Want to install a new paper machine? First fire the engineers!

BARCELONA, Mär. 8, 2010 (RISI) - Both the European and North American paper industries are at a crossroads. Declining paper demand appears to be the big predicament but it is really not the only one nor the most important. History tells us that this is a transitory issue that will eventually run its course, at least for most grades. The poor demand underlies the issue that everyone appears to be ignoring which is that the paper industry in the West is clearly uncompetitive and the mitigation brought about by the continuous mill closures will simply not turn things around.

The problem goes way back, to when the paper sales managers drove Jaguars and stayed in the best hotels in town or when each mill had its own guest house. Money was no object then. Most companies have changed many concepts and procedures but not the essence of how they build and operate those machines and mills. We still do it as if we owned the bank. We are going bankrupt but we're doing it in style. We are even closing down machines and mills with the best and newest technology. It is not supposed to be that way. Something elusive has gone really wrong here and it is not just the cost of energy or raw materials.

A few examples help us in the search for possible solutions. A manager of an important paper machinery supplier told me that the price for his equipment is always 30% higher when he sells to European mills. The reason is that the engineers ask for things they do not really need and because the equipment has to be designed and constructed outside of the vendor's standards.

"Simply the best" - not always the best route

I also read several years ago, in a machinery supplier's magazine, that one particular mill chose them because they were simply "the best" from the technological point of view. Naturally, the best always comes with a high price tag. In that case, this mentality likely accelerated the closure of that mill which very unfortunately took place last year. Best is often not the best.

Moreover, go visit any new operating paper mill and examine the high ceilings, the offices, the luxury of construction with stainless steel everywhere and the operating and maintenance people having a leisurely day. Notice the paper being wasted between the pope reel and the winder. Look at clamp trucks carrying paper from one place to another, damaging the rolls at every turn. See the great inventories waiting for shipment. Nobody will tell you the exact quantities. This should not be the picture of an industry that is in heavy duty trouble.

The title of this article is more provocative than literal. Of course you need engineers to build and operate the mills. The only problem is that we (the engineers) need to be woken up. We need to be thrown from our know-it-all pedestals. We need to be brought to the reality that if we don't change our pompous attitudes, we will bring about the destruction of the companies that provide us with our own livelihoods.

Back to basics

We have to get back to real basics, to zero budget, to thinking on how we can we make this thing called paper cheaper, simpler, and better. We have to be humbler and smarter and we must realize we do not have much time. We need a radical change in perspective. To confront our fatal weaknesses we will have to do a combination of the following;

1. Forget about specific and different widths for new machines. In the future, all machines should come in standard sizes of, say 5.5 m, 6.0 m, 7.0 m and so on. The idea that each machine serves a particular market and needs a specific width is false. With rare exceptions, the infinite number of existing widths serves no purpose except to increase the cost of any project.
2. When planning for a new machine, buy a carbon copy of what your competitor already ordered. No changes will mean that most problems will be known when starting up. Additionally, the design and construction will be so much cheaper. Let the rich companies pay for the development and endure the sleepless nights.
3. Design the machine as if it needs to last thirty years, not one hundred.
4. Do not put any extra capacity in the plans. If you want three hundred thousand tonnes, build for that and no more. Piping, pumping and everything else will be much less.
5. Put extreme attention in the logistics design, whether of materials or manpower. Do not waste space or any type of energy. The distance between the main raw materials and the finished product in the means of transport should be studied in a holistic way and absolutely minimized.
6. Review the building plans. Reduce height, length and width. Why are those machine basements so high? Why are those machine halls so wide? They are very nice to have but we simply cannot afford them.
7. All or most raw materials should be handled without internal or external labour input. Outsourcing work is all the rage today but eliminating the work by means of automatic transport and smart design is the only way to lower cost.
8. A rigorous benchmarking on manning needs should be carried out before designing anything or hiring anyone. The mill conception should minimize the operating and maintenance personnel.
9. When the mill is running, the responsibility for all operating costs should fall on one field person and one person only. When too many people are in charge, nobody is in charge. Operating mills need clear decision lines and responsibilities.
10. Material efficiency is paramount in operating mills but few operations personnel believe their competitor is better. There is a mindset in the industry that makes people believe that they are the best. This perception must be destroyed. How can we be more humble, learn from others and think that we can improve without investing?
11. Eliminate the warehouses. "It is impossible," they will tell you. Redesign the business from the raw materials to the customer's home so that you will have much less than your best competitor. Being far from the main markets is a common excuse that hides all sorts of inefficiencies.

In the end you should not fire the engineers. The mills need them. But in the new paradigm, they must concede that their job is not to buy and operate the most modern, biggest and fastest machinery but to make a financial return that will ensure the continuation of the business. The job satisfaction will then come from the knowledge that we have contributed to those necessary blocks that make our industry sustainable.