Forest products CEOs: Agility needed during stressful COVID-19 period
The pandemic has brought surprises and severe disruption, industry leaders say
MADISON, Wis. -- Forest product company CEOs stressed their organizations' agility and flexibility in adapting to the stresses and dramatic changes brought to their businesses this year as COVID-19 arrived in force in the U.S. during the second quarter and some products incurred huge spikes in demand.
Their comments came in a panel discussion at the American Forestry Conference, being held virtually this week, hosted the Georgia Forestry Association.
The COVID-19 situation has turned “just in time” inventory management now into “just in case,” said Christian Fischer, CEO of Georgia-Pacific. “That’s as in ‘just in case’ you need it,” he said.
The question became “Do you have surge capacity,” as store shelves for paper towels and toilet paper were left bare in April and May. “Just in time was upended,” said Fischer.
Employee commitment across their companies was impressive, members of the CEO roundtable reported, as the essential nature of paper and forest products became evident.
Miles Roberts, Group Chief Executive for DS Smith of England said that the employee absentee rate for his company was lower in May, 2020 than in May, 2019 despite the pandemic. D.S. Smith employs 30,000 people throughout Europe, where it’s the largest manufacturer of corrugated paper.
The underlying sustainability and “circularity” of the forest products business became more obvious, according to Steve Vorhees, CEO of WestRock. The crisis lent “additional momentum toward sustainability,” he added.
Weyerhaeuser, the largest private forest landowner in the U.S., saw an immediate drop in demand for lumber after the crisis hit, said CEO Devin Stockfish. But he said that housing demand has recovered more quickly than expected.
“Home improvement has held up particularly well,” Stockfish said, adding that the company is being somewhat cautious in the second half of the year due to increasing COVID-19 infections across the U.S.
The impact of the early demand changes showed up in Weyerhaeuser’s second quarter financial results, which were announced in late July. Revenue declined by 18% and earnings of $128 million for the quarter were down almost 60%. (Some of that was caused by construction shutdowns in some states.)
Georgia-Pacific is a privately-owned company. WestRock will announce financial results for the quarter on August 4.
On the question of how long pandemic changes could last, Voorhees mentioned WestRock’s efforts to help customers who were hurt by sinking demand to pivot to new products by changing packaging.
“We helped some of our customers who sell alcoholic beverages convert to hand sanitizer,” he said. That change may not last as the demand for beverages has now rebounded. Fischer of Georgia-Pacific pondered how long the new habit of sanitizing kitchen counters frequently with paper towels and disinfectant will last.
“At least through the pandemic, but then how much longer?” he asked.