As you look towards 2024

December 15, 2023

The overall economy still leaves the industry in a period of uncertainty. If you look at the primary grades that compose pulp and paper today, i.e., tissue and packaging, they behave entirely differently at the retail level. People will not do without toilet tissue. For a long time, I have called tissue and underwear 3^rd world countries’ first luxury goods. Impoverished societies want these two first. Hence, of interest to us papermakers, we can be assured the tissue is an enduring product no matter personal financial conditions. Once one has had tissue, they never go back. It is non-discretionary.

Packaging is more of a mixed bag, no pun intended. While packaging continues to grow nicely, there is a portion of packaging that protects products that are discretionary in nature and hence can experience some softening.

What does this mean to decision makers allocating funds to capital projects in the pulp and paper industry?

First, study your own tactical and strategic plans and make sure they match the macro truths I mentioned above.

Second, make sure your sales and marketing folks can deliver what they promise. This is done by repetitive examinations of the data with accountable personnel, driving for more granularity with each iteration. Do this until they whine!

You can be a bit less forceful if you are in the tissue business. The caution in the tissue business is to not get out too far ahead of demand which can erode prices temporarily.

In the packaging business, if your sales and marketing crowd says they are going to grow their share of the business (read: steal business from the competition), this is going to be a more intense exercise involving specific grades, customers and geographic location.

If you have a wad of cash burning a hole in your pocket and are in danger of losing key engineers or local contractors due to a dearth of capital projects, by all means redirect towards maintenance.

I have never seen anyone spend too much on maintenance. I know this is counterintuitive, but it is true. Where you see this working best in is private companies who do not have the obligation to report to public stockholders.

Walking on to the site, I can usually tell the facilities owned privately without knowing their ownership status. The private facilities usually look like someone loves them. They are cared for like a cherished classic car, not a rented mule.

So, a little different kind of Capital Arguments column, but perhaps it will provoke some constructive thinking on your part.

What is your opinion? Drop me a line at jim.thompson@ipulpmedia.com. I would like to hear from you.

And by the way, I come to mills and talk to various departments about many subjects. To arrange my custom visit to your mill, just email me at jim.thompson@ipulpmedia.com or call me at 678-206-6010.

Young Engineering Manager of the Year, call for nominations

We are looking for an individual who has done an extraordinary project, one that almost defies belief. Its extraordinary features can be schedule, technology, cost or all three. There is an age limit on the manager eligible for this award: they must be under 35 years old when they completed the project.

We have often gotten nominees that go something like this, "I nominate Joe because he has done a great job of running our engineering department for the last fifteen years." Quite frankly, we are not interested in such nominees.

However, if you know someone who has led a very exceptional project in the recent past (the last two or three years) and meets our age requirement, we want to know about it. We want to honor them and hold them up as an example for Engineering Managers in every pulp and paper mill around the world.

Just send your nomination, with as much details as you can provide, to jim.thompson@ipulpmedia.com. We will seriously consider it.

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