Industry management survey reveals budgets, trends and job satisfaction

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

BRUSSELS, Jan. 17, 2011 (RISI) - Outdoing our first worldwide mill management survey (PPI, December 2009, p. 31), this latest effort attracted an even greater response. And once again, every sector of the pulp and paper industry was represented, from market pulp to tissue to newsprint to fine paper to the packaging and board grades. Responses were received from around the world, about a quarter of them from North America.

The questionnaire included queries on such things as competitiveness, budgets, trends and labor relations. The responses came from people whose mills employed anywhere from fewer than 10 to more 1,500 people.

Experience still counts. More than half of respondents had more than 20 years' service in the industry, including two who had 40 years of service. This fact did show up again in a later question when managers were asked about the challenges they face.

Figure 1 - Do you like your job?

Despite the changes that have happened and continue to happen in the industry, there was overwhelmingly high degree of job satisfaction among the respondents. More than 50% said they "strongly like" their jobs. This was an even higher number than last year when 49% indicated they ‘strongly like" their jobs. Another 30% said they "like" their jobs.

Perhaps tied into the job satisfaction level is the degree of involvement many said they had in strategic planning, particularly in the operations end.

• "I am intimately involved in strategic planning for our mill."
• "Good opportunities for input and ideas."
• "We routinely discuss future challenges and opportunities."

The biggest complaint from those that feel left out was top down decision making.

Figure 2 - What is the general outlook for 2011 in terms of your mill's products in the marketplace?

The problems

When about the biggest problems they faced, managers' answer ran the gamut of issues: poor quality, rising costs, labor; overcapacity; energy costs, the aging workforce and tied into this was the "lack of a young and interested" labor pool. Other concerns cited:

• "Union that does not see or understand the economic realities of our business."
• "Balancing people and mill needs with budget constraints."
• "Finding successful new products."
• "Extreme focus on the day-to-day."

Managers were once again asked about the results of mergers and/or private equity taking a large role in the industry. Repeating last year's response, about one third said it would result in greater profitability. However, unlike last year when 12% believed the opposite, this time, only 5% said mill profitability would probably go down.

A large majority (73%) felt their mills were investing sufficient capital to retain competitiveness. Of those who felt more was needed, paper machine issues, automation and new product research and development were the areas most cited as needing the attention and capital.

Figure 3 - If you were advising a young employee or student in the pulp and paper industry whose goal was to become a mill manager, which of the following skill sets would you encourage that person to focus on most?

The biorefinery

Again this year, we asked if companies had invested in a bioenergy project, Although the issue has attracted an enormous amount of attention in the past few years, it was somewhat surprising to see that only about 33% answered in the affirmative. However, when asked if they would invest in one in the next five years, more than 50% said yes while another 23% answered that they did not know.

Just over half of respondents said that even with the focus on cost control, their mills were not outsourcing more mill functions. Of those services outsourced, maintenance virtually equaled the numbers for others cited such as transport, water treatment, energy and woodyard operations.

But when asked what areas should not be outsourced, maintenance led the list for some.

• "It is essential to keep the knowledge in the company."
• "A mill's specific needs require people with experience."
• "You get less ownership of the equipment."
• "You need people who understand the process and are involved.

There was an interesting answer from someone producing currency paper who said because of that mill's unique product and security concerns, it did all virtually work in-house.

Although many said competitiveness was a concern for their particular mill or company, more than 75% said their region would remain competitive in the next 10 years.

Given a wish list if they had the available capital, there was a three-way split on how such money would be spent. Process control/automation, energy including bioenergy and paper machine were the areas most would like to see work done.

Figure 4 - Are labor relations at your mill better or worse than five years ago?

The rising costs of raw materials and energy were the biggest worry for many managers. Other challenges:

• The need for a long-range strategy to stay competitive in changing global markets."
• "Staff is aging... need for an HR strategy for senior colleagues." Similarly, someone said the "brain drain" in the next five years is going to be a big challenge.
• "Getting buy-in from workers that large change is necessary to stay competitive."

Perhaps due the massive amount of downsizing that the industry in the developed world has gone through in the past few years, fewer than half feel their mills will reduce their workforces in the next five years. Many said they had already gone through downsizing. "We're running lean with an aging workforce."

Still, others said financials had to improve and another foresaw a section or machine closure at his mill.

Getting the most tons out the door is still the goal of half of the mills, according to the answers received. The other half said their companies target production in response to demand.

This year, we added a question about whether there would be more merger/acquisition activity in the industry in 2011. A large majority, 85%, said yes. When asked if they thought their companies would be involved, 50% said yes. For those who answered in the affirmative, when asked if their companies would be buyers or sellers, 64% said it would be as a buyer while another 14% said it could be as both.

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