TOUGH TIMES
Despite the wealth of assets and product-mix variety at its disposal, Norampac is clearly facing some tricky times ahead, according to Dépin, competing in a North American industry plagued by production overcapacity, pricing pressures, and soaring transportation and energy costs.
“I’d have to say that these are is the most challenging times for the industry in my 20 years of working in the business,” Dépin confided to Canadian Packaging in a recent interview.
“We have finally seen some price increases for out products taking hold, and that’s helping us to offset some of our rising energy costs, but I would like to see a few more price increases still to enable us to make further investments in our operations.
“Nevertheless, the thing about challenges is that they always tend to create new opportunities,” reasons Dépin, “and it’s companies who successfully pursue those opportunities that will find themselves in good market position once the overall market picture improves.”
Because there is not much that Norampac can do on its own to improve the industry’s general outlook, Dépin reasons, it is absolutely vital for Norampac to operate as a truly zero-waste, mean-and-lean manufacturing machine where all its components pull their own weight.
In retrospect, Dépin observes, it was the inherent inability of the Toronto boxboard mill to earn its own living—given its existing cost structure—that ultimately brought about the “painful” decision to shut it down.
Operating as a wholly-owned subsidiary of Cascades Inc., Canada’s largest publicly-traded producer of recycled packaging products and tissue, it is key for Norampac that all of its assets are able to earn their keep on a continuous basis in a real “sink or swim” operational mode, Dépin asserts.
“Cascades has traditionally favored a very decentralized approach to running its business on the local level,” relates Dépin, “allowing for local senior management to make key decisions regarding investment, human resources, cost structure and so on, but at the end of the day all of these operations have to demonstrate their respective ability to turn a profit and realize meaningful ROI (return-on-investment).
“It is just not the Cascades way to have the more profitable operations, in effect, subsidizing the less efficient ones—that has never been how Cascades had done business in the past, and that’s not how it’s ever going to be in the future.”
That said, Dépin is quietly confident that with the cost-cutting restructuring and the new capital investment earmarked across the Norampac operations, the company is well on track to weather whatever more short-term pain the industry may still have to endure.
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