If you are building statues or monuments, when the construction is done, you are done. We don't build statues and monuments in the pulp and paper industry.
If you have spent your career in the shelter of large, rated companies, you likely have not experienced this problem. Some explanation. By "rated" I mean a company that carries a rating by a Dun & Bradstreet, Fitch, or some other recognized rating agency. Most such companies fund their capital projects through their corporate treasury.
Very long time reader Dene Taylor wrote me a note after last week's column (Week of 9 January 2023 "First Number Uttered") suggesting the second number uttered is the time to complete a project. Mike Higgins offered a similar comment. This is so true and in line with the items I covered the first week of this series, the week of 2 January 2023. I have seen so many schedules blown over the years that they are uncountable. The worst are the rebuild schedules, for they are the ones that take an operating machine out of production for a period of time, endangering the customer base. There is a lot of pressure to make these as short as possible.
Capital project budgets suffer from "first number uttered" syndrome. Whatever project cost number gets to the executive suite first is the one that every decision hangs on. That number may arrive from a back of the envelope exercise, an article read in a trade publication, or some other unresearched source. The corollary to "first number uttered" is, "surely we can beat competitor x's reported costs." More projects have been doomed by these kinds of thinking than any other I have ever known, and remember, we're talking about my fifty-three-year career here.
What continues to amaze me are the stories of projects gone bad. Large, small, makes no difference, there are still for me, after nearly 53 years of watching projects from all sides, reports of disastrous projects. In this time period, experienced and learned people have brought forth courses, books and institutes to tackle the subject of project management, yet my side gig of being an expert witness in construction lawsuits continues to thrive. These are the top five reasons I think capital construction projects fail...
The 10,000-pound elephant in the room is that old digester that you abandoned in place. Or maybe it is an old paper machine, or an old bleach plant. Managers have gotten really cute about abandoning old equipment in place rather than take a write-down. The error in this is that one has no idea what kind of energy consumption or fluids consumption (water, lubricants and so forth) are taking place in that abandoned unit operations.
The first energy crisis started within four months of my graduating from college. You might say I, and anyone younger than me, has spent their entire career energy centric. Yes, at times energy became relatively less expensive than at others, but it was always there.
I think my long-term proclamation that all energy is political (which is proven true every day in the popular press), licenses me to wander a bit from our normal management and technical topics here as we attempt to figure out how to get the pulp and paper industry through this coming Northern Hemisphere winter.
In May of each year, we talk about Energy Trends, and we wrap up in December with Power & Energy. Energy is an important topic in the industrial and post-industrial world. As I have said many times, modern energy is all politics. It doesn't help that most politicians and journalists did not go to STEM schools for their secondary education.
So, what have we learned from this series of columns?
Discerning when to be innovative or not is just as important as the art of innovation itself.
Be creative, but make sure you are creative from many points of view. Additionally, don't get hung up on your idea, there may be a better one.
I think anyone can train their brain to be creative. It is a matter of recognizing and knocking down the subconscious mental barriers in your thinking. I believe most are not creative because they won't let themselves explore the possibilities. I know this happens to me even though I am aware of this barrier.
I suspect when I started this series four weeks ago and you saw the word quality, you immediately thought about the products or services your company provides. That is normal. However, we first must get our house in order, starting with ourselves, before we talk about the products or services our company provides.
Todd Brooks of NORPAC in Longview, Washington, wins Capital Arguments Project Manager of the Year Award
We had an opportunity to gather on the evening of 6 October 2022 and award the Capital Arguments Project Manager of the Year Award to Todd Brooks of NORPAC in Longview, Washington. Todd came in on budget on a tough project that was done entirely during the Covid Era. Todd learned the meaning of Force Majeure and still pulled it in on budget. Great job, Todd!
I am just from the SAP Conference in Madrid and I have to tell you my head is still spinning. One cannot understand the rapid advancement being made in business and process software unless one listens to the users.
As we talked about attitude last week, you should have picked up some ideas for making sure your customer relations exude quality, but there are a few more items I would like to emphasize.
Generally, I think that a cheerful countenance and an empathetic attitude convey a person of quality, and like I have said in other parts of this series, an aura of quality is contagious throughout your entire sphere of influence.
The modern phone is a miracle device. The downside is that it may expose us in multifaceted ways that are not flattering.
Quality starts at home, and that home is often your home, your car, and your workspace. Organization exudes quality. Ever walked into an automobile dealership? Was it disheveled or spotless? How would you react if you walked into an automobile dealership that was untidy? If we are going to talk about quality, we must start with ourselves in the places we live and work.
Nothing is free
Spinning the Invoice Printer
So, you want to be a consultant
Well, after a few days, the Great Mother came back. She did not mention gorging herself and neither did anyone else. Great Mother, "We have gotten very far behind, and our time is almost up. Til, can you come forward and read the remaining cases? If we have time, we will take them up at next year's conference." Til came forward.
The Rats took a break for a couple of days. We found a pond for swimming and had a good time. On the way back to the meeting area, we went past a place where the Big Things eat food that they heat up very quickly. Out behind, there were bins full of discarded food, so we had quite a feast. The Great Mother got sick from gorging herself and was very embarrassed. The Great Mother always takes her role very seriously and is very conscious of her decorum. Gorging herself was out of character. She must have felt quite ill, for when we reconvened the Junior Mother was presiding. "Attention, please!" she called us to order. "The Great Mother is a bit under the weather and has asked me to preside over this session. Today, we are going to quickly look at cases where Big Things threatened the companies for which they work. Clerk, please read the cases."
After a brief recess, the Great Mother called us together again. "What is on the docket for today?"
After three lights, the Great Mother called us together again. "We have heard a particularly disturbing story," she began. "It seems as though the Big Things want to be known for protecting this whole place where we live, but some of them take what they call shortcuts at times. The RBI, or Rat Bureau of Investigation, has been looking into this. I'll let them explain." Phineas Kirby came to the front of the room...
By Jim Thompson interpreting for Fos the Rat ... Yes, it is August again and its is corruption month at Paperitalo Publications. We rats have observed in the past year that the human engagement in corruption is not limited to pulp and paper mills. This last statement may sound naïve, but one must understand our methods of communications are rather limited (basically just walking around and talking to each other) so we perhaps don't get all the information Big Things do.
As we wrap up Environmental and Regulations Month here at Paperitalo, we would be remiss if we did not mention the minefield that regulations relating to Human Resources have become.
Don't think you can turn regulations into a marketing advantage. Thinking that a customer base must buy a certain good or service and hence this will make an automatic market for you is a potential mistake.
The general intent of regulations is to keep order in society and keep the population safe. A dictionary definition of regulations is "a rule or directive made and maintained by an authority." My cynical version is this: "those who have power by fiat telling those who own assets what to do." Over the decades, we have seen many actions that follow my definition here in the pulp and paper industry.
A little regulation is probably good, but a lot of regulation chokes business to death.
Sorry about that, but the energy news is coming thick and fast for all of us these days. I am sure you remember old Jim telling you to carefully preserve your boilers, regardless of what form of energy they consume (I have also said these are the only types of idled assets to save). I hope you have heeded my advice. It appears the rapid transition to "Green Energy" sources appears to have some problems.
A tough subject and one all of us, not matter what side of the negotiating table we sit, should treat with respect, not forgetting our fiduciary duty.
Today, we need to know the delivery status of items way before their expected delivery date. We even need to know what ship they are on and where that ship is at any given moment. As shortages continue, this becomes even more important.
The purchasing department is an area of great opportunities. It is also a place where all the profits of the mill can be dribbled away, and a potential source of grossly unimaginable corruption. The purchasing department must be carefully managed.
As we wrap up this month on energy trends, there is one certainty over which you have complete control. That certainty is this...energy you don't use frees you from others' control. If we think of a pulp and paper mill as a "black box" this means that energy we use inside the mill that we generate ourselves frees us from the vagaries of the markets and external suppliers.
If you have read this column for any length of time, I am about to repeat something you have heard before. I am always in favor of removing obsolete and unused equipment quickly with one glaring exception. That exception is this: power plants.
The answer to dirty energy today seems to be electricity. For mobile transportation, cars and trucks, electricity moves the emissions from many points (tail pipes) to either single points (power stations) or theoretically no points (solar, wind and hydroelectric). The first thing we need to understand is that our choice of energy is cost, ease of use, and emotions. Notice that glaringly absent from this list is science. Energy choices have long since left science out of the equation.
