Research & Development: Harvesting Technological Progress
By Pulp & Paper Canada
It is said rather casually that we live in a technological age. For the most part we have become comfortable with technology and with its offspring, not the least of which is the expectation of instan...
By Pulp & Paper Canada
It is said rather casually that we live in a technological age. For the most part we have become comfortable with technology and with its offspring, not the least of which is the expectation of instant gratification. Yet, the advancements in the last 25 years, notably in the area of computer technology, should not be taken for granted. Quickly forgotten in our technological ease is that major advancements that dedicated researchers make are painstakingly slow.
In the high-tech age that today characterizes our lives in so many ways, the question that invariably arises in boardrooms and shop floors is whether major investments in technology always translates to improvements in worker efficiency and productivity.
To be sure, the question is worth examining. For long the argument among technology advocates is that technology will quickly (if not eventually) reap benefits for companies, the so-called technology dividend. Yet, studies in the late 1980s and early 1990s tended to show a lag between investments and dividends. The productivity paradox showed that investments in technology, and notably information technology (IT), did not immediately translate to greater productivity on the part of workers. (See PPC, December 1998.)
Many companies, disappointed with the results, started to scale back their investments in technology and limited spending to particular urgent projects that were directed at day-to-day operations. Their reasoning can be summed up thus: Technology was not producing the quick results it promised and investors were becoming impatient, if not nervous.
Years later, however, we read a different story. The United States, which spends the most per capita on technology and its development, has finally proven its benefits. Its workers, boosted by the use of new information and communication technologies, are the most productive in the world, a United Nations study released last month pointed out. The report, released by the International Labour Organization, a UN body, notes: “U.S. productivity accelerated in 2002, surpassing Europe and Japan in terms of annual output per worker for the first substantial period since WWII and widening the productivity gap with the rest of the world.” (See sidebar, Technology boosts productivity.)
The industry continues to benefit from technological advancement, from sophisticated on-line process analysers that control white-water chemistry, to on-line systems that monitor the quality of wood chips, to continuing advancements in the use of alternative fibres like straw to complement declining wood resources. The sum total of these research and development initiatives is to help Canadian pulp and paper mills produce world-class wood-based products. Mills, however, ought to be prepared to spend more money on R&D to milk the advantages of technology.
Research leads to innovation
Behind each technological advancement are scores of researchers and product developers, who are dedicated to making systems, processes and products better. Are the lessons learned from high-tech investments relevant to research and development? “Studies show that companies that invest intensively in innovation, and not only in research, significantly outperform those who do not,” says Joseph Wright, president of Paprican, a well-regarded research institute in Montreal. “It’s well established in the business literature, and it’s without refute.”
Canada is currently ranked 15th in the world in the amount it spends on R&D, which many point out, is poor for such an industrialized nation. The federal government says that it is committed to substantially increasing its expenditures on research and development — from $21 billion today to $49 billion by 2010. If achieved, Canada would rank fifth in the world in R&D spending.
Wright argues the point that in a downturn economy, companies that continue investing in R&D are better prepared to not only survive, but also thrive.
“Investment in research and innovation is mandatory for long-term-survival,” Wright says. “The psychology of a research-intensive organization is that the best way out of a downturn is through innovation.”
One research institution that is doing important innovative work is Alberta Research Council, where the pulp and paper group is working on such areas as on-line process analysers that control white-water chemistry, on-line systems that monitor the quality of wood chips, and advancements in the use of alternative fibres like straw and hemp to complement declining wood resources.
ARC’s papermaking laboratory focuses specifically on product development. In addition to helping local mills overcome their process or development problems, it researches new grades and combinations of paper. As well, the research lab investigates paper made from hardwoods and softwoods, and agricultural and other non-wood fibres.
The reasons are clear, says Wade Chute, business unit manager for pulp and paper: “There are mills in Western Canada that will soon face a critical shortage of wood chips. The non-wood fibre program that we are developing will act as a supplement to wood chips,” Chute points out.
