By Michael Lynch
Flexibility is an important word in John Brophy's vocabulary. It is one of the things the general manager of Provincial Papers in Thunder Bay uses to keep the coated, fine-paper mill he manages competitive in a "tough" global marketplace.
"To survive and prosper in this business, you have to be flexible and use your size to your advantage," Brophy says.
The company plans to spend $10 million this spring on a bark-burning system that will reduce its dependence on natural gas. Three small package boilers are being installed instead of one large boiler.
"Installing three small boilers is more economical and provides more flexibility because it allows us to use all three, or just one or two, depending on steam requirements," Brophy says.
Once installed, the boilers will provide 40 to 45 per cent of the facility's steam requirements.
Boralex Inc. of Montreal, a company associated with Provincial's parent company Cascades Inc., will provide the pre-assembled boilers.
The mill currently sells some of its bark to other mills in the area. Once the new boilers are installed, it will have to purchase bark, and reduce in size most of the bark. Even with this extra handling the mill is expecting significant savings, he adds.
Provincial Papers has experienced a number of ownership changes since the early 1990s. Abitibi-Price Inc., now Abitibi- Consolidated Inc., sold the mill to employees in 1993. After four years of employee ownership, Provincial became a subsidiary of Rolland Inc., a major producer of fine paper, which is wholly owned by Cascades Inc.
"Employee ownership was a positive move because it enabled the mill to survive, and it also made the mill attractive for eventual purchase by Rolland," Brophy says.
At the time of the sale to employees, the paper industry as a whole was losing money.
During the employee-ownership phase "we were able to do a lot of restructuring and reduce costs significantly. We had some good years and a few lean years," Brophy says.
Provincial currently employs 600 and has annual sales of $200 million. The mill produces 160,000 tons of fine paper per year, which is used for magazines, high-quality brochures and hard cover books. Half of the mill's production is sold in the United States.
The coated, fine-paper operation also produces wet-strength paper that is used for beer labels.
The raw material the mill uses to make paper is kraft pulp and ground wood aspen.
"We use approximately 8,000 tons of pulp a month, of which 3,000 is aspen," he says.
Provincial Papers operates in the global marketplace and faces stiff competition from European, Asian and American mills.
"The price for coated paper is not strong right now. Because of our size, we are not in a position to dictate price," Brophy says. "However, our size allows us to respond quickly to customer needs. It also allows us to provide superior customer service and make grades that many larger players find unattractive.
"On an annual basis we are profitable, but this depends on how our operation runs and market conditions."
Brophy says the mill's greatest potential for cost savings is eliminating waste, improving efficiencies and quality and making productivity improvements. One of the measures the mill uses to keep capital expenditure costs down is buying "good used equipment instead of new equipment."
Brophy is optimistic about the future, but says "the immediate outlook for Provincial is tough. That is why we keep a close eye on efficiency, consistent quality and customer service."
