Pulp and Paper Canada

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Obsolescence


December 1, 2006
By Pulp & Paper Canada

Dave Farrell, Director of the North Superior Training Board is frustrated with the situation on a number of levels. Although he recognizes the industry is in dire straits, he contends the government h…

Dave Farrell, Director of the North Superior Training Board is frustrated with the situation on a number of levels. Although he recognizes the industry is in dire straits, he contends the government has a ready-made solution to many of the sector’s ills, and further, that the delay is serving as a sieve — while a solution hangs in the lurch, the industry’s talent is leaving. “If we don’t put the pressure on, they walk away,” he says, confident in the rationality of this argument. “We know they have a resolution to the forestry crisis in terms of regional energy pricing, but they’re playing politics. And as they’re playing politics, companies are going down. When we climb out, the issue will be to make sure we still have enough skilled people.”

He speaks from experience. After a 30-year career with Bowater, Farrell himself will soon be taking leave of the industry he built a life on. “Although my decision to leave is voluntary, many, many more are forced, and I feel it’s my turn. I’m leaving because I couldn’t stand to see all those workers in their late forties going out the door.”

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There has been a monumental shift in the mentality of the pulp and paper industry, which is reflected in the make-up of its workforce. As Farrell noted, the average age of a maintenance worker at Bowater’s Thunder Bay mill is between 40-50 years old. With continued job losses, that age will increase. “People who were hired in the 1980s are all gone,” Farrell confirms. “Much of the workforce hired in the 1970s did not have much education. Because I had a college diploma and some university behind me, my dad, who was a pipefitter at the mill, actually had to pull some strings to get me in the door! Now, unless you have the education requirements or a skilled trade, you may be left without a job. So, as for the baby boomers, it’s not their fault. It’s the state of the industry, it’s gone very high-tech. Workers used to be able to learn their trade over time. Now you need to be high-tech. The pulp and paper industry needs a highly skilled workforce to maintain its productivity.”

There are a host of factors that compound and complicate the logistics of trying to address this challenge. As the industry works to fend of pressures coming from all sides, very few resources are left over to direct towards dealing with obsolescence. “The industry’s biggest fight is to survive. So not a lot is being done,” Farrell says. “There are limited resources for trainers to pass on their skill sets and the industry has largely gone to computer-based training to meet requirements.”

The situation is somewhat of a double-edged sword. As Farrell notes, “the industry can’t afford huge amounts of training. We don’t have years to spend developing employees. People need to be up and running a lot sooner — when someone walks through the door, they need to be productive right away.” One of the obvious solutions would be for companies to adopt specialized apprenticeship or co-op programs for operations, as well as trades. In some instances, such as the on-site program at Weyerhaeuser’s Dryden mill, this has worked extremely well in adapting their current workforce. However, two major obstacles impede this solution from full-fledged implementation. As pulp and paper mills are traditionally situated in rural, outlying regions, trying to attract younger workers to these areas, or enticing them to stay, is problematic. Further, as Farrell highlighted, the morality of forcing people out the mill door through layoffs, all the while bringing in new students to take their place, is unfeasible.

In order to overcome the challenges associated with obsolescence, Farrell believes it isn’t only the forestry sector that needs to change. Working through some of the issues that prompted the current situation, Farrell feels, is requisite to understanding, and subsequently dealing with the current environment. “We’ve moved from a workforce that used to be unskilled or semiskilled, to one that’s highly educated and adpative. There is a conflict here. How do we synthesize this new workforce with the current one?” Farrell’s experience with the pulp and paper industry and his subsequent retirement, prompted him to go back to the drawing board, which inevitably led him back to university. “I’ve gone back to school a number of times,” he said, simply. “Everybody needs to be marketable, all the time. It’s a lifelong business. When I went back to school in the 1980s, everyone thought I was crazy. It has, however, opened a number of opportunities. Transferable work skills can be found by partaking in leisure time activities or interests like coaching. The colleges are good at attracting mature students, and it doesn’t matter what you’re learning, as long as you are learning.”

However, Farrell feels universities could, and should be doing more to help mature students, and therefore making their older pupils increasingly eligible for varying sectors of the workforce. “15% of the people in university should be mature students,” he said, drawing on the belief that young and older generations would stand to benefit from what they could offer one another. “We could help transfer some of the innate, soft skills to younger people,” he said. The structure of university education for mature students also needs to be revamped, he feels. “Universities expect you to have a rounded education. But I tell you what? At the age of 55, I don’t need a rounded education. I know what I want to do.” Programs directed at mature students, in combination with a prior learning assessment, are two options that could possibly address, and remedy these issues.

Where do we go from here?

Farrell’s ideas and approaches employ a cause-and-effect scenario. What should the industry be doing now in order to prepare for upcoming labour shortages?

The statistics are daunting. Columnist Donna Nebenzahl recently noted in the Montreal Gazette that, “estimated labour shortages in Canada will rise to more than 100,000 workers by 2009.” Consultants have pegged the number at 1 million by 2016. According to Luanna McGowan, national partner of PricewaterhouseCoopers centre for entrepreneurs and family business, 50% of senior managers will be retiring in the next five years, and a whopping 45% of them do not have a full succession plan in place.

