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Abitibi-Consolidated: the Values That Drive John Weaver


January 1, 2004
By Pulp & Paper Canada

You would expect John Weaver, president and chief executive officer of Abitibi-Consolidated Inc., the world’s largest newsprint producer, to speak about values and leadership. All executives at the to…

You would expect John Weaver, president and chief executive officer of Abitibi-Consolidated Inc., the world’s largest newsprint producer, to speak about values and leadership. All executives at the top rung of the corporate ladder speak, to some degree, about the importance of integrity and vision.

Yet for Weaver, there is a significant, if not ironic difference. His upbringing was an influential if not powerful force on forming the values that he holds so dear today. Weaver was born in 1946 in Barberton, Ohio, a small town south of Cleveland with a population of 30,000. His father was the head of the local chapter of the powerful AFL-CIO labour union. His mother was secretary of the Barberton Church of Christ.

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“My upbringing demonstrates to me, and I’ve always believed it, that it’s not us against them — the company against the unions,” Weaver points out. “We have to be partners, the company and the unions in order to achieve the overall success of the company.”

Weaver, who stands six-foot-three and speaks with a husky voice, displays quiet confidence in what he says, which tends to fit the model for a leader of a large firm with international reach. He always knew that he would be the right person to head Abitibi-Consolidated — an entity formed after the merger of Abitibi-Price and Stone Consolidated, in 1997. “I believed that as one of the leaders of the company, I was a candidate for the position and well qualified for it,” Weaver says without any false hint of modesty.

He has captained the ship since January 1999, although it has not been free of hardships. The story has been often told, yet it bears repeating at least in part, if only to give a sense of what Weaver took on after the merger, and to give the measure of the man.

Let’s back up a bit. In 1997, Weaver was put in charge of the new organization’s biggest division: newsprint production and sales with 19 mills and $2 billion in revenues. Yet, Weaver took over at a time when paper prices were on a downward trend, and when union troubles were brewing. Making matters worse, there was internal friction between Ron Oberlander, chairman of the board, and Jim Doughan, president. The media has often described the merger as a forced (and sometimes stormy) marriage of differing corporate cultures.

Both men soon announced their resignation. The two candidates for president and CEO were Bill Sheffield, the former head of Stone-Consolidated’s marketing and development division and John Weaver.

The right time

Weaver was the right man at the right time. An engineer by training, if not by temperament, Weaver has a keen ability to analyse and synthesize information. “My wife says that I am too organized at times,” Weaver says. “Yet, that’s one of our traits as engineers — we have the ability to manage, organize and follow-up. That’s what we are trained to do the first day we enter university.” (see sidebar, Brief Bio)

Even so, in a return to values, Weaver strikes home a point. “Even though many of us are engineers, it’s the ability to manage people and get them to implement continuous improvement that drives the company forward.”

Such might have been the deciding factors in who was the best choice to run the company. “His determination and considerable talent for analysis and synthesis mean that he can quickly identify a situation and find a solution,” says Richard Drouin, chairman of the board of Abitibi-Consolidated, in a May 2003 Commerce article. “He always hits the nail on the head, without shilly-shallying.”

He displayed such character traits quickly after taking on the CEO mantle. Weaver told investors, customers and employees that the next two years would be tough. Weaver kept his promise. He closed mills, cut newsprint production by 350,000 tonnes and reduced the company’s workforce by 10%, including 112 head office jobs. Things looked good; by the third quarter of 2000, earnings rose 77%.

But the real test of his leadership came after Abitibi acquired Donohue, a $5.8-billion deal that transformed Abitibi-Consolidated to the world’s largest newsprint producer. Donohue was considered a crown jewel in Quebec, led by Michel Desbiens and controlled by Quebecor since 1991. It has posted 29 profitable quarters, and was North America’s most profitable pulp and paper company. Desbiens was regulated to chairman of the board, a position without any effective power.

