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Have you ever had a conversation like this? "I was going to by a car from Brand X because it is cheaper and has more features than Brand Y." "Well, you obviously bought Brand Y. Why?" "Brand X didn't have any in stock and didn't know when they would get any." So, really, in the end, Brand X didn't mean anything because you could not get Brand X. Their price could have been twice the price or half the price of Brand Y, it just didn't make any difference. You may find yourself in this place with certain pieces of capital equipment now. You may have to become a "satisfier" instead of an "optimizer."
Most of the people I talk to today have not prepared or managed capital budgets under the conditions we find ourselves in now. Well, I saw my first capital budget in an industrial setting in March of 1970. Perhaps I can help you a bit--we had similar issues back then as those we are facing today--the administration in the White House in those days thought they could control inflation with price controls which caused me to miss two planned 25 cent raises as a co-op student, from $2.75 per hour, to $3.00 per hour to $3.25/hour, over a period of 18 months. Glad I could do my part to help tame inflation; as a student operating on the pay as you go plan (no loans), one makes too much money anyway.
I don't think this is a one size fits all question as you look at your marketing going forward. Some customers will be interested in your energy usage, others will be interested in what your products can do to save them costs in their manufacturing and logistics schemes. Please note that in all scenarios in this column, I will be talking primarily about business-to-business sales, not business to consumers.
I recently read an article in the Wall Street Journal which was discussing the write down coming in some energy assets, such as coal reserves, as the economy switches to "greener" energy sources. Like it or not, agree with it or not, there seems to be a move afoot to completely change our acceptable energy sources. You can interpret this as follows: energy is going to get more expensive, a lot more expensive, in this new world.
What concerns me today is that we seem to be more interested in the form of energy rather than its efficiency or cost. Energy has taken on somewhat of an "identity politics" persona. In earlier days, it was security of supply and efficiency. Today it is products of combustion that seems to garner the attention.
If you have read this column for any length of time, you know that old Jim has told you countless times to carefully mothball energy assets that are out of favor, for sooner or later, they will come back into fashion again. This statement is a corollary to my principle, all energy decisions are political. This calendar year has seen a sudden swing to an overwhelming global opinion that climate change is "settled science" and we can't decarbonize fast enough. Couple this with ESG (Environmental, Social and Corporate Governance) principles and boards of directors worldwide are moving at warp speed towards these extremely popular ideas.
The components and devices to do what I will describe here exists now. Someone just needs to assemble the bits and pieces.
If you think you can't innovate, the problem is purely mental. Creativity can be learned and you can use it in many ways to make your work environment more productive and safer.
Getting innovation right is crucial to optimizing profitability. Too soon, and the equipment may not be able to deliver as promised. Too late and your competition may have already eclipsed you.
There have been many attempts to institutionalize innovation. Sometimes the domiciles of higher education seem to think they have a lock on innovation capabilities. Likely, in some areas, they do. The innovation with near term payoff, however, often takes place at the millsite. It is an activity in which everyone can participate and can be made into a fun (and profitable) activity if structured correctly.
We are in the process of revitalizing and restarting the Light Green Machine Institute, a 501c3 educational institute we created back around 2008. The Light Green Machine Institute's mission statement is "Holistically reducing the environmental impact of pulp and paper processing."
The fourth step in quality is the training and morale of your personnel. All your employees need to be thoroughly trained for the job at hand and not only trained but taught to think so that they can take action when they see something occur that can affect quality.
The third step in Quality is the quality of your raw materials. Some might have thought this is the second step. No, it's the third, for you don't know the quality of raw materials required until you know the quality you are promising your customers.
The second step in Quality is a solid standard of product performance. If you are in the tissue and towel business, these are likely internal standards. If you are in the containerboard or other paper products businesses, these are likely recognized industry standards. You don't know what quality is if you can't define it.
The first step in the path to producing a quality product is the housekeeping in your facility. I know I sound like a broken record, but in truth, housekeeping is the first step in many actions in your mill or converting facility. I have never seen quality products consistently produced in dirty or sloppy facilities. It is just not possible.
If you are the top person on your site, get out of your office and visit your people regularly. I recommend 6 a.m. rounds, with flashlight and small notepad in hand to take notes on what you find (or put them on your phone). Shake hands, get to know your people. If you are over a large facility, don't do it all in a day, but make sure you visit every department at least once per week.
Where human/machine interface is going in our paper mills is hard to guess, it seems to be just at the cusp of arriving as we implement Industry 4.0. On one hand, it will make us better papermakers, but on the other, like my automobile experiences, we will likely have many of the unconscious dependencies...
I was assistant project manager in the engineering department at a mill back in the early 1980's. I have referenced this experience a number of times in this column over the years. One of the upgrades we made at the time was to go from pneumatic controls to digital computer control. This means that the machine, which only a few days ago was operated from benchboard on the floor was now operated from a control room. Now a mere month later, the bench boards are gone. Keep in mind, the crews on this machine had been running it from benchboards for about 14 years...
This is my 52nd September in the workforce. I think management is tougher than ever. Think about it--when I started even OSHA did not exist. People were glad to have jobs and they put up with all sorts of things at work that simply aren't tolerated today, both from the standpoint of society's mores and from a labor regulatory perspective.
Silas, the CEO of REO, wasn't finished last week. He had another story he wanted to relate.
After a few lights of recreation, the Great Mother convened us once again. "Rats," she announced, "Let me introduce the Rat 'Em Out Detective Agency. You can just call them "REO" for short." Six wizened looking old rats came to the front of the room.
The Great Mother called the meeting to order after a short break. "Who has a case for us?" Dis came up the side aisle. There were a lot of rats at the meeting. They had been attracted by the thoughts of a trip to the Big Things capital city and to their building where the biggest rats of all congregated. The Great Mother seemed to be in a benevolent mood, "And what is your story, my child?" "In the mill where I work, there is this female Big Thing. I should say, 'there was.' She is in jail now."
The Rats arrived at the big building with the big half ball on top. What we didn't count on is how bad it stinks inside! Don't know how the Big Things stand it, but after a day or two, we pretty much got used to it. I guess because it has been here a long time and gotten saturated with the residuals of Big Thing's activities causes it to stink so. The Great Mother called us to order. "Thank you for coming. As usual, the Big Things have been working overtime again creating havoc and committing crimes throughout the land. What's on the docket today?"
By Jim Thompson interpreting for Fos the Rat: You Big Things may think we rats are in the dark about your activities. Of course, if you have been reading this column for any length of time, you know that is not true. I (Fos) have been reporting on your misdeeds and malfeasance since August of 2015. Yes, this makes the seventh year Mr. Jim has yielded his column to me for the month of August.
If you have read this series of July columns, you might be thinking I take a dim view of environmentalism principles. I don't--as long as they are measured in their application or make good economic sense. Don't trust the public to be informed. I'll use an example that is not necessarily environmental to prove my point and to show you some of the ways misinformation abounds...
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