Case study :Taking change at Domtar; What it takes for a turnaround.

Training and Development

Prepared By

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Manu Melwin JoyAssistant Professor

Ilahia School of Management Studies

Kerala, India.Phone – 9744551114

Mail – manu_melwinjoy@yahoo.com

Case Study : Domtar

• Third Largest Producer of uncoated free sheet paper in North America.

• In the decade prior to 1996, it had one of the worst financial records in the pulp and paper industry.

Case Study : Domtar• Bureaucratic and hierarchical

organization with no clear goals. • Half of the business in trouble

areas. • Did not have critical mass to

compete with bigger names in the industry.

• Balance sheet was in bad shape.• Did not have investment grade

status in its long term debts.

Case Study : Domtar

• In 1996, Raymond Royer

was name president and

CEO.

• He decided to focus on

two goals.

– Return on investment.

– Customer service.

Case Study : Domtar• Royer told Domtar

employees that in order to

survive, they need to

participate in the

consolidation of the industry

and increase its critical mass.

• The goal was to become the

preferred supplier.

Case Study : Domtar• He explained to the executive

team that there are three pillars to

the company.

– Customers.

– Shareholders.

– Ourselves.

• He noted that it is only “ourselves”

that are able to have any impact

on changing the company.

Case Study : Domtar• Royer implemented Kaizen in

Domtar, a process of getting

employees involved by using

their expertise in the

development of new and more

effective ways of doing things.

• He believed in tapping the

intelligence of experts, the

employees.

Case Study : Domtar• The success of any change

process requires extensive

training and therefore, training

became a key part of Royer’s

strategy for Domtar.

• He believed that it is employees

competence that make the

difference. This was later called

the “Domtar Difference”.

Case Study : Domtar• Training a Domtar went

beyond the traditional job

training necessary to do

the job effectively and

include training in

customer service and

kaizen.

Case Study : Domtar• Using the Kaizen Approach, employees

developed a new way of cutting trees

into planks.

• The result was fewer wood chips to

transport and more logs produced per

tree.

• Since 1997, it is estimated that Kaizen

has saved Domtar about $ 230 million

in production cost.

• Two of their mills are among the lowest

cost mills in North America.

Case Study : Domtar• First quarter net earnings in

1998 were $ 17 million

compared with a net loss of $

12 million for the same period

in 1997, his first year in office.

• In 2002, third quarter earning

were $ 59 million, and totaled

$ 141 million for the year.

Case Study : Domtar• Domtar became the only paper

and pulp company in north

America to be included in the

Dow Jones Sustainability list.

• In 2003, Paperloop, the pulp

and paper industry’s

international research and

information service, named

Royer Global CEO of the year.

Case Study : Domtar• The committee said that Royer

was selected for the award for

his ability to integrate

acquired businesses through a

management system that

engages employees.

• This happens only through

training.

Case Study : Domtar• It was Royer’s sound management

policies and shrewd joint ventures

and acquisitions that helped

Domtar became more competitive.

• However, joint ventures and

acquisitions bring additional

challenges of integrating the new

companies into the “Domtar way”.

• This requires training.