That did not sit well with the head of Quebecor, Pierre Karl Pladeau, who launched a nasty campaign that played out in the Quebec media like a soap opera. On one side there was Pladeau and Desbiens, on the other Weaver and the board. In short, Pladeau wanted Desbiens in, and Weaver out.

Weaver’s determination and abilities eventually won that battle, gaining the unconditional confidence of his board and investors.

That sorry episode behind him, Weaver has moved the company forward with a vision of achieving productivity gains. “We’re the lowest-cost producer of newsprint in North America, if not the world,” he notes. “Similarly, we’re the first- or second-largest producer in the world of uncoated groundwood grades, and in North America has the lowest costs for these grades.”

As well, the company is the third-largest lumber producer in Canada, and the largest recycler of old newsprint (ONP) in North America. Despite all that, it has yet to deliver to shareholders. In the third quarter of 2003, Abitibi posted sales of $1.2 billion, but reported a loss of $69 million. The company attributes the performance to a stronger Canadian dollar, lower prices for the value-added grades, and lower sales of newsprint.

Since most sales are in American dollars, any swing has an effect on the bottom line. Thus, there is much discussion in the offices of CEOs and CFOs on what effect a 75- or 80-cent dollar would have on business. Weaver has his views on things. “The big thing is not where the dollar is, but the fact that the dollar changes so rapidly. No company can adjust to a 15% fluctuation in currency in three or four months. It’s important that we get some stability in our currency. We can’t allow it to swing from 68 cents to 78 cents in one year.”

As well, it is carrying a debt of $5.6 billion (as of December 31, 2002), which corresponds to 64% of capitalization, a ratio that is likely to concern investors. Without a doubt, Weaver has to hope for a stronger economy in the U.S. to see his company’s prospects improve. “It continues to be a tough year,” he says. “As we begin to push forward, we will have to further galvanize the company to be financially profitable, even under these adverse conditions.”

The big question for the industry, and for Abitibi specifically, is “how far back will the recovery of the economy take along the road to consumption of newsprint,” Weaver says. “A year ago at this time, I was predicting that the second half of this year [2003], the economy would recover. As I sit here today — and it hasn’t made as big a recovery as I hoped — I have to question whether the capacity is still a little too much. So we will be looking at the analysis to see if we have too much capacity.”

American values

Such are the values of an American leader. Although Weaver’s ideas and values were chiefly formed in the U.S., he says that matters little in today’s multinational markets. “The values of my social life have very little impact on the company,” Weaver says. “Our management team consists of a mix of English- and French-Canadians, and Americans. I have been in Canada almost 10 years, and I often say ‘we’ when I speak of Canadians.”

Even so, Weaver is still an American at heart and truly understands his compatriot’s cast of mind. Many Americans consider Canada a socialist country, at least compared to the American style of capitalism, which holds less patience for unions. That being the case, it probably doesn’t hurt that Abitibi has an American at the helm, who understands the concerns south of the border. “In the U.S., our customers have to feel that the supply is secure, and that the product is going to continue to flow,” Weaver says.

The Cana
dian company has about 15% of its operations in Asia. For example, Pan Asia, a 50:50 joint venture between Abitibi-Consolidated and Norske Skog, recently signed a deal to build a newsprint mill in the Hebei Province of China, 280 kilometres southwest of Beijing. “China is one of the world’s fastest-growing markets for paper, especially newsprint,” Weaver points out. “It’s the one place that we look for growth. We’re building one new machine in China, and possibly we’ll consider another in five years.” (see PPC, April 2003.)

In Canada, Abitibi-Consolidated has invested $175 million at its mill in Alma, QC, to convert its equipment to produce Equal Offset paper, which is earmarked for use in reference books, school manuals and envelopes.

At the same time, A-C has idled its mill in Sheldon, TX, removing about 540,000 tonnes of excess capacity. Weaver admits it is difficult to justify closing (at least temporarily) any one of the mills it operates, particularly because most are highly productive “It’s difficult to rationalize that one of those mills should be idled till production returns,” he says, “but that’s one of the difficulties about being the leader in the industry.”

