Email Jim at jthompson@taii.com

Listen to this column in your favorite format

iTunes or MP3

When considering capital projects, especially those of larger sizes, I have always been bemused by the owner's team approach to negotiations with goods and services providers. The closer such a provider is to the front end of the project, the more scrutiny, the more vigorous, the negotiation process.

The engineers withstand the worst of this (because they are usually first), but so do capital equipment providers that are early in the process (those with long lead items). The project leader and her team will spend a lot of time analyzing the various bids and approaching them from many different directions in the first few weeks of the project. Later, in the heat of battle, or as the project is nearing the end of the procurement phase, they will spend just as much money on certain items as they do up front, but with a lot less care and enthusiasm.

Insurance is a good example of something paid little attention. So are logistics services. Insurance of all types is necessary to execute a capital project, but seldom do I see anyone use a professional broker to bundle these together, a process I believe could save considerable money. Transportation, or logistics services, could merit further examination and some sort of bundling process as well. I could even see logistics and insurance bundled together in some innovative ways.

****

Save the date! The Pulp and Paper Industry Reliability and Maintenance conference, sponsored by IDCON and Andritz, will be held March 19-22, 2018 in Raleigh, North Carolina.

****
For instance, if I am paying for insurance to protect from loss of a ship full of my new paper machine parts if it sinks, it seems like there may be duplicate coverage that could at least be consolidated should I also have insurance for protection from loss from a late startup. These would be related events and there must be some way to combine the coverages for, to some extent, they are duplicates, or related at least.

If I took all the logistics out of every contract and placed these transportation services with one transportation company, I could also theoretically get a better price than piecemeal here, too. If, further, I add a bonded warehouse on the receiving end to hold the equipment until I need it, more savings may be available.

But instead the team thinks these things are a drip here, a drop there, and don't amount to much in the big picture. News flash: insurance and logistics services often equal the cost of engineering and when summed into the total project costs, it makes no difference where the dollars are spent, they all drop to the bottom line.

****

EMPLOYMENT OPPORTUNITY: We are a large automation company that has a line of consistency transmitters, sample valves and sheet break detectors that are marketed through a rep. network. We are seeking someone with a strong background in consistency control to facilitate start-ups, provide troubleshooting and technical advice. The individual should have experience in all major types of consistency measurement technologies (blade, rotary, microwave and optical). Knowledge of sheet break detection technology is desirable as well. Willingness to travel to paper production facilities across the US is a must.

Travel & Living Expenses to be reimbursed along with an agreed upon daily per diem rate.

For more information, please contact Jim Thompson at: jthompson@taii.com Ph. 678-206-6010 Cell: 404-822-3412

****

Why do we behave so irrationally concerning these expenditures? Because they are in relatively tiny pieces and we erroneously think we are laying off liability to the various suppliers if we let them be inclusive in their contracts. Plus, we have lost our enthusiasm for negotiations.

So, may I suggest the next time you are assigned a major capital project that you start by bringing in the insurance brokers and the logistics companies and just see what kind of packages they offer you? You may be pleasantly surprised.

For safety this week, your construction site is fraught with hazards, hazards that start well before anything arrives on site. Make sure your insurance expert reviews your total plans even before you start.

Be safe and we will talk next week.
___

It is advertising sales season, and we have produced the best media kit we have ever put together. Ask me for a copy today and put my feet to the fire--make me explain it to you. You can get one by calling me on my cell phone--404-822-3412--or emailing me at jthompson@taii.com. As we have been saying, if you like our innovative ways of presenting the news about the pulp and paper industry, I'll suggest you do the following. If you are in a mill and like what you see here, please tell your suppliers what you like to read and who you would like to see them support with their advertising budgets. If you are a supplier, please be aware (we know) we are first in news, (we think) we have the largest audience in the pulp and paper industry worldwide and (we know) we have the lowest advertising costs.

****

Jim Thompson is back again...with a new book on a taboo subject: the personalities in the pulp & paper industry. Jim has written in the past on many subjects based on his four plus decades in the worldwide pulp and paper industry. This new book is packed full of information valuable to the senior member of the industry as well as the recent entrant. A must for every pulp and paper library.

________

Other interesting stories: