Got excess resources? Get ready to rent!

Due to efficiency improvements or downsizing, your current mill site may have excess resources. These may be land, steam, machine shop capabilities, office space, or warehouse space. You may have something as simple as a truck scale that can handle many more trucks per day than you have.

Turn these liabilities into assets. If you have extra land, hire a professional industrial park developer and create an industrial park on your site. You might be able to sell the new firms steam, repair shop services, maintenance storeroom services, or other ancillaries, which will save them capital construction costs. The biggest payback would be convincing your largest customer to build their new plant on your site. Suddenly, your freight costs disappear. Perhaps you can provide ancillary services to assure your status as the favored paper or paperboard provider.

Rework surplus office space--particularly if your mill is in a small rural town--into executive office suites or other similar operations that will attract local insurance agents, lawyers, and others. Surplus warehouse space can be master leased to a national personal warehousing firm that can manage the "fitting out" and retail aspects of such a business. You may even attract your key chemical and other suppliers to lease office and warehouse space for their regional operations. They need these assets and where better to obtain them than from you?

These ideas are certainly not new. For example, Morton owns a salt plant in Rittman, Ohio. It is there because of the underground salt domes indigenous to the area. Across the street is a recycled boxboard mill. The salt was there first, then the salt plant, then the boxboard mill to manufacture packaging for the salt. You get the idea.

HIRE THE RIGHT PEOPLE

If you wish to explore any of these ideas, a few words of caution. First, your security and safety people will immediately dash cold water on this concept. The security professionals will correctly argue that, with your facility's current configuration, you cannot handle the new security and safety issues. However, motivated experts can economically solve these problems. Secondly, do not violate the principle of having the best people doing the tasks they are trained to do. If you get serious about this idea, form a separate, for-profit entity to handle the new businesses on your site. Hire professionals in the appropriate fields to manage and be accountable for performance. It is the only way to succeed.

Mills must find as many ways to generate revenues and reduce costs as possible. Taking the blinders off is important. A sad case for a community is the example at Fort St. Joe, Florida, USA. For years, mill management viewed the vast acreage of timberland included in the assets of this company as merely a source of fiber. Astute business people came along and saw the timberland for what it was--a highly valuable, under-appreciated asset perfect for development in a state running out of prime development land. Those business people stripped the timber assets from the mill, and today there is no mill. I do not provide this example to bemoan that an obsolete manufacturing asset has gone away, but rather to show how creative thinking can unlock real value from underutilized assets.

FROM COWS TO SHOW DOGS

Another example is a dairy farm in the northern Atlanta suburbs. Twenty years ago, it was out in the country surrounded by other dairy farms. Today, it is the sole survivor--not because it produces milk, but because of its new ancillary activities. The farm holds frequent events (with healthy admission charges) where city kids see how a real farm works. The farm sells T-shirts and other items one might find at a professional sporting event. Nationally acclaimed sheep dog trials are held on this site. This dairy farm may survive for a long time to come, despite being surrounded by subdivisions.

Look at all your assets and liabilities in a different manner--how can they all be put to work at the highest possible value for the owners? You may be surprised what a little creativity can do for your company's bottom line.

ABOUT THE AUTHOR: James R. Thompson is Chairman and CEO of Talo Analytic International, Inc., an Atlanta-based consulting company. He is also a member of the TAPPI Editorial Board. Contact him at [e-mail]