Sappi’s Jennifer Miller Talks Shop: Ensuring a Sustainable Future in the Papermaking Industry

Jennifer Miller discussed highlights of 2014 performance and what Sappi North America is doing to insure a sustainable future across all four of its businesses in this Q&A.

1. Global market conditions were challenging for Sappi Fine Paper North America in 2014, impacting all of its businesses. Could you share what the Company learned from navigating these markets and your outlook for the year ahead?
We learned that you do need to keep your focus on long term opportunities, and not get overly distracted by the current environment. For us, that meant refreshing our thinking about how to grow, not just in core markets, but in newer markets now accessible through recent capital investments. Having a clear vision on what you must do to grow your presence and influence with targeted customers, which in turn leads to increased profitability and the prospect of further investment and growth, is critical. It provides the framework for deciding what to continue to spend time and money on—and what to eliminate. A clear growth vision also leads to more engaged, committed employees who do a better job in short term execution in tumultuous markets. It really is a win-win.

2. Could you elaborate on some of the Company’s newer growth strategies?
We are very excited about our plans to enter the specialty packaging market in a much bigger way. We launched LusterPrint, a grease resistant FDA compliant food packaging product way back in 1993, and have seen steady growth in the business over the last several years. We realized that we had the coating technology, asset base, and internal know-how to do much more. In August we announced our intent to establish a separate business unit with a dedicated team of professionals in sales, customer service, technical support and new product development. I am pleased to report that this business is up and running. We have hired two new sales managers who are fully engaged in tapping into new market opportunities and we recently announced the launch of LusterCote, a coated one-side (C1S) label grade that provides a great alternative to what is available now. We are looking at further extensions of our packaging line through active product exploration with our R&D, mill and technical service teams. Growth in specialty packaging has the added benefit of allowing us to be more selective in targeting customers in our coated paper business—providing improved product mix opportunities there.

Our release paper business is another area where we are looking at exciting new product opportunities and growth. Release papers that are used to impart a pattern to a wide range of substrates used in the automotive, apparel and shoe industries, all where we see demand growing. We are able to bring new patterns to market faster than ever, responding to new fashion or consumer trends in the season. We bring a different level of product differentiation in release papers that makes it a real potential engine for growth.

In 2013 we completed a major investment at our Cloquet mill that enables the mill to produce dissolving pulp to serve as a feedstock to textile and consumer goods. Global trade dynamics have resulted in lower than expected prices for this product in the short term. But in the longer term, when market conditions strengthen, we are well positioned for growth having achieved in the first year of full production the ability to make consistently high quality dissolving wood pulp for the most demanding vicose customer with very good production efficiencies. In the meantime, our ability to swing the mill back to production of kraft paper pulp for our own consumption demonstrates the importance of building flexibility into our long-term growth strategy.

3. The coated paper market this year saw consolidation continuing across producer, merchant and printer sectors. Where does Sappi fit in, how are you going about creating relevance for your coated brands?
We believe in the continued relevance of high quality printing papers in high end communications and advertising. Market research continues to reinforce the unique power of print’s tactility in building brands and making emotional connections. We are well positioned in those healthier sectors where print has strong relevance. Therefore consolidation, to the extent it portends commoditization, doesn’t worry us. We must stay true to our DNA and keep doing what we are known for doing. We know that our distinct voice and the full range of what we bring to the market—including what we do to promote print, educate our customers, collaborate with the design community, advocate for sustainable business practices, launch innovative new products, even troubleshoot problems at our printers well after our sale is made—is what will set us apart and insure our success.

4. What is Sappi’s role in the Paper and Packaging Board’s consumer campaign?
By way of background, in March 2014 the United States Department of Agriculture approved a “commodity check-off” program for the paper and paper-based packaging industries. Under this program paper and packaging manufacturers and importers will fund a broad based consumer campaign to spur demand. Well known commodity check off campaigns include the “Got Milk” and the “Incredible Edible Egg” campaigns. Sappi is an investor in the campaign and I serve as a member of the Paper and Packaging Board for the Northeast region.

Campaign-funded market research indicates that there are significant opportunities to change consumer behavior and educate purchasing decision makers. Messages highlighting that our products are reusable, recyclable, and come from trees that are sustainably harvested, for example, resulted in meaningful improvements in overall industry perceptions. Tapping into the positive emotional connections that consumers experience when responsibly using paper will also be an important element of the campaign. Visit http://www.paperandpackaging.org/resources to learn more.

5. Last year you shared how Sappi approached the issue of smart consumption. Is there anything new on this front?
Absolutely. First we have continued to make strides in driving out internal waste as measured by our 5 year sustainability goals: By 2014, we had reduced the amount of fiber and papermaking raw material waste in our paper-making operations by 14 percent over the 2011 baseline, two years in advance of our 2016 target date. Just as those accomplishments underscore our commitment to avoid waste of materials, we encourage our customers to efficiently use paper. With sophisticated list management marketers can be more targeted in their direct mail campaigns. We applaud these strategies; they eliminate waste, improve customer perceptions of direct mail, and finally, over time improve the ROI of print campaigns as measured by brand marketers, insuring print’s role as an effective communications platform for decades to come.

6. In closing, can you highlight what you see as the most critical issues for your business, and where you see Sappi headed across each of the three pillars of sustainability?
For long-term prosperity we must continue to control costs and drive out waste across our operations. We must react to changes in market conditions effectively and here the flexibility built into our capital strategies are key. The ability to swing from dissolving pulp to kraft pulp at Cloquet, and from natural gas to other fuels at Somerset are two good examples of operational flexibility.

But most importantly we must focus on growth and driving demand for our products. Growth in the most attractive and resilient sectors committed to print advertising. Growth in packaging applications, as we launch new products and enter new markets. Growth in release papers, as customers in fashion, automotive, aerospace and other industries continue to appreciate the high fidelity and uniqueness of our patterns. And, finally, with the ability to make high quality dissolving pulp out of our world class Cloquet mill, growth in those markets as well.

Attracting, training, and retaining dedicated employees to our industry and our company is critical to achieving this growth vision. The talent and fresh insights they provide will help redefine our business strategies and position us for a sustainable future.

Read the full Sappi North America Sustainability Report 2014 by downloading an online PDF version directly from our website here or for more on sustainability, check out our eQ microsite at: http://www.na.sappi.com/eQ/index.html.