One of the areas that ARC is researching is how to more easily process alternative fibres, or agrifibres, like straw, flax and hemp. For example, cereal straw is a slender fibre, requiring a different type of digester to process. ARC developed a lab-scale digester, which works much like a large pressure cooker, to allow pulp producers to experiment with various treatments of agrifibre/wood pulp combinations.
“Unlike existing laboratory digesters, the ARC design was created specifically to deal with chemical pulping of both wood and alternative fibres,” Chute says. “A novel control feature detects when the fibres start to plug the screen plate during cooking — a common problem with agrifibres — and adjusts the flow path of the cooking liquor.”
Another area is on-line measurement technologies. One recent development is a colour-imaging instrument that shows the brightness and residual bark content of wood chips on a conveyor. Another uses high-speed gas chromatography to identify wood chip species by analysing the chemical composition of the vapour emitted from heated wood chips.
Equally important, ARC has developed and field-tested a group of on-process analysers — including a dissolved solids analyser, a colloidal pitch analyser — to more efficiently monitor and control white-water chemistry.
Chute, like many other researchers, senses that the mills acknowledge the importance of research, but don’t always take advantage of it. “When budgets are tight, as they are now, mills cut discretionary spending and R&D falls under that.”
True enough. R&D in the Canadian pulp and paper industry is around 0.5% of gross revenues, whereas in places like Finland and Sweden, it is well over 1%.
“There is a payoff in research investments,” Wright says. “It’s easy for me to say, but our numbers back it up.”
ARC is working with PAPTAC to get its message out on the importance of R&D. Chute sits on one of the technical committees of PAPTAC. One of the messages is that mills will always require a skilled labour force, even though today’s modern mills have become more technologically advanced and automated, requiring fewer people to operate. Some say the industry is following the path that agriculture took in the late 1950s, as it increasingly relied on modern machinery. (See sidebar, Down on the Farm.)
“Sure, mills are getting smarter and more technologically advanced, but I don’t see a day when mills would operate without people,” Chute points out. “There are still some jobs that cannot be automated.”
Even so, Chute says mill workers need more training and skill now than they did a decade ago, if only to better understand and take advantage of emerging technologies.
Setting up technology teams
During the 1980s and early 1990s, companies closed many of their in-house R&D centres, mainly for economic reasons. One person not shedding any tears for their demise is Waynne Despres, who heads up WHBD Associates
Inc., a consulting firm in Ottawa.
“I doubt that the old research centres really provided very much direct benefit to their corporate sponsors,” Despres says. “The centres tended to be independent and bureaucratic entities often pursuing their own objectives, and without much concern for the real needs of their clients, which were the manufacturing divisions and mill sites.”
In their place, Despres advocates setting up two small, centralized groups, each with differing yet complementary purposes. One is a Corporate Manufacturing Technology Group, consisting of up to 10 seasoned engineers, whose chief purpose is to use their combined experience to solve mill operating problems and to train mill technical staff.
Despres was part of such a team at Avenor Inc. in the 1990s, before Bowater Inc. bought the company. The technology group, which numbered eight at Avenor, acted as a bridge to the R&D group. Often working in parallel is a capital planning/project management group, who is responsible for all capital spending. It would be made up of a core team of managers who implement overall company strategy and manage the larger projects that are beyond the means of a mill’s engineers. As Despres puts it, “A small corporate group can provide the leadership, the training and trouble-shooting for a company.”
That approach, coupled with support from equipment vendors and chemical suppliers, has proven successful. And the use of information technologies like the Internet, e-mail and IP phones has made it easier to communicate more efficiently.
The other small group is the Corporate R&D Management Team, which would be integrated with the Technology Group. The R&D Group would subcontract pure research to organizations like Paprican, PAPTAC and ARC, as well as specialized suppliers like Metso and Kamyr. “In that way, mills manage R&D, and not have to do it,” Despres says.
As for major repairs, mills would continue to do what they have done for years — either seek out the vendors that sold and installed their equipment, or find worthy competitors. While Despres says outsourcing is acceptable for maintenance, mills should not outsource IT services. “Mills have to take control of the programming for PLCs, because it’s easier to change when you have in-house programmers.”