Of course, it is. You ask how I can write a column about this. What we don't realize is how rapidly and how important energy has become to modern societies. The following is a column I wrote for my hometown newspaper about six months ago. While not about energy, it describes a real scenario, that while current, could have easily been widespread conditions about 70 years ago in the United States. The boiler, an important object in this piece, was manufactured only about sixty years ago.
On the Nip Impressions calendar, May is energy trends month. There is hardly a timelier topic, except perhaps food trends, but Nip Impressions does not cover food and my doctor wants me to lose ten pounds, so I try not to think about it. I would guess a good half of the headlines in the popular press today are about energy. These then fall into two categories, security of supply and what to do about, what I will call "dirty" energy.
I was doing some consulting in a mill a number of years ago that had a sign by their entrance that stated they had won some "safety award of the year" some years before the time I visited. I chided them and asked what they had been doing since the time of the award? Obviously, they had not won it again. Unfortunately, about five years after my visit, they had a triple fatality at that mill--contractors on an outage. There are a couple of issues I would like to unpack from my opening paragraph.
Many of us take OTC (Over The Counter) drugs. These can be abused, too. Especially on outages. I'll tell a story on myself...
There was a fatal automobile accident in our neighborhood lately that can serve as an excellent study on how we think when there is little time to sort out the situation. There are lessons here for all of us.
I like to remind people of the following resource any time I get a chance. It is a good way to start off safety month here at Paperitalo Publications. It is simply this. On our website, PaperMoney (www.globalpapermoney.com), we have been keeping track of the industry's safety performance. In its sixth year now, the department, "Reported Risks" is a current chronicle of "Risks: Fires, Fatalities and Catastrophes." It is a good learning resource and a source of endless safety meeting subjects.
It has been over a decade ago that I started talking about manufacturing your own spare parts with additive manufacturing. It is now moving from an interesting idea to a vital necessity. Between logistics problems and world turmoil, the spare parts needed for your machine may not be available. Most, except those of the most critical metallurgy, you can make in your own shop with less skills than a first-class welder or machinist.
Over the years, I have talked about this miserable old mill that I worked at long ago. When I was young, when I had a choice, I always ran towards opportunities that had lots of problems. My philosophy was that situations in trouble were the best way to advance your career. I have never been interested in career safety, it is boring and leads to complacency. So, I end up at this mill, in the prime of my career. It is large, ancient and a mess...
We have more aids for maintenance today than ever before. Detection instruments, storeroom software, built in monitors, training, you name it. Maintenance has never had more help than is available today. So, why do we still have maintenance failures?
Probably after August (Pulp Rats Month), Maintenance Month is my favorite month of the year on the Paperitalo editorial calendar. My dad was notorious for avoiding maintenance. It was an expense he loathed in the same manner as many mill managers and operations executives do. I followed his example for a while, saw the fruits of such policies and became a maintenance fanatic. A couple of old family incidents are in order.
I don't think most mills realize how close we are to interacting with robots every day. The box plants are ahead of us on this. The new Super Plants require about two thirds the employment for the same level of productivity. They are all 110" corrugators and they have a heavy component of robotics. I am expecting to see a flurry of box plant upgrades between now and 2030. Super plants won't be super then--they will be the norm. Back in the papermill, a couple of ready for here and now human aids are available.
In today's world, you may want to think long and hard about how the new or replacement piece of equipment (or other vital supplies) reach your mill. If you can afford to wait 12 - 18 weeks for those special refiner plates to arrive, put them on a ship. If you are losing production or quality every day because you do not have them, fly 'em, the most economical overall cost.
Back in the old days, we used the term "FOB." This meant "Freight on Board." There are other terms these days, but they mean nearly the same thing. One could purchase items "FOB seller's dock" or "FOB purchaser's dock." Internal logistics personnel have, for the last couple of decades, thought it smart to handle the logistics and freight themselves and purchase nearly everything "FOB seller's dock." They think they are saving money and justifying their existence. No more. In today's world, I would recommend that you purchase nearly everything, especially capital goods, "FOB purchaser's dock."
If you are like most facilities these days, your transportation system, outside the fence, if not in shambles, is at least limping along. What to do?
Give your operations and maintenance folks the help they need to make the project truly successful.
