When I was a kid, I remember going to the circus and being absolutely captivated by the tightrope walkers. They seemed so relaxed walking on that fine rope high above the crowd, as they would balance perfectly, seemingly without effort.
And now in the paper industry, our very intelligent money managers - with more than a bit of effort - have to balance budgets. (And the money manager's job involves a bit of fortune-telling too. For example, will gas prices go up or down?)
And due to good money management (and fortune-telling), our mills are able to have capital projects.
With capital projects the Board and Corporate Management often focus on climate, efficiency, and flexibility: new fuel, less steam, and more grades - a runnability package - all of which is excellent and significant.
Yet with those beautiful runnability packages you can make the mistake of confusing those with integrity purchases: fit tanks, dikes, live alarms, repaired shells, and peroxide kept away from fiber. Those are different purchases.
So let's take a closer look at these types of purchases and for simplicity's sake, we'll break our purchases down into two handy categories.
What The First Category of Spending Looks Like
These first type of expenditures look like energy conversions and grade-flexibility rebuilds, which are easy to justify as green or cost-saving.
This also includes the more stable steam systems and machines that can change grade without a crash stop, resulting in fewer recovery days. They can remove hours of middle time operations. This is significant, and it matters for safety issues similar to the Woodland mill in January (2).
This is money spent for an updated, improved, more energy-efficient mill.
What The Second Category of Spending Looks Like
These second type of expenditures look like inspections, repairs, rerates, replacements, containments, detections, and segregations.
They can also look like Peace River's new piping, kiln, and new recovery boiler.(3) The St. John's boiler application could be this kind of spending (4), if the board could point to the specific line item(s). If the memo only says green energy, it is still the first category.
This is money spent on keeping equipment safe and operating optimally.
Why Boards Slip
Why boards tend towards one type of purchase is very simple. The first category of spending hits public targets (tons CO₂, new products, "stability"). The second category of spending looks like maintenance: a tank called unfit last July, or a boiler from the 1970s.
It's also very easy to put integrity on next year's list, while this year's capital goes to the machine that changes grade at speed. Longview had that calendar: replacing the tank was put off to "next year."(1)
What the Board Should Require in the Same Meeting
When planning out capital projects, pull out a piece of paper. You'll make two columns, and get ready for one question afterwards.
Begin by having the two columns on one page.
- Column A: list the hours of messy-middle operations this capital project removes.
- Column B: list every open integrity finding on liquor, bleach, and oxidizer storage, with a date and a budget.
If Column B is blank, the project has not bought safety. It has bought a "more efficient process" with a sales pitch. Ensure both columns are funded.
Next, review your calendar. Ask the question whether or not integrity work shares the calendar? Because we can have no more Longview events. Ensure integrity work always shares the calendar.
So keep up that balancing act, and do capital projects in a way that ensures you are not only completing your focus on climate, efficiency, and flexibility, or whatever capital projects improve the mill, but also confirms you have integrity work sharing your calendar. Because that's not a date that can be postponed.
Stay safe, and if you want to see a circus, several are on tour this fall. We'll see you next month when we cover the topic of Energy Trends.
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