Email Jim at jthompson@taii.com

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Every facility in our industry has two types of assets--hard and soft. By hard I mean buildings, machinery, process control systems and so forth. By soft I mean people. When a facility produces products for a vibrant market (defined as steady or growing, not declining), which are more important to its success--the hard assets or the soft assets?

I have been employed in the industrial world since March of 1970--roughly forty six and one half years. Well over forty years of this time has been spent in the pulp and paper industry. For all of these years, the answer to my question in the first paragraph has always been the same--the soft assets--the people.

The soft assets most important for success are, in particular, the people in management--and to be even more particular, the person at the top of the facility's management structure. Given good markets (if you don't have a market you don't have a business), success comes down to the management skills and the leadership ability of the one at the top.

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Notice, I did not say the top of the company (if the company happens to have more than one operating facility); I mean the top person at the head of each facility. Granted, the executives in the headquarters office can foul up a good company, and you can have the best executive in headquarters, but if they don't have good people running each facility, the company will not survive. In fact the top executive's number one job is to make sure each facility has the best top manager that competitive salary ranges will afford.

I have seen excellent hard assets run into the ground by lousy managers. I have seen mediocre hard assets run circles around newer assets when managed by outstanding managers. Given the choice of equipment or managers, I'll take managers any day.

Further, I will grow managers not so much based on their education and directly related experience as I will based on their energy and drive.

Give me a reasonably intelligent person with a real drive, energy and attitude and you can have the fanciest, newest hard assets. This person and I will beat you at your own game.

I get so tired of going into mills where people whine about the equipment they have and play "if only" games about the equipment they don't have. In most places where I see this, they are not even maintaining or properly operating what they do have. Why should they get new equipment when they cannot demonstrate they can run and maintain what they already have? I've seen the movie where such management teams are given new equipment. In six months it looks like and performs like the "junk" they already had.

Except it wasn't "junk"--it was treated like junk.

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All else being equal, your best run facilities should get the capital for new equipment and processes. In your poorest performing facilities, you should change out the top management (and keep changing out the top management if necessary) until you see some real improvement. When improvement comes with what the facility has, then you can start talking about capital improvements.

So, I love equipment and made a significant portion of my livelihood in the past forty six and a half years by building significant experience in all aspects of capital equipment selection and management. But capital equipment must be bestowed upon the deserving who will make it perform in the top 10% of its class.

By the way, welcome to management month at Paperitalo Publications. We'll continue next week. In the meantime, now that the Rats have gone back into hiding, quizzes are back. We'd love for you to take our quiz this week here.

Safety is about management, too. Great managers can operate old equipment safely, poor managers can maim employees with new equipment.

Be safe and we will talk next week.

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