Arriving as CEO of Newark Recycled Paperboard Solutions (formerly Newark Group) in August 2011, Frank Papa knew he had his work cut out for him. Founded in 1912, the company was approaching its centennial but was floundering. In 2010, it had to declare bankruptcy.
In the 2.5 years since his appointment, Papa has certainly made his mark. "When I arrived, clearly, it was a very inward looking company." Some would say that would be putting it mildly. Newark was an old and tired company; there was no spunk, no excitement, no creativity.
Papa adds, "The prior CEO was of the notion that we should not make waves in the marketplace, but maintain the status quo. There was no sense of pride; people were just putting in time versus being excited and wanting to change."
To the industry, Papa admits he was truly an outsider. However, he was a skilled turnaround expert and Newark would be his fourth effort. "I was not worried about my lack of industry knowledge; I had those people here," he explains. "I brought a toolbox of turnaround tools."
As Papa says, there was no vision of what Newark was or wanted to be. "We were producing the same old, same old." A strategic plan was either outdated or non-existent. Goals were unattainable and not relatable to many employees throughout the organization. Papa states that, "People want to know how they are performing at work but the majority had no clue."
With a change in leadership, Newark Recycled Paperboard Solutions has a new drive and desire to be a force in the market.
One of the critical things Papa did to change the mindset among employees, and even among outsiders, was to embark on an ambitious communications program to promote a vision of the company three years, five years down the road and also how to get there. It was also important that the plan not be viewed as a top down plan. Employees were asked for their input, something that had been previously rare. They thus "bought into" Newark's strategy and vision which made them in part accountable for achieving success.
This is part of the reason why the Newark name has been in the news recently with interviews in RISI's Pulp & Paper Week as well as Tappi's Paper 360. "It's not so much about me," Papa states, "but more about people hearing of the changes at Newark and seeing a different Newark and asking: ‘What's happening at Newark?'.
"I want to communicate. I want the company to be known."
Still, Papa says, recognizing his outgoing and blunt nature, "The organization had to feel comfortable with me. It could not be intimidated by me. It was important to get some initial small wins where as a company we could celebrate our success."
Newark is looking to better rationalize its capacity to current market conditions.
The employees had to be convinced of the company's ability to execute. Thus, when Papa presented his goals and objectives, the employees now had a sense that these goals could/would be met.
"Also, if we said we were going to do something, we were going to do it. Therefore, we could not make false promises."
The company established a new set of values -- TALK -- which stands for Teamwork, Accountability, Leadership and Knowledge. This is on every employee's screensaver. And under every heading is a list detailing exactly what each value stands for.
Newark is striving to ensure this set of values does not just become another flavor of the month program. "We have to constantly reinforce the values every chance we get," Papa says. "When we started to show examples of people using the values, it caught hold; it's just not another set of words."
Once the value proposition was started, Newark expanded it to its strategic plan and objectives. "In two years, we have changed the culture," Papa says, but adds that the destination has not been arrived at yet.
Employees are now up to date with current issues and know whether the company had a good or bad month. "Employees want to help the team to succeed," he says. This happened over time; no one just "switched on" to the program.
There were many initiatives put into place to improve the financial performance of the company. These were well-communicated and people started to put the values together and saw the success that sprang from the initiatives. But it was not all smooth sailing. "Not everybody embraced it," Papa admits. "So, we had a healthy turnover, about 30%."
Interestingly, about 80% of those who left were replaced with people from outside the industry. Why? "We were not grasping what world class is," Papa answers. "We were inward looking."
An operational excellence department was created with Papa and four others who were experienced in lean manufacturing and all of who came from outside the pulp and paper industry. "These four drove lean manufacturing in all of our plants and they did it by training and teaching plant management how to teach and implement."
On the sales front, Newark's system of sales force compensation ("archaic" as Papa describes it) was completely revamped. "Now we have a truly motivated sales force that is rewarded for exceeding expectations."
Newark is also looking at its paperboard capacity and how to better rationalize it to current market conditions. When Papa arrived, the company was about to mothball three mills and one paper machine. Since, it has shuttered another paper machine and converted one from uncoated recycled board (URB - tube and core board) to linerboard.
Newark has started an e-business portal where cores can be ordered online. The recent hiring of an e-business manager shows the success this move has enjoyed. "We must make our company customer-friendly," Papa adds. "Our new EBiz program allows customers to call up their order and the see the status of where that order is in our manufacturing cycle along with estimated ship dates."
Newark has also introduced a new products group to drive new products and different applications for the existing ones. For example, Papa cites customized packaging for windows.
Another example is construction tubes. Papa explains that these weren't being made at Newark facilities that were close to the areas in the US where the housing industry was taking off. "Now, we make them at five facilities and we cover the country. We also make private label cores and tubes if that is what the customer wants."
