Financial Reports & Markets
A sustainable management framework
By Pulp & Paper Canada
By Pulp & Paper Canada
There has been significant stagnation in development of the kraft pulping industry in Canada over the past 15 years. While there has arguably been some degree of modernization of existing facilities, …
There has been significant stagnation in development of the kraft pulping industry in Canada over the past 15 years. While there has arguably been some degree of modernization of existing facilities, nothing new has been implemented. Canada’s newest kraft pulp mill, Alberta-Pacific, started up in September 1993. By comparison, one of the world’s newest kraft pulp facilities, Veracel Celulose in Bahia, Brazil, started up in late April 2005.
Even Canada’s largest pulp mill has been dwarfed. Al-Pac’s current capacity is 645,000 ADt/yr, while Veracel was initially rated at 900,000. Al-Pac’s 2-vessel Kamyr digester was rated at 1810 ADt/day; Veracel’s rating is 2830 ADt/day. Al-Pac’s Babcock & Wilcox recovery boiler was rated at 5.75 million lb/day BLS; Veracel’s Kvaerner is rated substantially higher at 8.80 million lb/day BLS. Al-Pac consumes aspen fibre from trees with a 60-yr growth cycle in northern Alberta; Veracel’s fibre basket is plantation eucalyptus harvested in 12-15 years. Canada is considered one of the very best countries in the world in which to live, and this status comes with inevitably high labour wages and extensive benefit program expectations, while Brazil, by comparison, has a population of 275 million; 270 million of whom would be considered poor by Canadian standards.
Veracel is just one well-documented example, and no longer the most recent. Startups during the past two years include the second line at Suzano Mucuri, the Arauco Neuva Aldea project, most recently the Botnia mill in Uruguay and the world’s largest single-line pulp mill: APP’s Hainan Jinhai mill in China. Jinhai is larger in every comparable way than Veracel: nominally rated at 3,000 ADt/day with a Kvaerner “compact cooking” continuous digester, the world’s largest recovery boiler at 11 million pounds per day BLS, a recaust system drawing 3,350 usgpm of green liquor and a 370-inch trim twin-wire pulp machine!
This most recent wave of kraft pulping capacity has occurred not only in the southern hemisphere hotbeds of Brazil, Indonesia and Chile, a trend the industry has witnessed for roughly 12 years, but also now in traditional customer regions including Germany and China. So how can Canada possibly compete?
Survival of the Canadian industry depends on support and alignment of management, labour, government and the public at large. One critical step is to increase public and government knowledge of our industry. There is a general tendency to consider the Canadian pulp and paper industry as part of the forest industry, and this can be misleading. We do not simply process trees: we are a dominant player in secondary and tertiary heavy industries, as well.
Many North American corporations today are over-managed and under-led. Management is able to maintain the current system, but it takes leadership to produce useful and continuous change. Success requires the ability to balance stability with change in order to thrive in the short and long-term. Most companies pay attention to development of management capability, which has been reflected in an emphasis on MBA-type degrees over the past 15-20 years. Only truly successful companies actively foster leadership development at every level, and this requires the implementation of several innovative initiatives.
To support leadership development for the next generation we must create learning opportunities. A casualty of 25 years spent on right-sizing the workforce has been the virtual disappearance of developmental positions. In the late 1970s, I had the opportunity to spend two years as maintenance and engineering manager at American Can of Canada in Marathon, Ontario. It was a unique opportunity for a chemical engineer in our industry. While I will never be a maintenance professional, the experience certainly provided me with a strong foundation for responsibly and leadership in maintenance. Ten years later, I had the opportunity to spend two years working as paper production manager in a three-machine groundwood specialty paper operation at Boise Cascade Canada in Fort Frances, Ontario. Again, while the experience did not make me a papermaker, it did allow me a golden opportunity to see how the other half, the customer, lives.
Beginning to Turn the Tide
We must always think of a kraft pulp mill as a chemical processing facility. Chemical engineering comprehension of reaction kinetics, mass transfer and unit operations is at the core of achieving the best possible process performance efficiency. However, being effective in the ways in which our industry demands requires more than a technical understanding. It additionally necessitates management and leadership competence, as well as proficiency in the basics of knowledge management.
It is time to restore the traditional status of “top operators.” When I began my career, operators at the top of their line were competent, respected crew bosses, actively involved in directing the activities of younger, more junior members. Something has been lost. As centralized control technology has advanced, and union work and management duties have separated, an ever-widening gap has been established. Since the industrial revolution began nearly 250 years ago, every modernizing step has divided jobs into parts, leaving no one with a craftsman’s sense of accountability for the quality of the overall job.
It is time to restore some of this control in order for employees to feel engaged in the process and accountable for their contributions. While there are many modernized approaches to asset preservation, perhaps the most effective is one in which field operators are engaged as the first line of defense in monitoring and inspection of their process equipment, with integration of the data collected back into the asset management database system. Sound cost-effective maintenance execution then takes over.
Running a pulp mill “like a paper machine” effectively implies a need for tighter discipline. If we are to clearly understanding the sustainable production capacity of the operation, we recognize that the 90th percentile of daily production results over no less than the last 100 days. The acceptable level of maintenance losses is mill-specific; assume it is 5% of sustainable productive capacity. The right ratio of scheduled to breakdown is also site-specific; let’s say it should be 70% scheduled. If it is over 50% breakdown, intervention is urgently required.
