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Thrive! And that's no jive.

"I want to win, not merely survive," is a lyric from the ever-popular "My Way," a song made famous by the late Frank Sinatra. That particular lyric sums up some of the pent-up longings of the pulp and paper industry, which has been on the "surviving" side of that equation and stressed out about it for a decade or so--at least in North America.

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With economic news and the industry's prospects turning up recently, the possibility of "winning" seems less remote. That's why it was nice to hear some optimistic thinking in late June at the PIMA Leadership Conference in New Orleans, which included both the PIMA International Management Conference and the PIMA IT Conference. A year ago, "thriving" seemed like a quaint pipe dream. But today, as the rear-view mirror says, maybe it's a bit closer than it appears.

One of the focal points of the PIMA International Management Conference, as always, was the President's Panel, which includes leaders of pulp and paper companies and suppliers to the industry. The panel usually provides insightful, challenging assessments of the industry, and this year's panel continued that tradition. The focus of the President' Panel, as you might guess by now, was "thriving, not just surviving"--also the theme of the conference.

Thomas V. Brown, president and CEO of Caraustar Inc., Atlanta, Georgia, examined how his company had weathered the financial storms of the past decade and has emerged stronger. He had an interesting definition of the challenges companies face each day, calling it "hostility." He noted that it changes almost constantly. Traditional hostility, he noted, is competition from domestic players and other known entities. Structural hostility, a growing trend, involves regulatory compliance and obligations such as health care costs. One more trend, global hostility, "hit us like a ton of bricks," he said. "A lot of box production went offshore and we had to figure out what to do when the customer leaves the country."

Despite the challenges, Caraustar believed it could thrive in the "old economy." "We were focused on just one industry--we had to diversify. We had to find new products and new markets entirely." Caraustar greatly reduced its exposure to the specialty products market, entered the folding carton market, grew its gypsum paper business and maintained its tube/core business. The result is that the company has a balanced portfolio in those four areas. Caraustar grew in the 1990s at a 15% compound annual growth rate. Rightsizing and rationalization at Caraustar and other manufacturers has led to a major rebound in capacity utilization; in the first quarter of 2004, Caraustar was at 96%.

Dr. William H. Joyce, chairman and CEO, Nalco Company, examined what successful companies have done to win in difficult markets. The number one factor is that they don't give up, and they have confidence in paper/paperboard as a superior material. To win, said Joyce, companies must:

* Last through the cycle.

* Focus on areas of competitive advantage within their segment and keep a steady stream of new products coming.

* Continue to emphasize cost control by setting aggressive targets and using work process redesign. Look at the entire work process and total cost. Trace the flow of money, information, and people. Achieve a savings of 20% on variable costs, and remember that 50% is possible.

* Invest in innovation. Paper competes with many materials, so we must grow new markets and defend existing ones. Use process improvements to free up resources for innovation.

Jan Brons, president of SKF Reliability Systems, examined the entrepreneurial spirit. "I am Australian by origin and I have worked in many countries," he said. "I've never experienced a more entrepreneurial and innovative society than the U.S. We need to apply that energy to the pulp and paper industry."

He noted three key focal areas for management: innovation, local effectiveness, and global efficiency. "Good management focuses on facilitating, evaluating, and selecting the most promising new technologies. Global efficiency comes from using an enterprise asset management program to effectively manage sales and the company's knowledge base. Local effectiveness involves improving your operating efficiency by more than 20% over the next five years."

The President's Panel offered some good advice; as always, putting it into practice will be the hard part. But as some companies begin to thrive, they will have the resources to do just that.

ALAN ROOKS

Editorial Director

Contact Alan at +1 847 998-8093, or by e-mail at: arooks@tappi.org
COPYRIGHT 2004 Paper Industry Management Association
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Article Details
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Title Annotation:Viewpoint
Author:Rooks, Alan
Publication:Solutions - for People, Processes and Paper
Geographic Code:1USA
Date:Aug 1, 2004
Words:741
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Next Article:Continuous upgrading of paper machines as a business strategy.


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