“This is certainly a threat to our economy,” McGowan said. “The difficulty lies in the survival of the business going forward, in maintaining its value.” What are some of the reasons why owners and managers are neglecting to ensure the future success of their businesses? The reasons are multi-layered, McGowan says. “There have been studies done on why people aren’t planning,” she notes. “For the most part, people don’t know where to go or how to begin. It’s easier to focus on the day-to-day and avoid the long-term questions.” The fallout from not planning is drastic. According to McGowan, 80-90% of Canadian businesses are family-owned. Of those, three out of ten do not succeed to the next generation, a statistic largely attributable to lack of proper planning.

“Plans are made without full information,” McGowan says. “We see this all the time.” She noted a particular instance where an 80-year-old entrepreneur was in acquisition mode, and was grooming his 50-year-old son to take over the business, when in fact, the son wanted to retire, but didn’t know how to break the news to his father. “There wasn’t full information,” she said of the situation. “My message — effectively communicate.”

A guiding mantra for putting succession plans in place, according to McGowan, is to recognize that it is a process, not an event. “The sooner we start planning, the better we can project our future executive management needs,” she concedes. “We need to identify people who can take over, who can replace those who are leaving, and we need to teach them what they have to do in order to take over. We need mentors, we need coaches, and we need to determine where the gaps are. If we’re missing technical expertise, we need to ask
ourselves, ‘where can we get it?'”

The answers to many of these questions, McGowan feels, lie not in prescribed, ready-made solutions, but rather, require a deeper understanding of the issues and challenges unique to different generations. “Sure, we have all the technology at our disposal,” she says, “but here’s my take. We need to understand the different generations, and the different conditions and events that have shaped each of them. Now, we often see a total of four different generations in any given workplace, and approaches that work with one won’t necessarily work with another and we can’t pretend they will. We need to better understand these generations.”

McGowan identifies the four generations as the traditionalists, who are typically characterized by sentiments of patriotism, loyalty, and are generally conservative. The baby boomer generation on the other hand, places tremendous emphasis on values, and they are largely optimistic and competitive. Members of Generation X do not share this sense of optimism, but generally hold a fairly skeptical outlook, and are extremely resourceful. The newest generation, Generation Y, does share the optimism of the baby boom generation. The challenge, according to McGowan, is to better understand, and therefore engage Generations X and Y. “These generations typically move from company to company,” she said. “We need to keep them motivated and challenged.” Similarly, we need to draw on the resources provided by the retiring traditionalists and baby boomers. “These two generations are moving on to the next chapters of their lives,” McGowan acknowledges. “But we need to approach them by saying, ‘you’ve done so well in your career, now let’s take this experience and work with the next generation,'” thereby easing the transfer of knowledge process that can prove a heady task in an industry as involved and technical as that of pulp and paper.

Succession planning, in any industry, or any size of business, according to McGowan, can be addressed through adherence to five main principles. “We need to work with people who are proactive. We need to build awareness of the situation and what we need to do. We need to approach succession planning as a process, and not an event. We need to do this sooner rather than later in order to achieve our objectives. Finally, we need to focus on ways in which to attract and motivate younger employees.”

As was further noted in Donna Nebenzahl’s Montreal Gazette column, “a detailed survey conducted in May in the U.S. showed employers’ growing frustrations over the preparedness of new entrants to the workforce. Nearly three-quarters of the 431 survey participants cite deficiencies like professionalism and work ethic.” If this is indeed the case, both Farrell and McGowan’s suggestions would prove highly effective in tackling some of these issues. Through an emphasis on skill sharing and understanding of the different generations, those individuals set to take their leave of Canada’s pulp, paper and forestry sector, could retire with the comfort and peace of mind that their industry is in knowledgeable, professional, and highly capable hands.

OBSOLESCENCE FROM A DIFFERENT PERSPECTIVE

When we hear the term ‘obsolescence’ we typically think of the human factor, or implications of retirement. Dr. Roger Gaudreault, general manager of research and development at Cascades views the situation a little differently. The type of obsolescence that has him concerned does not emphasize the age of workers in pulp and paper mills, but rather the danger of obsolescence of the entire Canadian industry.

“Economic effects such as high energy prices, high raw material costs, and the increased value of the Canadian dollar all combine with current international competition to damage the economy of our industry,” he says. Further, “Canadian mills are poorly prepared and finding it extremely difficult to modernize quickly enough to keep up. The only way for smaller capacity paper and board mills to compete is to develop new, specialized, cost-effective products for market niches and well-differentiated from the products of the giant production facilities,” he contends. “You need to create new services to support each product, be sensitive to the needs and opinions of the users and remain aware of long-term changes in market demands. Our ability to innovate will ensure that we can make incremental breakthroughs in innovation and stay at the cutting edge.”

However, as he says, “in new product development, the time to market, from 800 companies world wide has dropped from 18 -12 months in the last seven years. Realistically it is possible that the targeted characteristics of the product that is within the new product development process (PDP) might be obsolete even before we put it on the market. Consequently, we must always, as part of our modernization, be prepared to rethink, redesign, redevelop and generally to adapt at any and every stage of the PDP. Essentially, the increase rate of change of innovation greatly increases the rate of change of obsolescence. Consequently, there is a real need to change the internal culture of our Industry: from our employees, middle management, research and development people and the company executives. It is for all of us in the pulp and paper industry a continuing, exciting endless race to stay ahead of the competition and market forces. We all have a thrilling choice to manage innovation, create market niches, outthink the competition, and create a vibrant and financially profitable industry, or to continue to waste time and money and opportunity by managing our self-imposed obsolescence.”


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