Financial Reports & Markets
How to leverage our competitive advantage
October 6, 2015 By Brett Robinson president and CEO Canfor Pulp
Canadian companies should learn from the past, and take full advantage of Canada’s great fibre and the talented people working in our industry, says Canfor Pulp’s president and CEO Brett Robinson.
The following is excerpted from a keynote speech presented by Brett Robinson at PacWest 2015.
“I have been in this industry most of my life, with my father beginning his career as the first generation of my family to work in the forest products industry in the ’70s. Shortly after I graduated, I followed suit. While we have come through some fairly challenging times in my 26 years, we are now at a very exciting time, with the future most certainly bringing more surprises, adversity and, hopefully, prosperity for those who are proactive.
In preparing for this presentation, I was struck by how my personal objectives have shifted in conjunction with life’s experiences, opportunities and adversity. In the early days my goals were simple. Build my resume and value to an employer so that income could be sustained and hopefully grown with time. If I really worked hard and stretched, one day maybe I could finish my career as an engineering manager. Let’s face it, when you are a junior engineer at 23 that feels like the most likely career path.
There were many times in the early days that I asked myself why I picked this industry. While other [career] options were there, I often found myself held by unfinished business, my friends in the mills, my relationships in the community and an overwhelming desire to see things through. I became increasingly connected to my team as an extended family. Our social lives become entangled with work life and soon a job becomes a career and eventually a lifetime.
In my lifetime, which is only a mere fraction of the industry’s lifetime, we have made changes that were considered to be impossible when I started. It’s only impossible until it’s not.
As I reflect back to the mid ’80s, the pulp and paper business had enjoyed several decades of significant growth and consistent profitability. This was as a result of demand-driven economics as the business developed and matured. But what should have been obvious was the storm on the horizon. The indicators were there. What the S-curve business cycle predicts after phases of extreme growth is the inevitable mature but saturated market. As margins contract the next phase a mature business faces is classic survival mode with cost reduction, margin improvement focus, headcount reductions and constant challenges to do more with less.
The reality is, for a near-commodity business like we are in, low cost is the number one way to ensure your survival until demand can catch up with oversupply. These years of incredible prosperity led to many changes for the Canadian pulp and paper industry, with the final sprint in the ’80s to build capacity in Western Canada and the hangover effect of production-at-any-cost leaving the older, smaller Canadian producers behind on the ever-decreasing cost curve.
Over the last several decades we have all faced tremendous adversity as we raced to drive our costs down and watched as many respected friends and peers struggled to continue. Today, if we look at the new capacity that is under construction or proposed in South America, I would suggest that there is another storm on the horizon as new mills with economies of scale, great fibre, growing customer demand and cheap energy continue to incent these investments.
During the steady build-out of the Canadian pulp and paper industry, across the ocean in Europe our competitors were struggling to survive against the onslaught of new Canadian pulp capacity that had the advantages of economies of scale, excellent fibre and cheap energy. Does that sound familiar?
I believe history can be a great teacher. Things are only impossible until they’re not. So what is our competitive advantage? There are many, but I would like to focus on my personal favorites.
Fibre: It all starts here and without the best and most diverse fibre base in the world, our business would not have flourished and developed to the economic engine that it is. Our unique fibre characteristics can compete with lower cost alternatives provided we are delivering good value.
The impossible goal is to always be moving our high quality products further up the value chain by finding innovative ways to make our customers more successful.
People: We have decades of [experience] operating our assets and know our mills, the technology and the business as well as anyone else in the world. We know how hard we can push, we know how tight we can run our costs, we know how to push this business to its limits.
Let’s make sure we give our emerging leaders our support and confidence. Most importantly, find opportunities to push them to lead while they still have strong support networks around them. Don’t let a week of vacation go by without filling key positions, look at every project as a growth opportunity, use retirees to fill more junior positions so that these emerging leaders can be given opportunities to move up and grow with you as mentors. Let them prove they can step up just as you did when many doubted you could.
We are in the middle of one of the most significant knowledge transfers in North American history, and we need to embrace it for the opportunity that it will surely be. Our new and emerging leaders are not bound by old paradigms and will most certainly drive improvements for our customers, our processes and our finances. However, the balance of change must blend with what has worked for our legacy teams. We need to capture their tried and true knowledge and approaches to ensure we are not vulnerable as the wisdom of our experienced work force slowly transitions into retirement.
Often I find myself looking at our young professionals and wondering if they are ready for that next challenge. After all, everyone seems so young now. I have to remind myself how old I was when I became mill manager. How old do you think I was? 36. Six months later I was given the challenge to combine [Canfor’s] Prince George and Intercon management teams into one as we went through one of the many downturns our industry has seen. So I was now 36-and-a-half, and challenged to bring two teams into one, eliminate 20% of the senior management positions and get the new team to deliver new levels of performance. This direction was given with unwavering clarity and confidence that I would make it happen, and in the end my team did just that. It was one of the toughest experiences of my career and we all grew because of it.
What I have not told you is that it was tried twice before. Trust me, there were good leaders on my team, but it was impossible, until it was not.
Accept that in the next few years, we will see another “winter” season for our industry. Accept that complacency is our real enemy and push the boundaries of your business by challenging the things that have always been impossible to change, until they’re not.
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