I've often been asked, "how often should our project team meet once our project is under way?" My answer is based on your average spend over the life of the project and at peak times (especially in rebuilds).
I have written assessments on lots of projects. Every one of them follows the same pattern in the same order. Three questions: 1. What are the markets? 2. What are the raw materials? 3. What are the assets (including tangible assets and human assets) that you place between (1) and (2) to have a successful project? If you don't start here, your chances of success are very low.
Most of the people I talk to today have not prepared or managed capital budgets under the conditions we find ourselves in now. Well, I saw my first capital budget in an industrial setting in March of 1970. Perhaps I can help you a bit--we had similar issues back then as those we are facing today--the administration in the White House in those days thought they could control inflation with price controls which caused me to miss two planned 25 cent raises as a co-op student, from $2.75 per hour, to $3.00 per hour to $3.25/hour, over a period of 18 months. Glad I could do my part to help tame inflation; as a student operating on the pay as you go plan (no loans), one makes too much money anyway.
Have you ever had a conversation like this? "I was going to by a car from Brand X because it is cheaper and has more features than Brand Y." "Well, you obviously bought Brand Y. Why?" "Brand X didn't have any in stock and didn't know when they would get any." So, really, in the end, Brand X didn't mean anything because you could not get Brand X. Their price could have been twice the price or half the price of Brand Y, it just didn't make any difference. You may find yourself in this place with certain pieces of capital equipment now. You may have to become a "satisfier" instead of an "optimizer."
I don't think this is a one size fits all question as you look at your marketing going forward. Some customers will be interested in your energy usage, others will be interested in what your products can do to save them costs in their manufacturing and logistics schemes. Please note that in all scenarios in this column, I will be talking primarily about business-to-business sales, not business to consumers.
I recently read an article in the Wall Street Journal which was discussing the write down coming in some energy assets, such as coal reserves, as the economy switches to "greener" energy sources. Like it or not, agree with it or not, there seems to be a move afoot to completely change our acceptable energy sources. You can interpret this as follows: energy is going to get more expensive, a lot more expensive, in this new world.
What concerns me today is that we seem to be more interested in the form of energy rather than its efficiency or cost. Energy has taken on somewhat of an "identity politics" persona. In earlier days, it was security of supply and efficiency. Today it is products of combustion that seems to garner the attention.
If you have read this column for any length of time, you know that old Jim has told you countless times to carefully mothball energy assets that are out of favor, for sooner or later, they will come back into fashion again. This statement is a corollary to my principle, all energy decisions are political. This calendar year has seen a sudden swing to an overwhelming global opinion that climate change is "settled science" and we can't decarbonize fast enough. Couple this with ESG (Environmental, Social and Corporate Governance) principles and boards of directors worldwide are moving at warp speed towards these extremely popular ideas.
The components and devices to do what I will describe here exists now. Someone just needs to assemble the bits and pieces.
If you think you can't innovate, the problem is purely mental. Creativity can be learned and you can use it in many ways to make your work environment more productive and safer.
Getting innovation right is crucial to optimizing profitability. Too soon, and the equipment may not be able to deliver as promised. Too late and your competition may have already eclipsed you.
There have been many attempts to institutionalize innovation. Sometimes the domiciles of higher education seem to think they have a lock on innovation capabilities. Likely, in some areas, they do. The innovation with near term payoff, however, often takes place at the millsite. It is an activity in which everyone can participate and can be made into a fun (and profitable) activity if structured correctly.
We are in the process of revitalizing and restarting the Light Green Machine Institute, a 501c3 educational institute we created back around 2008. The Light Green Machine Institute's mission statement is "Holistically reducing the environmental impact of pulp and paper processing."
The fourth step in quality is the training and morale of your personnel. All your employees need to be thoroughly trained for the job at hand and not only trained but taught to think so that they can take action when they see something occur that can affect quality.
The third step in Quality is the quality of your raw materials. Some might have thought this is the second step. No, it's the third, for you don't know the quality of raw materials required until you know the quality you are promising your customers.
The second step in Quality is a solid standard of product performance. If you are in the tissue and towel business, these are likely internal standards. If you are in the containerboard or other paper products businesses, these are likely recognized industry standards. You don't know what quality is if you can't define it.
