As this seemingly endless COVID pandemic evolves into something endemic, with new variants arising, tissue producers need to stay on top of their game.
The disease affects producers in myriad ways among them production, products, markets and, most importantly, employees.
But, as many nations lift COVID-related restrictions, tissue producers are trying to regain a sense of normalcy.
For the Cascades Tissue Group, there has been one constant throughout the pandemic: its employees (now numbering around 2200) come first. “Employees are our core asset and this has not changed,” Group CEO Jean-David Tardif stresses.
How the company operates may have changed, e.g., “virtual” meetings as well as having to adapt to new market conditions such as inflation and labor shortages, but, Tardif adds, “We have been able to go through the pandemic in a good way. We gained agility and became more efficient.” This has paid off as the company is now North America’s 4th largest tissue producer with 650,000 t/y of capacity with 17 tissue machines making bathroom, paper towel and napkin with bath tissue holding the majority of production. Revenue totals about CDN$ 1.4 billion annually.
Finding new ways to connect had the added benefit of reducing costs as for the most part, travel was no longer an option.
Despite the changes in business operations, Tardif says Cascades’ culture has proved to be a strong asset. “Our core values have always shone through. We have a fierce determination.”
He cites the example of installing an SAP system at its recently acquired Orchids Paper assets, which was all done virtually, including the training, an especially difficult task.
“We have always stayed close to our employees, Tardif adds. This even extends to virtual social events.
Cascades Tissue Group has 14 facilities across North America. With Canada having stricter COVID-related legislation that the US for the most part, did this affect the company’s approach to operations? Tardif says no, that it had a consistent approach. For example, at one US facility, the state had no mask requirements. However, within the plant, employees had to wear masks. “The reasons were well-explained and the policy was accepted by the employees. This is part of our culture,” Tardif says.
Company-wide, extra cleaning processes were institutes and the air systems in all mills, converting sites and offices underwent rigorous examinations.
It’s no secret that the away-from-home (AfH) has suffered the most during the pandemic. Tardif says it is picking up as restrictions ease but not as fast as he wishes. “We’re not back to 2019 levels yet. Depending on the analyst, it could be late 2023 or 2024 before the market gets back to pre-pandemic levels.
In the AfH sector, paper towel is still down 10-15% compared with 2019. Napkins are down 10-17% while bathroom tissue is off 20% in the US and 30% in Canada compared with the pre-COVID era.
One benefit of the pandemic has seen people preferring paper towel versus air dryers. Study after study has shown that air dryers tend to spread germs. Tardif says that the studies show that 73% of people prefer towel to electric air dryers. “We are working to take advantage of this.”
YOUR BRAND IS OUR BRAND
As the AfH sector recovers, another part of the tissue business where Tardif see further growth is in private labels. Although private labels have been around for decades, their growth in North America took off following the financial recession in 2008-09. Many consumers opted for the more economical private label products at the time and have not gone back, either for economical or quality reasons. It was around this time that the long-held assumption that private label products were of inferior quality began to disappear.
“For sure, they will continue to grow. Since 2017, private labels have grown faster than the brands in the US,” Tardif adds.
In Canada, however, the two leading national brands have been very aggressive with their marketing so have grown slightly more than private label. Tardif points out that the market is more consolidated in Canada, which helps the brands. But, overall trends in North America clearly show private labels will continue to increase their share of market.
Tardif also notes that Cascades has a good customer mix with strong partnerships with the large retailers. “Your brand is our brand” is the Cascades philosophy. The company strives to ensure high quality whether for its own labels or making a retailer’s private label tissue.
Tardif points out that retailers have “the power of the shelf. If you look at US retailers, there used to be more emphasis on the national brands. Now, the emphasis is more on private labels and promoting their high quality.”
GREAT LOCATIONS IN A GROWING MARKET
The 2019 acquisition of Orchids Papers greatly improved Cascades Tissue Group’s US network. Tardif says the integration of the assets is complete. “They are in great locations with state-of-the-art equipment. The southern US is the growing market. The move makes us more competitive in the southeast while giving us access to south central US as well.”
There is still a bit of work to do such as improving product quality by using virgin fiber in some products, but overall, he feels they are going in the right direction.
Work also continues afoot at the company’s new 284,000-ft2 US$64 million converting facility in Scappoose, OR. Opened in 2017 for the AfH sector, in 2017, the pandemic forced Cascades to alter its business plans to add a retail mix as well. Originally designed to produce six million cases of virgin and recycled hand towels and bath tissue annually, a napkin line and a kitchen roll towel line were installed recently, as well as retail packaging equipment.
“The pandemic slowed us down, but we are ramping up the plant continually,” Tardif adds. “It is an excellent site with great equipment , robotized and efficient. There was a market-driven impact but the addition of the retail business helped.”
Prior to the pandemic, Asia exported a lot of jumbo tissue rolls to the US. COVID changed this, which was also an opportunity for Cascades.
The Scappoose plant uses less than 50% of the company’s nearby St Helen’s mill (110,000 t/y). “The mill is fully booked,” Tardif says. “The demand for jumbo rolls is good on the West Coast.”
Currently, the company’s integration rate is about 75% but it is geographically imbalanced. Tardif says the company has done a lot of work over the past three years to improve its logistics/supply chain processes, work that continues.
The company still has a lot of converting capacity it wants to use. It has added 13 new converting lines – three in Canada, 10 in the US – but has closed 28 lines elsewhere and moved five from closed sites.
Asked where he sees growth coming from in the future, Tardif answers,” We will grow where the opportunity arises.”
But, he does say it looks like growth in capacity will be a 50:50 split between AfH and at home products. Maintaining the flexibility to switch will be important.
One of the tissue group’s main goals is to produce private label products with national distributers/retailers. “We can be competitive coast-to-coast. We are looking at mainly roll products. We try to stay in line with market trends.”
The group produces mostly conventional, dry crepe tissue. It has no TAD machines although with one ATMOS and one QRT machine, it can produce a TAD-equivalent.
To close, Tardif mentions that Sustainability has always been part of Cascades’ DNA.. The company launched an ambitious sustainability plan covering 2021-25. For the tissue group, reducing water consumption is the key and will be the focus of many short-term efforts. Tardif says this is especially true for the Orchids sites where work will be done to close loops and recycle water.
Electric boiler projects will also be part of the effort to reduce greenhouse gases (GHG).
“If we compare ourselves with our competition, we are well ahead,” Tardif says. “All the work is being done on science-based targets. We see more opportunities because of the increased relevance and recognition of sustainability: water, energy and chemicals. It is where we can differentiate ourselves. Retailers and distributors are now very sensitive to this and we can help them achieve their objectives and help them reduce their carbon footprint.”
The pandemic still poses some challenges but the Cascades Tissue Group sees more opportunities ahead.
Photos courtesy of Cascades Inc.