Trust, the Essence of Leadership
Leadership Consultant Steven Covey says there are two fundamental principles in developing the trust that is essential to being successful as a leader: integrity, which comes from character, and competence, which is what you can do. Trust is critical between union and management, between support staff and line, between production and maintenance, between manufacturing and marketing, between corporate and the operating location, between the major industry and the community of stakeholders.
Covey has written several books including “Seven Habits of Highly Effective People” and “Principle-Centered Leadership”. Covey established the Covey Leadership Center, now half of FranklinCovey, a global professional services firm and specialty retailer selling both training and productivity tools to individuals and organizations.
As much as integrity is essential, there is more to it than simply telling the truth. Your honesty has to be visible. Make yourself a more effective knowledge broker: translate jargon into terms that lay people will understand. Learn to relate to the people you are talking with when gathering information and sharing knowledge. While the ability to lead and inspire people is instinctive and acquired through life experience, a significant component of it is premeditated and can be learned. Every soldier has a right to competent command; learn to attend to those visible signals of competence and integrity, and you will be significantly more effective as a leader.
Management means doing things right; leadership means do
ing the right things. What are the right things? One is lead by example — treating people fairly, honestly and with respect. Remember that some of the most important needs of an employee are to have an accessible boss, to be called by name and to feel appreciated. Another is soliciting input from employees in problem-solving and decision-making, and so, effective leaders seek out employees for their input and respect their contributions. Every employee has a fundamental right to achieve satisfaction from his job, to the extent of his capability and interest, without feeling pressure to hold back knowledge or talent. It is our leadership responsibility to ensure that our people are enabled to fully utilize their natural aptitudes and acquired skills.
This requires you to develop your ability to gather information by being able to talk comfortably with employees at all levels; question gently, listen and use your intuition to put two and two together. Learn to coach other people to use information, classifying and organizing it in a way that makes sense to them. Polish your ability to adapt and improve information provided by other people and help them express their views so they can cultivate their sense of self-esteem and see what they have offered being put to practical use.
Knowledge management has raced to the forefront of business jargon over the past fifteen years. Let’s quickly take an overview of the field. Two kinds of knowledge have to be considered.
Explicit knowledge is what can be expressed in formal grammatical sentences, mathematical relationships, technical specifications, etc. It is at the core of formal education in general and is even more emphasized in the case of an engineering degree. It can be readily transmitted to others, processed by a computer, transmitted electronically or stored in databases.
Tacit knowledge consists of softer intangibles: beliefs, perspectives and values. It is more subjective, insightful, intuitive and based on hunches — effectively rendering it more difficult to communicate. It is generally less formal in its origins and is borne out of personal knowledge embedded in individual experience. Before tacit knowledge can be communicated, it must be converted into numbers, words, analogies or images that can be understood.
There are four basic mechanisms in which knowledge creation happens, and it is of significant value to understand them: combination, internalization, socialization and externalization.
Combination (converting explicit to explicit) is the process of putting knowledge into conventional information systems. As chemical engineers or simply as formally educated professionals, we do this routinely in conferences and peer networking opportunities.
Internalization (converting explicit to tacit) is closely related to “learning by doing.” This is the channel through which most traditional classroom-type training occurs.
Socialization (converting tacit to tacit) is the mechanism working amongst peers in operations control rooms and maintenance shops and in “buddy training” throughout the industry. It is the process through which the informal organizational culture perpetuates itself, much to the frustration of change agents who are unable to recognize and manage it.
Externalization (converting tacit to explicit) is the powerful key to creating new knowledge. It means understanding converted statements. This may be the softest of the four and certainly the least emphasized in our technical education process. It’s what happens when a young engineer really learns from a veteran operator or tradesperson.
Zooming: an Essential Leadership Skill
Every successful organization is made up of detail-oriented and concept-oriented people. Concept-oriented people, who account for 20% of a typical population, gravitate towards the managerial and leadership roles in an organization where their tendency to pull back and focus on the big picture and inter-relationships makes them productive. Hands-on “doers,” interface with machinery and the process, are most successful if they are detail-oriented people. These make up the remaining 80% of the population who can zero in and focus on the smallest elements of whatever they are working on. This makes them leaders who understand the details of their business to the extent that they are positioned to offer guidance or pose constructive questions and then step aside and let their people perform, demonstrate competence and contribute to the competitive performance of an industrial organization.
Wisdom is the ultimate level of understanding. When we’ve seen enough patterns and trends that we are able to synthesize and then use them in novel ways, we have achieved it. Wisdom is not easily transmitted, and it must be strived for. However, recognizing and valuing the wisdom in others will help define a framework for achieving it.
Capital reinvestment on construction and installation of quality equipment and care in recruiting and staffing can result in 40th percentile performance. Adding rigorous management discipline and structured risk optimization can elevate the performance level to the 80th percentile. Attaining and sustaining that top 20% requires strong leadership that continuously and consistently responds to the competence and credibility expectations of internal and external stakeholders.
That must be the focus for us at the operations management level over the next decade as our corporate executive managements execute the “big fix” strategic measures required for long-term survival and profitability.
R. Thomas Boughner, P. Eng., MCIC, of Mackenzie, British Columbia, has been a PAPTAC Member since 1970.