll recognized the American ability to survive and even prosper under tremendous pressure. "That's called ingenuity and innovation, and that's what employees do," he said.

However, it's an undeniable fact, as witnessed by closure of mills with talented employees, that innovation is not enough. Even the very best American ingenuity and papermaking skills can't work miracles with obsolete equipment. As with closing unprofitable mills, if we don't invest in technology, it may eventually hurt everyone in our industry.