It's team talk and targets now down at the mill

By PAM GRAHAM

They are working to get the team thing going at the Kinleith pulp and paper mill after the three-month strike last year.

The logo "Kinleith Pride" is prominent on hats and shirts, and team scores (production figures on whiteboards) are records.

Kinleith is on target to make 568,000 tonnes of pulp and paper this year after a record first quarter. The target is 600,000 tonnes a year by "de-bottlenecking" in the next few years.

The goal was 70,000 tonnes back when Kinleith was an idea on a drawing board in the 1940s and it made 400,000 tonnes as a protected local producer in the 1970s.

The $350 million modernisation in 1997 by owner Carter Holt Harvey helped production.

The big Number Six paper machine is both expensive and delicate, with more computer systems feeding into it than a jumbo jet.

Don't drop your pen into the machinery; it will cost $1.4 million to fix.

Now work practices have been modernised. Workers are on salaries, there are new rosters and promotion is on merit.

Getting there divided Tokoroa. It also cost $33 million - and hundreds of jobs.

After the media and analysts toured the mill recently, Carter Holt chief executive Peter Springford casually asked how the workers were. There weren't many around to ask.

There are 562 staff - down from 1100 before modernisation - and 165 of them work for the outside contractor running the mill.

Carter's forestry chief Devon McLean was once one of 4000 people working on the site.

"It is better at the mill," says regional union organiser Mike Sweeney. The strike was horrific. A controlling management was now showing signs of listening to suggestions from the shop floor, but there was still a skills shortage.

Brice Landman, the mill manager who gave 200 media interviews during the strike, put the recent history in context at Kinleith's 50th anniversary last year.

Kinleith was a private enterprise mill that had to fight to exist when the Government was planning its own Tasman mill at Kawerau.

It has always meshed foreign talent and money with local resources. In Landman's research, right back to the planting of the trees that gave the mill a reason to exist, characters such as polar explorers, Australian Prime Ministers and media barons pop up.

The forests began even before depression work schemes. "The origins of Kinleith really go back to the imagination, vision and hard work of two young men who first met in 1920," said Landman.

Henry Landon Smith, a farmer, and Douglas Stuart Wylie, an accountant, got enthusiastic about pine after polar explorer Sir Douglas Mawson predicted a softwood famine in Australia, and after talking to locals.

They sold bonds around the world and by 1929 had planted 50,600ha.

They lost control of Perpetual Forests in boardroom machinations that involved a Melbourne barrister by the name of Robert Menzies, later an Australian prime minister.

By 1932 the business became New Zealand Forest Products, but its plan to import a one-tonne paper machine was blocked by a government planning its own mill.

Health Department advice that the industry was "obnoxious" provided another obstacle.

It took NZFP, under chairman Sir David Henry, six years of lobbying to get a licence and the mill was named Kinleith by the Scottish chairman.

The mill had 61,000ha of forests within a 26km radius and was protected by import barriers.

Kinleith first produced pulp in July 1953 and paper four months later. By 1969 it made 400 different products, or grammages, mostly for the New Zealand market.

Rogernomics changed its world: import barriers came down, and corporate raiders bought in.

Eventually NZFP became Carter Holt Harvey, now majority owned by International Paper of the United States. Carter Holt now owns the pulp assets at Tasman and Norske Skog the paper assets.

Kinleith now makes four types of linerboard, a heavy paper used in the construction of cardboard boxes, and bleached pulp for Asia.

Output per employee has risen to 1000 tonnes from 670 tonnes.

"Today we have a very good mill," said Landman.

Kinleith's cash manufacturing cost is top quartile globally in pulp and third quartile in linerboard. Because its linerboard is made from virgin wood, rather than recycled paper, it sells at a premium, making the mill effectively a second quartile producer.

The bleached kraft pulp price has risen from US$500 a tonne to US$600 a tonne this year.

"We held our market share even in the downturn and when we came out of the strike we had a full order book," said Landman.

The company will not give out return-on-capital figures for the mill but its pulp, paper and packaging group makes 9.1 per cent on Carter's cashflow measure of investment returns, just about making the 10 per cent cost of capital.

That said, many people wonder if $350 million would be invested in Kinleith if the decision was made today. Springford said investment in making pulp would make sense but he seemed less sure about linerboard.

Industry observers cite electricity prices and the future supply of wood in the centre of the North Island as long term issues for the mill.

Ownership is also a question as some investors believe International Paper is cashing up its investment and the sale of the tissue business last month was the start.