Effects of Global Recession
Date: September 4, 2009
Author: Michael Stephens, President and CEO
The under 40 crowd now has their own taste of economics 101 and a real dose of reality that was missing from their experiences. When I completed my education in 1977, there were no jobs to be had. We just entered the era coined by economists, “Stagflation”. We were stuck in a low or no growth mode, with double digit inflation. Oil was over the top expensive, if you could get it. The 1974 Arab oil embargo was still fresh in our minds and the days of $.25/gallon gasoline long gone.
I was a lucky one who found work, made my way into business and was off on my career. Many of my friends were not so lucky, off to grad school, if they could get the money, usually in loans, military, or under employment for many years to come.
Not so different from the graduates of today, few jobs, low pay and tough to get a loan to go on to grad school. Purgatory, if you will. Stuck where you don’t want to be and little hope of improving your situation.
Why do I digress like this? The lessons of history are clear. Recessions all have one thing in common. They end. And things improve, people return to work, banks begin to lend money again, stocks rise and homes sell. All of life is a cycle, with highs and lows, as well as lessons for life. And so it will again end, teaching us valuable lessons along the way.
My grandparents survived the Great Depression. The lessons from that changed them forever, no credit cards, paid cash for everything, saved and depended on their own hard work for their needs. I learned similar lessons from the mid-70’s that have served me well in my life.
Those today’s under 40 never experienced tough times, prices of homes only went up, stocks as well, risk was only a cash flow management technique with no serious downside consequences. Banks were flush with cash and willing to give it away on a whim, with no real check and balance in place and life was good. Then came 2008, it all came apart at the seams and life was now again teaching age old lessons of conservative money management, hard work and perseverance.
For us at AFT, hard work and conservative philosophy have served us well in this downturn. We focus on providing a real value to our customers and on being a reliable partner, who can be counted on when times are tough.
The tough times will come to an end, and the lessons begin to fade in our memories. But always remember, there is no substitute for hard work, diligence to duty and conservative financial management. And when you need high quality, reliable products in your mill, remember AFT and our commitment from more than 100 years of history to provide you with the best products and conservative engineering advice that we have gained in our long tenure in this business.
Until next time,
Mike
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May 2009
Date: May 19, 2009
Author: Petri Tuomela, Director, Marketing and Business Development
The recession which has affected the pulp and paper industry (among others) has made me think how can we get our message to our customers? We have comprehensive, high quality product offering, our technical support team provides excellent services, and we have skilled sales representatives. With this, we can provide not only the right product to a right application, but do it better than our competitors can.
Yet, we continue to stumble across to customers who are not aware of our products and/or services, or more importantly, do not understand the potential value AFT can offer.
To address this, we’ve launched AFT Newsletter. The newsletter will have three articles which focus on specific problem, issue or opportunity that our customers may have. In our first issue we focused on:
- Reduction in power consumption in screening. AFT’s screen rotors are most power efficient rotors in the industry, and we have hundreds and hundreds of references to prove this. Payback times of power efficient rotor technology typically vary between 6-12 months.
- Improved wear resistance of screen cylinders. New chroming technologies developed by AFT extend the useful life of screen cylinders, without the compromise of heavy deposits of chrome. Obviously, this will save you some money!
- Reduced use of softwood kraft on paper machine. AFT Finebar® low consistency refiner plates provide significant opportunities to reduce and/or eliminate the use of SW kraft on printing and writing papers. Possible? Absolutely!
Hopefully this will help us to spread information about opportunities which lie within mills which focus on improvement.
With this, all the best for the summer!
Petri
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December 2008
Date: Dec 1, 2008
Author: Michael Stephens, President and CEO
Here we are approaching the end of another year. I am reminded of an old Elvis song, “Blue Christmas”. No matter your persuasion regarding the upcoming holiday season, it is a blue time, indeed. I wrote early this year regarding storm clouds on the horizon and now we find ourselves caught in the tempest of recession, liquidity issues and softening global demand for all paper and board products. Blue Christmas, indeed.