On the mill side, it added new products to make its six board mills more diversified. "There is no more specialization," Papa declares. "Mills can run a full range of products. This fills a gap of providing demand so we can run a paper machine even if conditions are not optimum." (See boxed copy for Newark's facilities and production.)
For example, at Fitchburg, MA, two new fourdrinier machines were installed in 2001 to produce state-of-the-art graphic board. Unfortunately, the timing was well off as the market was entering a steep decline with the advances of e-media.
Those two paper machines never ran full and one was shut permanently in 2011, although Papa says he has plans for it. The other did limited runs of graphic board. However, work was undertaken to allow the machine to run URB and utilization increased to 75% from 50%.
In January 2013, more work was done to allow the machine to diversify further and soon it will only pro-duce 10% URB with remaining volume being linerbaord. "It will run full for the foreseeable future," Papa says. (For more on Fitchburg, see the accompanying story.)
Frank Papa: "I want to communicate. I want the company to be known."
"We diversified Fitchburg," Papa adds. "Not all mills can do that. We now have a 100% recycled board that meets or exceeds the properties of virgin board. We recently installed a new cleaning system so we can run OCC. It replicated the strength of virgin pulp." The cleaning system came about after a refinancing plan that gave the company the ability to invest where necessary. In 2014, Papa hopes to install similar cleaning systems at one or two of Newark's other mills. "In five years, we feel all our mills will have these cleaning systems as single stream recycling takes hold."
It should be noted that the Mobile, AL, mill also produces tube and core URB and after the machine in Fitchburg was converted away from graphic board, Mobile moved into that sector and now produces a good quality graphic board. Papa notes that this was something the mill had never done.
The Santa Clara, CA, mill is another example of the company's willingness to adapt and move quickly. About 80% of its business came from one customer. When that customer took his business elsewhere, the outlook was bleak. "We gave the mill four months to fill its order book or be shut," Papa says. "Now, two years later, it is running full. This is typical of the new ‘can do' attitude. Management and sales found different products and with them, new accounts."
Overall, the company produces a high-quality URB board across a broad spectrum of calipers and sizes. Newark is self-sufficient in its secondary fiber needs. In fact, it only uses about 50% of what it collects and sells the rest, domestically and for export.
Its collection network is varied. Newark works with some municipalities and also contract with retailers. In the eastern US, it has its own recycling sites in Salem, MA, and Newark, NJ. In Mobile, AL, it accepts secondary fiber from individuals who are paid on the spot. Contracts are in place with Waste Management and Republic Industries for some of their OCC. But, in most cases, Newark has its own truck fleet which collects the fiber.
Although it has its own converting division, only about 35% of Newark's paperboard is converted in-house. All of its CRB, linerboard and medium is sold. Papa would like to bring the in-house conversion of paperboard up to about 50%.
None of its six board mills are integrated to any particular converting plant but the company does try to minimize freight costs whenever possible.
On the converting side, Newark has shut or is in the process of closing five facilities, not because it is losing business, but because it wants to make better use of its resources. The aim is to run at least two shifts at each plant.
Its market is North America -- Mexico to Canada. Newark sold its European division (three mills, four converting sites) just over a year ago believing there were too many unknowns in that market.
Looking at industry trends, Papa says he is seeing more food applications for the company's products as well as industrial applications. For example, Newark makes a product for laminated countertops that repels water on one side and wicks on the other. He would also like to see the company gain a stronger foothold in the automotive sector (laminated products).
The market has reacted positively to the changes at the company. "People are noticing Newark more," Papa says. "Our reputation for providing high quality and good service are at the forefront now compared with what it was. We are gaining new accounts because of where we are as an organization, because of our technical capabilities and because of our sound financial footing.
"These are demanding customers with a high bar. It is a major step forward for us and gives our sales force a nice, added tool."
For all that's gone on, Papa says it is not only important for the work to be done but that the work is seen to be done and success achieved. That's why company pays so much attention to its communication with the employees.
Although success is nice, Papa also realizes that failure often comes with it and one can't be fearful of failure. "You can't have success without some failures. Those that have success really want it. We have a pack here and we're running hard. Today our organization is agile," Papa adds. "It understands the need for speed. Speed wins! What used to take months now takes weeks and what used to take weeks now takes days."
What about five years hence? Papa has a goal of annual sales reaching close to $1 billion. "I'd like to think that our converted product line has diversified and I'd like to think that we can expand into Latin America."
The change at Newark is noticeable. "If people who knew us four years ago would come to us today, they would notice a change: visual, emotional and financial," Papa says. "All of us are accountable. We operate with a high degree of integrity. Everyone here operates in a boundary-less environment, open to ideas from everybody. We seek out the best practices and put them to use."