When the paper mill in Lincoln, Maine, closed in 2004, it wasn't a tragedy just for its owners and the workers there. Losing the mill was a serious blow to Lincoln, a town of about 5000 located in east central Maine. There had been a mill of some kind in Lincoln since the 1800s, and lumbering and paper-making were embedded in the area's history and culture.
For nearly three years, the mill doors remained closed, and it looked like the next stop would be dismantling the plant. Nobody wanted it. Then a group of investors, led by Keith Van Scotter, bought it up for about $33 million dollars.
But that was only the beginning of the project of getting Lincoln Paper and Tissue up and running again and, above all, profitable.
Lincoln is not a small facility physically, covering some 15 acres, although it does only about $150 million in sales, not all that much in the paper business. It makes 140,000 tons of paper and tissue a year and has six integrated pulp and energy production lines, two paper machines, a pulp dryer and three tissue machines. Its machinery runs the gamut from some of the oldest in the State of Maine to the newest—a tissue machine installed in 2006. Its Paper Machine 4 is over 100 years old.
The business has a checkered history. CEO Van Scotter explains: "As a pulp and paper company, it was formed in 1882, and paper machines were added in the first half of the 20th century, but there has been manufacturing on the site since the 1850s. It's been through a couple of ownerships and a couple of bankruptcies—the first time in 1968. It was purchased and restarted then and tissue-making capacity was added in the 60s and 70s. Pulp mill improvements had been added in the 1950s and 60s, but due to a combination of factors, it went into Chapter 11 in 2000."
Unable to work out an arrangement to get it out of Chapter 11, by 2003, it had again been shut down and was about to be sold for scrap when Van Scotter and his associates negotiated a highly leveraged buyout and re-opened it as Lincoln Paper and Tissue.
Immediately Van Scotter went out to raise the $40 million to buy the modern Tissue Machine 8, but it would take more than that to get Lincoln back on its feet. "We had a tremendous need to drive the company forward without spending capital to get the kind of improvements we needed to stay in business. We were making a little bit of money then; we'd invested a lot of money, but we had to pay the bills. It was a survival thing."
And it wasn't just Van Scotter's and his associates' money riding on the line. Lincoln now employs nearly 400 people, many of whom already had been through one factory close in a one-factory town, and Lincoln is the biggest employer in a 50-mile radius. Failure simply was not an option, and frugal from-the-ground-up improvement was the only way to go.
"The company had been in bankruptcy for three years. Only limited expenditures were made on maintenance and capital improvements," explains Van Scotter. "It functioned when we got it, but it needed a lot of work."
And Van Scotter had little time and less money to get his improvements in place. "We didn't have the capital a lot of companies did; we didn't have the people a lot of companies did. We had what we had."
Bringing in MVT
That's when Van Scotter called in his old friend Art Hammer of QualPro in Knoxville, Tenn. QualPro is a consulting service that offers a technique for process improvement called multivariable testing or MVT.
MVT takes the guesswork out of selecting business improvement strategies by testing a multitude of ideas at once and revealing the positive, negative or neutral impact of the ideas. Van Scotter breaks it down this way: "Twenty-five percent of the factors will help [improve a process]. Another 25% will make things worse, and 50% don't matter."
What MVT does is demonstrate which is which.
"The neat thing about MVT," says Van Scotter, "is that in classic process improvement, you test one factor at a time. MVT allows you to take ideas from everyone and test a lot of different factors at the same time, and through showing their statistical significance, you can tell what helps, what hurts and what doesn't make a difference. You likely won't find a solution running individual tests. The math is impossible. You'll miss out on all the interactions. And you just run out of time. It's physically impossible."
QualPro's MVT methodology focuses on harvesting the ideas and creativity of the entire workforce to develop innovative ideas and then statistically determines which of them have the strongest impact on improvement. At Lincoln Paper, the rule of thumb for suggestions is "can it be done quickly and cheaply." If it can, Van Scotter says, "Then we'll try it. The science and the statistics are hard, but the actually testing is really simple."