Equally important, Abitibi-Consolidated is implementing a new company-wide operating system, which measures the performance of each operation against a standard. “It gives us an ability to benchmark one mill against another on almost a line-by-line basis,” he explains. “It’s a big challenge, however, for a large organization with many mills to transfer knowledge from one mills to another.”

Border disputes

As for the softwood lumber dispute, Weaver says, “The dispute has been a terrible waste of money.” As to claims by U.S. producers of subsidies, Weaver, sounding much like the diplomat, says, “I don’t believe that there is a subsidy in Canada, but on the other hand, the U.S. has their laws.”

Negotiation will likely pave the way to resolution, Weaver says. “At the end of the day, we’ll hopefully find a negotiated resolution to the softwood lumber dispute.”

He spends about half of the time on the road. ” I try to visit all the mills every two years, as well as customers and investors,” he says. “But when you have 60 different operating centres, it becomes very difficult to keep up with the visits to each mill every two years.” These include 27 paper mills.

To be sure, he makes the most of his time, often skipping lunch, because, as he puts it, “I’m not a big lunch person.” Still, senior executives like Weaver who travel so much often find ways to unwind. Weaver relaxes by playing golf, although admittedly, “not as much as I used to.” He also takes time for activities with his family. Weaver lives with his second wife, DeLores, in Westmount, QC. “We have an annual family reunion in the States, since my sons live in the U.S. it’s a good opportunity to get together. We also enjoy our friends here in Montreal.”

Roots go deep, however. “In some ways I feel Canadian. But at the end of the day I am still American. My wife and I have learned to assimilate into Canada. We like the things that we have here and the people that we know. We just find it too cold.” After university, Weaver spent 20 years in the southern U.S.. “That’s where my wife is from, so the cold in Montreal is hard to get used to.”

Besides climate, there is adapting to different government systems. “The first big challenge when you change countries is learning the different bureaucracies that you have to know in order to function in that country,” he says, referring to his family’s acclimatization to Canada and Quebec.

Despite the past and present controversies that mark the politics of a large organization, Weaver says he’s in the right place. “Most people who are in operations reflect back and say, ‘That’s the best job that I ever had.’ I miss the mills, but that doesn’t say that I didn’t try to get where I am either. I wanted to lead the company.”

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Brief Bio

John Weaver was born in Barberton, OH, in 1946. Weaver attended Mount Union College in Alliance, OH, where he pursued a bachelor of science while playing football for the Purple Raiders.

In 1970 he graduated with a master of science from the Institute of Paper Science & Technology (IPST) in Atlanta, GA. The IPST is among the pulp and paper industry’s premiere graduate schools, combining a broad business and technology curriculum.

He interrupted his graduate studies when the Vietnam War broke out, and he joined the U.S. Air Force, in Texas, for which he did a two-year stint. He returned to IPST in 1973, and earned his doctorate in 1976.

His first job in the industry was with Continental Can, where he managed a paper mill. In 1988, Weaver joined the Abitibi-Price group at the Augusta Newsprint Company, where he became general manager. After the 1997 merger of Abitibi-Price and Stone-Consolidated, Weaver was appointed executive vice-president and president, newsprint operations and sales. He was responsible for more than three million tonnes of production and over $2 billion in sales.

Since becoming CEO in April 1999, his accomplishments include the permanent removal of 450,000 tonnes of high-cost excess newsprint capacity; the conversion of the newsprint mill in Snowflake, AZ, to 100% recycled fibre; and a 10% workforce reduction that will achieve $100 million in annual savings.

Weaver sits on the board of Paprican, IPST, Augusta Newsprint Company and Alabama River Newsprint Company.

Weaver is married and has three children with wife, DeLores. They reside in Westmount, QC.

Perry J. Greenbaum, contributing editor, divides his time between Montreal and a rural community near Concord, NH. He can be reached at pjgreenbaum@metrocast.net.


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