The first step in the path to producing a quality product is the housekeeping in your facility. I know I sound like a broken record, but in truth, housekeeping is the first step in many actions in your mill or converting facility. I have never seen quality products consistently produced in dirty or sloppy facilities. It is just not possible.
If you are the top person on your site, get out of your office and visit your people regularly. I recommend 6 a.m. rounds, with flashlight and small notepad in hand to take notes on what you find (or put them on your phone). Shake hands, get to know your people. If you are over a large facility, don't do it all in a day, but make sure you visit every department at least once per week.
Where human/machine interface is going in our paper mills is hard to guess, it seems to be just at the cusp of arriving as we implement Industry 4.0. On one hand, it will make us better papermakers, but on the other, like my automobile experiences, we will likely have many of the unconscious dependencies...
I was assistant project manager in the engineering department at a mill back in the early 1980's. I have referenced this experience a number of times in this column over the years. One of the upgrades we made at the time was to go from pneumatic controls to digital computer control. This means that the machine, which only a few days ago was operated from benchboard on the floor was now operated from a control room. Now a mere month later, the bench boards are gone. Keep in mind, the crews on this machine had been running it from benchboards for about 14 years...
This is my 52nd September in the workforce. I think management is tougher than ever. Think about it--when I started even OSHA did not exist. People were glad to have jobs and they put up with all sorts of things at work that simply aren't tolerated today, both from the standpoint of society's mores and from a labor regulatory perspective.
Silas, the CEO of REO, wasn't finished last week. He had another story he wanted to relate.
After a few lights of recreation, the Great Mother convened us once again. "Rats," she announced, "Let me introduce the Rat 'Em Out Detective Agency. You can just call them "REO" for short." Six wizened looking old rats came to the front of the room.
The Great Mother called the meeting to order after a short break. "Who has a case for us?" Dis came up the side aisle. There were a lot of rats at the meeting. They had been attracted by the thoughts of a trip to the Big Things capital city and to their building where the biggest rats of all congregated. The Great Mother seemed to be in a benevolent mood, "And what is your story, my child?" "In the mill where I work, there is this female Big Thing. I should say, 'there was.' She is in jail now."
The Rats arrived at the big building with the big half ball on top. What we didn't count on is how bad it stinks inside! Don't know how the Big Things stand it, but after a day or two, we pretty much got used to it. I guess because it has been here a long time and gotten saturated with the residuals of Big Thing's activities causes it to stink so. The Great Mother called us to order. "Thank you for coming. As usual, the Big Things have been working overtime again creating havoc and committing crimes throughout the land. What's on the docket today?"
By Jim Thompson interpreting for Fos the Rat: You Big Things may think we rats are in the dark about your activities. Of course, if you have been reading this column for any length of time, you know that is not true. I (Fos) have been reporting on your misdeeds and malfeasance since August of 2015. Yes, this makes the seventh year Mr. Jim has yielded his column to me for the month of August.
If you have read this series of July columns, you might be thinking I take a dim view of environmentalism principles. I don't--as long as they are measured in their application or make good economic sense. Don't trust the public to be informed. I'll use an example that is not necessarily environmental to prove my point and to show you some of the ways misinformation abounds...
You would be hard pressed to find a topic or concept more universally and shamelessly exploited as a marketing aid than environmentalism. Positive vibes from environmentalism are used by nearly every marketer on earth to show alignment of their products and services with clean air, clean water and less landfill waste. It is a safe bet--who doesn't want clean air, clean water and less landfill waste? Sadly, as an industry, we were a bit slow on the uptake.
Never heard of the Sunrise Movement? You should check them out--www.sunrisemovement.org. On 28 June 2021, they blocked all entrances to the White House to get attention. Some were promptly arrested. One might characterize the Sunrise Movement as Greenpeace on steroids. Youth oriented, the Sunrise Movement has a multifaceted activism focusing on the environment and the Green New Deal. On their website, they list twelve principles. You will have to deal with them.
In the innocent days of the 1970's, the US Environmental Protection Agency was formed. It came into being on 9 July 1970. Other countries had formed similar bodies in the same era. Sweden's was founded in 1967, for instance. Others were formed as late as the 1990's. Back in those days, air and water pollution were spewing forth with little control and little was being done about it. The correct approach was science coupled with appropriate regulations. This has happened worldwide now, by one of two methods.