What are we doing at AFT during all of this?
Addressing operational issues, to maintain cost control, for sure, capacity control, travel, non-critical expenditures and the like. As was so truly said by Benjamin Franklin, “A penny saved, is a penny earned” is on my mind continuously as we turn our ship into the wind, to face the tempest head on, as any good captain would do while he has control of his ship.
Things we will not do are more important to our future prosperity and some of those activities are:
- We will not stop or reduce the level of services to our customers
- We will continue our product development activities, to ensure we continue to offer the best, most complete product line in the industry we serve
- We will continue to train our people in the latest technology to ensure our customers get the best benefit of our experience and expertise.
- We will not reduce our Lean / Six Sigma work aimed at streamlining our processes and systems.
In these tough times, one must get the best value for every item purchased, and we at AFT are dedicated to ensuring our products and people understand and deliver to our customers that value.
I hope you all have a good holiday season, enjoy your families and blessings of life, and remember, this is only transient, it will pass and prosperity will return, someday. Until it does, we will be here, working hard to provide our customers with the best valued products and services in the industry.
Until next time,
Mike
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Thoughts on Global Sourcing
Date: Sep 8, 2008
Author: Michael Stephens, President and CEO
The latest buzz I hear around the industry grapevine is “global sourcing”, of course thinking about importing items from China, Taiwan, India, etc with the idea of reducing costs. Some of the mentioned items I hear often include refiner plates, screen cylinders and rotors, felts and fabrics, showers and other so called “expendables”. I do not know of a company anywhere, including our own, not focused on reducing costs of purchased items, it is a necessary part of remaining competitive in a tough and getting tougher market.
In every study we have done in the past 10 years, including the one we just completed this past summer (and thanks to all of you who participated) show us how buyers rank suppliers and decide with whom to place their business, go about making these decisions and it clearly varies, depending on if you are in maintenance, purchasing, operations or corporate. The results clearly show that price is important, but it is 4th or 5th on the list of priorities, overall. So what does this tell us? Bottom line, it is service that makes all the difference, and service, from our surveys means, “availability of technical support, ability to deliver high quality products, right the first time and overall credibility of the supplier, in general”.
Where something is made and it’s price is important, but not as important as SERVICE, since we do not sell nuts, bolts, cap screws, stainless steel bars and other true commodities that are governed by global sets of quality and manufacturing criteria that everyone must adhere to, what you are buying is really “know how” (I call it the “why” and not the “what”) and not just a lump of welded and machined metal. When something does not work, does not fit, process changes come up, quality specifications or furnish changes, all these impact the hardware you are buying, and the process equipment you are installing it in. The real question to try to answer is, “what is the real cost of the item”, including the service, process engineering and mechanical services needed to ensure the right performance? Refiner plates and screen cylinders only cost pennies per ton of paper produced, but if it does not work, fit, or otherwise meet expectations, they can cost hundreds or thousands per ton of paper, depending on how long it takes to get the issue rectified.
I find it interesting that our business in China, Taiwan, India and Brazil are growing at double digit pace, the same place many now are considering importing from to save money. When I inquire of why they buy from us instead of the lower cost local guys, in a common voice, “We need your expertise and experience in our mill to ensure we get optimal performances from our wear parts”.
This confirms what I have known for over 30 years working in this business, both in the mill and on the supplier side, there is a real need for quality service to support the products we manufacture and sell, on a local basis.
As the phrase was coined back in the 1980’s when we first started into this increasingly global market, “Think global, but act local”
Until next time,
Mike
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July 2008
Date: Jul 14, 2008
Author: Petri Tuomela, Director, Marketing and Business Development
We have now reached the first half of 2008 and will take this opportunity to touch base with our readers and share a selected success story with you. Our president first welcomed you to visit our blog for “news you can use” back in January. Although the frequency of AFT blogging has not been as planned, we intend to return to more frequent information sharing with our customers and stakeholders.
