This past Sunday, 13 Jun 2010, Laura and I visited the George Washington Carver Museum on the campus of Tuskegee University in Tuskegee, Alabama. Dr. Carver is one of my favorites of all the practical scientists, for he was a prolific producer and an unselfish giver of all the knowledge he could acquire.
Also, in preparation for this column, I read most (and skimmed the rest) of the "Forest Products Industry Technology Roadmap, April 2010." You can get a copy of it here if you would like to read it.
In the first two columns in this series, we talked about computer and electronic driven changes in the immediate future. In this column, I would like to be a bit more expansive.
First, I would like to say I think the industry will be better served if and when its thought leaders adopt the following objectives:
1. Develop future plans solely based on market needs
2. Cease and desist trying to save existing assets*.
For in reality, this is what the operating businesses have pragmatically done and will do in the future. Assets that cannot make an acceptable profit (read: do not have vibrant markets at acceptable margins) will disappear faster than a snowflake on a Florida beach (except when governments interfere in the hopes of saving local jobs). In the case of aforementioned interference, it just takes a little longer and wastes more money.
The idea of saving jobs and existing assets has been denounced by this column for a long time, but it seems to fall mostly on deaf ears largely because it hits too close to home or perhaps denies some scientists the primary justification for their government research grant proposals. But let's turn it around for a minute. If you could buy an automobile which was of high quality and low cost because it was entirely made by robots, would you do it? Of course you would. In fact, the last time you bought an automobile, did you ask how many hours of human labor went into its manufacture? Certainly not, it is a stupid question. The same holds true for paper, paperboard and forest products. Our human input is valuable only as long as it increases the profitability of the products produced.
Dr. Carver was famous for his market-based approach. He asked, "What can we do with a peanut?" and then set about making it happen. When he started, the farmers he eventually helped had no idea what a peanut was, let alone could it be grown profitably. Market based thinking turned it into a profitable crop for them.
If we took the same approach we would ask the arborists what is the best tree we can grow on our land. By best I mean the most profitable given the soil and climatic conditions in a given place. The physical assets and the jobs that go with them are (heresy! heresy!) trivial in the long term--only profitable markets will succeed necessitating their products be produced in modern mills. Of course this shines a bright light on one of the problems of today: the forest products manufacturers have largely sold their land (an appreciating asset) and are left stuck with merely manufacturing facilities (depreciating assets). It is like trading your house in for an automobile--and much of the research is like taking a rusted out 56 Chevy and trying to turn it into a 2010 S-class Mercedes.
So, to the specifics, for after all, this particular column is supposed to be about changes within the next five years. First, linerboard will move to lower calipers running ever faster on corrugators. Make 23 lb capable of running 150% faster than the fastest corrugators today and you will be in business. Tissue applications require two-ply performance with one-ply weight (both toilet tissue and KRT (Kitchen Roll Towels)). And a note to you tissue manufacturers--stop making the rolls narrower--we notice. Soon you will be able to put two rolls on one dispenser if you keep it up! Printing grades that can produce glossy photos at a lower price (need to work with the printer manufacturers) will be all the rage.
For suppliers to the industry, give us the following. Lighter weight components built out of high strength materials. Press sections with the rigidity of today's but with thinner arms and uprights will make felt changes easier. Or, felt manufacturers, give us a true seamed felt that leaves no mark at a lower cost than today's seamless ones. Or how about building us an on-line winder eliminating the reel and reel storage? Every papermaker I know would buy a reliable one of these in an instant. Reliability is the key--it must never take the machine down. All we need to make this possible is a supersized, superfast accumulator just like one sees on tissue converting lines.
For employees, very important personal considerations are ahead. Employees are a large input cost to the industry and a major source of liability claims. The "Forest Products Industry Technology Roadmap, April 2010" mentioned above, on page 10, says that in 2008 the US Industry produced 154.8 million tons of pulp, paper and paperboard and employed 445,000 people. Let us assume 50% of those people were in headquarters, sales, and other places not at the mill sites. For the 50% then assumed at the mill sites, it follows the production was 696 tons per employee. In five years I expect this metric will be 3,000 salable tons per mill site employee (hourly plus salary) per year. In ten years this number will be 4,000 tons (neither of these numbers have any meaning in tissue but do in all other grades). Why? I have already witnessed over 3,100 salable tons per employee per year at a mill in the United States. What does this mean? If all other employment in the industry (the 50% assumed not at mill sites) stays the same and demand does not increase, overall employment will drop by around 38% just for mills to stay competitive. You are personally in competition with your fellow employees to have one of the jobs that is left in five or ten years. It is just like college where you competed on the curve--some will survive by cheating, hopefully most which survive will do so through meritorious service.
Taking the car analogy mentioned above a bit further, I believe we are about to see in the pulp and paper industry what happened in the automobile industry. In autos, the Far East suppliers, after establishing a beachhead in North America, started making cars in North America--in modern, highly robotized plants. Watch the Chinese--they will be coming to American shores in droves soon, building new paper mills that will run circles around the relics US companies call modern. Or perhaps the South Americans will decide to come north and build highly efficient mills to convert the pulp they are already selling in North America and Europe into value-added products (I a aware of one study done on this very subject, five years ago). There is nothing to stop them, indeed, nothing should stop them. Efficiency should always win.
Further down the road, cellulose and the hanging-on-sediments that come with it, are going to be even more vital to humankind's existence. But we will have to get our research focus reoriented on a strong market-based direction first and then build the appropriate modern factories to produce it at high quality and in economical volumes. Reworking obsolete mills will not succeed, which means you need to rework your career and get ready to go where profitable jobs with a bright future will be.
In our survey for this week, we are asking you to estimate your mill's human efficiency. You can take the survey here.
I can guarantee you one thing--safety will still be in vogue in five years.
Be safe and we will talk next week.
*in the context of Nip Impressions, Week of 22 Mar 2010, "Mutually Exclusive: Old and Obsolete".