In this final set of scenarios, I was in the role of Services Manager (responsible for maintenance, engineering, and the technical and power departments) at a mill in Ohio. We were having trouble with contaminants in our recycled fiber supply. The state-of-the-art solution at the time was to replace screen baskets with holes with ones with very small slots. Of course, like all such situations, this solution had spread around the industry as fast as it would on Facebook today (but this was pre-internet). We had screen baskets of the requisite specifications on order, but delivery was months away.
On Thursday, June 17, 2021, I had the great pleasure visiting our client, Industrial Air, Inc., of Greensboro, North Carolina. This visit was a year in the making, given the travel restrictions of the lost year of Covid 19.
We were in the middle of engineering and planning a rebuild. Our instrument engineer comes strolling into my office one morning. He's concerned about the delivery of the new distributed control system. On the paper machine, we were going from bench boards on the operating floor (with pneumatic controls) to a digital system in a new control room. Huge change. Our instrument engineer, I'll call him Jeff, was getting conflicting stories from the supplier concerning delivery. I told him to make a couple of more calls, and if he was not happy with the answers he was getting, we would jump on a plane. We jumped on a plane.
As I mentioned last week, we are in a new era of shortages, delays and high costs. Back when many of you engineers and purchasing agents in the mills in the United States were still watching Sesame Street, some of us were going to extraordinary lengths to get the goods our mills needed to stay on schedule and operating. You may need to start thinking this way, too--but be sure to read the safety cautions at the end of this column.
This is the month I talk about procurement. If you buyers or purchasing agents have been moping around for years, thinking you are not getting any recognition, those days are over. Suddenly, you are the center of attention. Pricing and schedule are paramount these days.
As I wrap up the energy columns for this month, I wanted to leave you with a few words of caution.
We have traditionally calculated the investment in energy projects based on savings against alternatives, fuel supply availability or regulatory requirements. What if we drag the marketing folks into the equation and ask them how much more product they could sell or what kind of a competitive advantage they could realize if they could say your facilities and products are more favorable on the carbon question than other manufacturers? Is there a piece of the economic question that could be answered with this discussion?
For decades I have been saying the pulp and paper industry is one of the most exciting sectors in the manufacturing world. It is full of surprises, never ceases to be entertaining and is continually offering new ways to succeed. Now an outfit called Allrise Capital has once again reinforced my beliefs in this thinking.
Regardless of your personal beliefs or the science you (do) (do not) believe, carbon neutrality is in your energy future. There are many high-profile companies and CEOs involved in the "CEO Carbon Neutral Challenge" including our own advertising partner, SAP. The Carbon Neutral Challenge has a list of six guiding principles.
Here in the United States, with a change in administrations, there is often a change in energy policy. It seems no different this time. If you will recall, many times I have said all energy policy is political. This has not changed. My confidential touchstone on energy activity tells me energy research requests are up, too.
Occasionally you will run into a safety situation that is not covered by your training. What to do? My approach to such situations is multi-pronged. Urgency, risk, obvious and unknown are adjectives I would use to describe my approach in these matters, coupled with a heightened awareness of my surroundings.
Last week, we talked about excitement creating dangerous safety conditions. This week let's talk about the opposite--routine creating dangerous safety conditions. Because we work around large machinery, clamp trucks and so forth, which, for the most part behave as they should, we become complacent that about these items. Paper machines can kill--and they have. Clamp trucks can kill--and they have. Dynamic accidents (things flying apart, things falling) are dangerous.
One of the most dangerous times, at work, home or wherever is when we get excited. When excited, we often don't think about safety. How many times have you come into the mill excited (perhaps by the traffic you had just driven in)? How many times have you left the mill excited, with plans to go on vacation or do something else exciting when you got off shift that day? How do we fix this?
The pressure to meet production goals is directly in conflict with safety procedures unless you work hard and creatively to take the conflict out of this scenario, for there is a conflict here, no matter what anyone says. In reality, doing tasks the safest way is often the most efficient way.
I hate boneyards. These piles of junk provide a false sense of security, causing clueless managers to think there is something there that can get them out of a maintenance jam. I haven't kept track, but my perception is that boneyards in my past caused far more problems than they cured.