Throughout the beginning of 2008, the news media has been focused on the growing concern about climate warming and other environmental issues. This phenomenon touches not just consumers in various parts of the world but all industries, including pulp and paper. Clear indications of this are rising power costs, more stringent requirements for effluent control, and greater challenges related to the higher recycling rate of paper.
How can we turn more expensive energy and more stringent regulations into an opportunity? We believe opportunities lie with the use of power efficient technologies, as well as technologies that allow mills to use lower quality raw materials to produce high quality paper. With the trend of rising power costs and decreasing recycled paper quality, these technologies enhance mill competitiveness and profitability against competitors who do not make sure they are using the latest innovations.
Let me give you an example. We recently accepted a challenge in a large Scandinavian pulp mill to reduce total power consumption and fiber loss while maintaining capacity and, if possible, the efficiency of the screen system. The mill installed appropriate flow meters, power transmitters and automation control to compare the performance of AFT cylinders and rotors against our competitors.
The results were very favorable for AFT. Relative to the competition, not only did we reduce the power consumption of the screen system by 40%, we also reduced the fiber loss by 20% while maintaining the capacity and efficiency! Our customer is excited to publish the results with us, resulting in a technical paper that will be published by the end of the year. Imagine the competitive advantage against your competitors when you have 20% less fiber loss and use 40% less power… It can make a huge difference.
This example illustrates just one of the many successes that AFT’s innovative products can offer. The return on investment can be surprisingly high, so ask your AFT representative for a basic system audit free of charge. We will then be able to identify improvement opportunities that will enhance your competitive advantage in the industry.
Why not seize the opportunity?
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January 2008
Date: Jan 28, 2008
Author: Michael Stephens, President and CEO
Welcome to 2008 and to AFT, a proud member of the Aikawa Group of companies. I have been wished many times so far this month “a happy new year” and I truly hope it is, even with storm clouds on the horizon of economic struggles in US that are affecting the economies around the world, there is much to be hopeful about.
Here at AFT, we are starting the New Year with a bright, clear vision of where we are going as a company over the next years that is as exciting a prospect as I could have ever imagined. Introduction of Aikawa capital equipment into our western markets, introduction of several new products and innovations in our Finebar refiner plate line, Project 2010, our next generation of screening cylinders, our newest rotors, MEF™ and GHCx™, and a clear focus on operational excellence through our Lean Enterprise endeavors. This on top of our ongoing work to improve our existing products, manufacturing methods and training of our people, all focused on maintaining the high expectations you hold us to every day in our work in your plants and create the value that only product knowledge, world class products and commitment to excellence can offer to you, our customers.
From time to time, here on our website, you will see my Blog to update you on what we are up to and our take on the world of screening, cleaning and refining, as we strive to stretch the level of technology and apply it to the real world you live in. You will also have the opportunity to sign up for a monthly blog from our sales/technology/marketing folks to bring real examples of how combining world class products with industry leading knowledge can solve real world problems, leading to lower cost operations for you with higher quality pulp or paper to offer your customers. Once signed up, all you need to do is sit back and wait for the email to arrive in you inbox with “news you can use” to steal a line from CNN from a few years ago.
As we participate in the 50th anniversary of the Canadian Pulp and Paper Association trade show and conference in early February, we urge you to visit our booth, if you find yourself in Montreal during Exfor week (February 5-7, 2008), or visit our website, www. Aikawagroup.com often, so you can see what AFT and the rest of the Aikawa Group is up to as we go about our work and sign up for our blog and newsletters, so you too can be on the leading edge of innovation in stock preparation equipment, operations and procedures. Also, check back in on my blog for updates on what we are doing to make AFT and Aikawa Group even more relevant to the day to day operations of your mills.
Until then, I wish you a “Happy New Year”.
Mike
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