President and chief executive Richard Garneau provides an update on Resolute Forest Products’ ongoing transformation strategy and entry into the growing tissue market. A TWM report.
In June 2015, Resolute announced its entry into the tissue market through a major investment in the construction of a state-of-the-art tissue machine and converting facility in Calhoun, Tennessee. In February 2017, the facilities became fully operational and have an annual production capacity of approximately 60,000 metric tonnes of ultra premium bath tissue and towel for the private-label market. At the end of 2015, the company acquired Atlas Tissue (formerly Atlas Paper Holdings), a manufacturer of branded and private-label tissue products for retail and AfH markets. Atlas Tissue has two manufacturing facilities in Florida with an annual production capacity of 56,000 metric tonnes per year across three tissue machines and 11 converting lines. Here, TWM interviews president and chief executive Richard Garneau.
TWM/1: How does entering the tissue market fit into Resolute’s overall business strategy?
Garneau: “Since 2011, our corporate strategy has been focused on transforming Resolute into a more sustainable organisation, one that can generate consistent value for shareholders through a competitive portfolio of manufacturing assets and a solid presence in long-term growth markets. This includes, on the one hand, a gradual retreat from certain paper grades and, on the other, using our strong financial position to act on opportunities to diversify and grow.
“With regards to tissue, our objective is to add value by integrating our market pulp into our premium tissue production, particularly as paper utilisation continues its steady decline, effectively mitigating risks associated with volatile market pulp pricing.”
TWM/2: What would you say is the company’s strategic advantage?
Garneau: “We are a fully integrated manufacturer of quality products and our tissue operations benefit from vertical integration. Our tissue products are manufactured from 100% recycled pulp or from virgin fibre from the company’s internal market pulp network. This allows us to control the production process – from material input to final product – ensuring precise control and consistent quality, while offering the flexibility and customisation our customers demand.”
TWM/3: What is the status of the Calhoun tissue operation?
Garneau: “Calhoun’s first rolls of bath tissue came off one of the mill’s newly completed converting lines in August 2016 and the entire converting operation was fully operational at yearend. Our new Calhoun tissue machine is the latest innovation in tissue manufacturing and we successfully began operating during the first quarter of 2017. Ramp-up of production at Calhoun will continue throughout 2017, and we expect to be producing at maximum capacity by mid-2018.
“I should point out that finished tissue products sold from Calhoun are now manufactured entirely from parent rolls produced on-site.”
TWM/4 :How key are environmentally-friendly products for the company?
Garneau: “We have introduced our Green Heritage premium 100% recycled tissue line for the At-Home market and our hope is to change the way consumers view recycled products. When comparing Green Heritage products to those of our competitors, third-party testing confirmed that our bath tissue is brighter, thicker and stronger than the leading recycled bath tissues on the market. We are proud to offer today’s environmentally conscious consumers a first-in-class recycled product. In addition to the new Green Heritage product line, we expanded our Harmony virgin bath tissue and towel line to offer customers a broad range of quality products, including value and premium grades.
“Resolute is well-positioned to become a key player in the North American tissue market. We now offer a full complement of our integrated tissue and towel products. And we believe that customers will be increasingly receptive to our offering.”