CONFERENCE NEWS
Thursday, May 29
''HUMAN CAPITAL: A SOFT ASSET WITH SOLID RETURNS''
by Mathieu Régnier, Paper Advance
Conference Chair, Brian Grantham, West Fraser-Hinton Pulp and Program Chair, Stew Gibson, Catalyst Paper act as moderators to the conference’s first session. They introduce this morning’s speakers; all “leading industry managers, consultants and analysts”.

Ted Bell, Partner, PricewaterhouseCoopers (PWC) is the day’s first speaker. He explores the theme of mill results improvement in the context of global mega trends. Bell’s impressive bio includes a career spanning many years in the pulp and paper industry. In Ted Bell’s view the Canadian forest, paper and packaging industry is still facing important pressures despite being in a better position today than it was only two years ago. After an overview of technological change through time with a focus on the last ten years, Bell concludes, “technology is an enabler of social and behavioral change which in turn suggests that brands and products can be created (and destroyed) rapidly”. Bell shares a market research reading that concludes “young people aged 14-24 are already seeing the iPhone as a brand that is connected to the older generation”. This can only “ring a tone” (or “a bell” depending on how old you are) to pulp and paper industry representatives. New technologies have indeed been credited for having a direct effect on the reduction in paper demand. Five “megatrends” are then described: 1) technological change (does it ring a bell?); 2) accelerating urbanization (behavioral change is influenced by where people live); 3) shift in global economic power (the East accumulating wealth); 4) demographic changes (aging populations in Europe and on this side of the Atlantic); 5) climate change and resources scarcity (increased demand for sustainable supply chains anticipated). What do these trends involve for the transformative industry? Bell cites interesting data from a PWC survey of CEOs who believe important to update strategies for investments in technology and concludes that FPAC’s vision 2020 is aligned with most of the megatrends described. For the forest industry, this involves a shift from hardware to software for example. It also involves changes in the way we think about production. Just in time and production adapted to local needs may soon become more and more noticeable.

In a presentation entitled “A Balanced Approach to Improving Mill Results”, Brian Baarda, CFO, Catalyst Paper presents some elements that are key to success and that include operational excellence on issues such as health and safety, productivity improvements and cost reduction strategies. He believes that what it takes is to “develop a strong team”. Getting employees involved means “setting goals that must be way up here” and the implementation of a culture of accountability. Yes, this is easier said than done but nobody said hard work wasn’t easy!

Gerry Murray, Vice President of Mills, Atlantic Packaging discussed the steps towards improvement in mill results by focusing on Atlantic Packaging’s experience. Planned reliability is the key concept he explores. Gerry Murray presents the case of Atlantic Packaging. “We had a maintenance wake up call he says, more than an operational issue we had to review maintenance processes.” This happened sometime in 2013 following a mechanical failure. It provoked a change in specs quality corresponding to a period of poor operation that affected reliability of manufacturing to schedule. A strategic plan was instigated following customer dissatisfaction with delays and commitments to supply in the timeframe. The company was reminded that reliability and predictability are paramount over the desire for increased production. Murray explains that this also came as the Whitby operation was coming on line and needed to get organized (upgrading of the mill, three years after closing the same facility “due to a decline in newsprint demand”). A strategic plan resulted from this multifaceted situation in February 2013. His team had two options: contracting maintenance work or growing the capability in house. They chose the latter.

Rick Heyland, Executive VP, RLG International Project Excellence proposes dollars in savings for companies. "Great news for companies bottom-line results!" Tempting? His consultancy describes itself as an “organization of performance improvement specialists”. For Heyland, “projects under budget are the exception, not the rule.” He lists a dozen factors contributing to poor project performance before presenting one of the consultancy’s most interesting service that is applicable to Canada’s forest products industry: “Project Excellence” or “Px”. RLG describes Px as a model for the “delivery of planning, optimization and execution for capital projects”.

For Rick Heyland, planning is not done with enough seriousness, especially across departments. And planning is not just something that must be done on a spreadsheet. He uses a catchy slogan to illustrate the importance of the human factor in planning. Catchy, the slogan resonates with participants: “none of us is as smart as all of us”. Essentially, teamwork is key but so is the intervention of a third party, and group that can intervene to propose an objective assessment of processes in place. Getting schedule to minimum required standard is usually well-planned and planned at least one month prior to an optimization session. This can help but must be accompanied by flexibility and responsiveness. Quoting Mike Tyson, a boxer, he stresses the need to look ahead… daily: “everybody has a plan until they get punched in the face.” Added work is disruptive says Heyland. It “reduces efficiency to those planning and executing the turnaround and impacts overall turnaround and performance results.”

The next presentation concerns human capital management - not a usual talk for an engineering consultant says Darby Kreitz, CEO, Allnorth Consultants who believes “we don’t spend enough time on human capital”. Just as it is the case with physical means of production such as digesters, boiler, steel drums or whole paper mills, a company can invest in human capital and obtain ROI. “Human capital theory suggests education and training raises the productivity of workers by imparting useful knowledge and skills.” People are a critical input in business success. People drive markets, products, buildings and processes. Yet, human capital does not show in balance sheets. How can we change this asks Darby Kreitz? The consultant proposes a series of ideas to align leadership principles to systems and practices. One is the “commitment to giving people the opportunity to learn and grow.” During PACWEST 2013, another consultant, Christer Idhammar (IDCON) also explained how high results are achieved when work processes “revolve on craft skills”. Kreitz presents his views in the framework of McKinsey’s 7S Model: seven interdependent business strategic elements which are categorized as either "hard": strategy, structure, systems or "soft": shared values, skills, style, staff.

To this list of “7S’s” Larry Stefan, President, Stefan, Fraser & Associates, could add an eight one: subconscious - the sum of mental processes we are not fully aware of. Increasing Mill Performance Through Effective Employee Selection.” Stefan, a corporate and organizational psychologist, delivers a presentation entitled: “Increasing Mill Performance Through Effective Employee Selection.” His bio note certainly makes you wonder how he survived such an extensive professional career with this communicative positivity: he personally assessed over 20,000 managers! Identifying an organization's human resource assets and needs may be the perfect addition to an investment strategy in human capital (see above), the consultant explains how identifying effective human resources enables pulp and paper companies to increase their performance.