Cheap does not work in the long run

Jim Thompson, CEO

Why do companies in our industry, or any industry, go out of business? Forensic work at the end usually shows they ran out of markets, then they ran out of money. Other things may happen leading to this, but markets and money are frequently the "death rattles" we observe at the end.

Sometimes it is just pieces of companies that die. Courtland, Alabama and Wickliffe, Kentucky come to mind. Ran out of markets, ran out of time, and their parent companies closed them. Courtland, as I understand it, has been returned to nature. Wickliffe is being resurrected by another company. We'll see what happens.

I am the first one to say we too often keep resurrecting old mills that should be allowed to die peaceful deaths. However, these are ones that are too far gone, or their technology was too far out of date to be economically repurposed in our industry.

Often, mills or whole companies are lost because the management was too cheap and lacked creativity. Being cheap about your business in the long term means you do not innovate, you do not invest in your people, you do not invest in your brands. Do this long enough and you are dead. Of course, there are many managers willing to do this for their own benefit and glory--they hope to exit the premises before they collapse around them.

From the looks of the industry, this has happened many times. Who should be held accountable? Most likely boards of directors that did not demand the company invest in tomorrow. They were wooed by the siren song of cheapness.

Jim Thompson is CEO of Paperitalo Publications.

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