The Sleeping Giant
To be sure, R&D, technology transfer and training are all essential to improving a mill’s productivity, and as a result the corporate bottom line. Yet, there is the matter of foreign competition. In a shrinking market, Canada needs to think about making international alliances. For long, Canada has been preoccupied with competition from the Nordic nations and American ownership of mills and fibre. On top of that is the difficulty of trying to compete with equatorial nations like Brazil and Indonesia, which can produce eucalyptus or acacia fibre in less than 10 years.
Here’s the rub: It will still take people and partnerships to win the day. Some industry consultants are predicting that another competitor is waiting in the wings to become a pulp and paper powerhouse: Russia, the Sleeping Giant. Russia has many things in its favour: the world’s largest landmass, a low-wage labour force, and inexpensive sources of energy, water and fibre sources.
“The landmass, the wood resources — it’s unbelievable what Russia has in Siberia alone,” Despres points out. (See sidebar, Look out for the Russian Bear.)
As it stands right now, Russia mainly exports logs, much of it to China. The country plans on becoming a modern pulp and paper haven like its next-door neighbour, Finland. “It will take awhile,” says Depres, who has been part of the planning to modernize Russia’s pulp and paper industry. “Russia aims to modernize its mills and ship finished products.”
Despres suggests that Canadian companies ought to sign high-tech agreements with Russian companies, despite the perceived business risk, much of it related to how well Russian courts enforce the law. This is an important point, because in the past, particularly in the early 1990s after the fall of the Communist regime, some Canadian companies fared poorly in Russia. “I know that President Putin is trying to control how Russian companies operate and is trying to attract foreign investment,” he says.
So, although technology and R&D efforts will likely advance Canada as a technological society, Canadian companies ought to move quickly in the area of technology transfer, Despres says.
“Now is a good time for Canada to support the Russian industry. The question is not whether, but how and when they’ll get their act together.”
Technology Boosts Productivity
Productivity is on the increase globally, says a recent report by the International Labour Organization (ILO), a UN body. The study finds that growth in productivity per person increased from 1.5% during the first half of the 1990s to nearly 2% in the second half.
Growth was concentrated in industrialized nations, as well as some Asian nations, notably China, India, Pakistan and Thailand. African and Latin American countries showed a decline in productivity.
Leading the way was the U.S., whose workers are twice as productive as those in the European Union and Japan. Among the leading factors for the rise in productivity in the U.S., the report says, “is the production and diffusion of information and communication technology.”
But the study attributes part of the difference in worker output to the fact that Americans work longer hours than their European counterparts. When measured on an hourly basis, European workers were the most productive. Leading European nations were Norway, France and Belgium. Americans workers put in an average of 1,825 hours in 2002, whereas in European countries, workers put in between 1,300 and 1,800 hours in 2002. The Netherlands reported the fewest hours worked (1,300 hours), whereas South Korea reported the most (2,447 hours). (Canadians worked on average 1,778 hours.)
Developing nations were less productive, but not for lack of effort. As ILO economist Dorothea Schmidt put it, “They are probably working harder than other people. But it is just that they do not have the technology to perform well.”
Down on the Farm
In the early 1920s, the agricultural sector in North America employed about one out of two workers, representing at least 50% of the GDP in Canada and the U.S. Now, agriculture, relying chiefly on technological advancement, produces far more than it did 80 years ago, and with much fewer people — about 6% of the workforce. “That’s the same model that I apply to the forestry sector,” says Joseph Wright, Paprican president. “It might not be a perfect analogy, but that’s that way it will likely go.”
Look Out for the Russian Bear
Russia, the largest geographical nation on earth, holds about 852 million hectares of timberlands, more than three times that of Canada. This equates to almost one-fourth of the world’s timber, or about 75 billion cubic metres. (It is also estimated that Russia contains one-fifth of the world’s old-growth trees.) Just for comparison, the next largest forestry nations own: Brazil (16%), Canada (7%) and U.S. (6%) of the world’s forest cover.
Even so, environmental groups like Greenpeace Russia, and Washington, DC-based Global Forest Watch say that Russia has to do a better job of managing its vast timberlands.
Perry J. Greenbaum can be reached at firstname.lastname@example.org.