Paper People

It’s hard to beat Western Pacific Pulp & Paper (WPPP) on location. Just southeast of Los Angeles, the company calls home an area so pleasant weather wise that a good portion of its operations sit outside, including its baling equipment.

Its sun-drenched spot on the West Coast gives WPPP more to celebrate than enviable weather. Where the average person might just see a day at the beach, paper recyclers recognize that WPPP has some very helpful neighbors in the ports of Los Angeles and Long Beach—the No. 1 ports for doing business with Asia and certainly hot spots for anyone looking to break into the lucrative export market for recycled paper.

"With China driving demand, and India and other Asian countries coming up slowly behind them, we’re really on the front lines for export markets," says Kevin Duncombe, WPPP’s president and chief operating officer. "You really can’t complain," he adds.

While the company’s Southern California home gives it immediate access to export channels, Duncombe says it’s the people in the plants that truly drive WPPP’s success. In his 17 years with the company, he says he’s found that having the right team in place brings more value than even the most prime location.

DOWN TO BUSINESS. With three business divisions, two wholly owned plants in California and a third affiliated facility in Las Vegas, relying on a team approach is the only way to keep the whole operation running smoothly, says Duncombe.

WPPP manages three divisions: recycling, document destruction and sheeting. In addition to the plant in Downey, Calif., the company owns and operates another plant in Newark, Calif., about 20 miles south of Oakland, Calif.

While the company doesn’t handle any municipal tonnage, it does offer a total waste reduction program, which includes pulling all recyclable commodities out of its suppliers’ material streams and marketing them directly with consumers. This program goes beyond WPPP’s core paper business and includes the collection of glass, cans and other metals, plastics and light bulbs. "This program helps our customers reduce their waste and increase their revenues," Duncombe says.

WPPP also accepts old corrugated containers (OCC), news and mixed paper as well, although, again, not from municipal streams. "We’re not doing the No. 8 curbside," Duncombe says of WPPP’s newsprint. "We’re doing more the No. 9 grade."

Most of the OCC handled by WPPP bypasses the packing plants entirely because it comes already baled from sources like grocery stores and distribution centers. "We send that tonnage directly to the mills," he says.

The high percentage of material from pre-consumer sources makes WPPP’s equipment needs a little different than other recyclers. The company’s Bollegraaf baler and two state-certified truck scales make up most of the heavy equipment on site. "Other than that, it’s forklifts and scales and that kind of thing. Other than cell phones and computers, there’s not much else you need," Duncombe says. "We don’t have any sorting equipment because of the nature of our sources. It’s pre-consumer, so it’s mostly source separated. The little bit of sorting we do is the old fashioned way—you break a bale on the ground and go through it before you put it on the belt."

With its front-row seat to the Asian market, export activity makes up a large percentage of WPPP’s business, which reflects quite a change in the past several years. "Five years ago, we were probably about 70 to 80 percent domestic and 20 to 30 percent export," Duncombe says. "Over those last five years, we’ve had more and more mill closures on the West Coast and we’ve had our customer base dwindle to the point where we’re back to 70 to 80 percent export, 20 to 30 percent domestic." This shift in his company’s customer base represents one of the biggest issues facing the industry today, according to Duncombe.

GLOBAL FOCUS. WPPP’s shift toward concentrating on exporting wasn’t exactly by choice, Duncombe says. "It’s just that we don’t have that many [domestic] customers buying the grades that we produce," he says. "We’ve seen our domestic customers dwindle, so we’ve got to take advantage, and China has really come to fruition in the last 10 years. In the last five, they’ve grown tremendously, and we’ve taken advantage of that as well."

Overall, the recycled paper market is solid, and prices today are certainly as high as they have ever been historically, Duncombe says. However, even with the vast opportunities created by the demand from export markets, the domestic decline raises concerns. "Overall, market conditions are not that bad. The biggest regret you have is the declining domestic market," Duncombe says. "It’s scary because we’re all going to be relying on fewer customers to buy our product, and that means they have more control than ever."

As domestic outlets for their material continue to disappear, recyclers also have to contend with regulatory challenges, particularly in California. Duncombe recalls the market trouble that followed in the wake of the approval of state-wide legislation that mandated a 50 percent recycling rate. "We had the advent of additional MRFs and additional tonnage into the market place," he says. "It really killed our markets for awhile because of that huge supply. We didn’t have markets for it until China showed up."

The problem with such regulation, while well meaning in its intent to increase recycling rates, is that the government "tends to regulate the recovery side and not the market side," says Duncombe. "So you end up with additional tonnage in the marketplace and nowhere to go with it."

A better solution for the environment and business might be to introduce legislation encouraging the use of recycled content in products, according to Duncombe.

The industry is undergoing a transition, becoming more global in nature with changing dynamics as more manufacturing (and the packaging of those products) occurs overseas. But Duncombe doesn’t see these changes as necessarily bad. "It’s a little disconcerting, but I think it’ll pan out OK," he says, adding that the size of China’s market will help paper recyclers stay competitive.

As the market evolves, Duncombe is confident that with the right team in place, WPPP will to thrive.

TEAM EFFORT. WPPP continues to rely on the three pillars of its business—recycling, destruction and sheeting—to drive the company’s growth. Duncombe and his team at WPPP want to concentrate on making a model of its three inter-related divisions that can be applied anywhere. "They’re very synergistic," Duncombe says of the three branches of the business. "They feed each other. We tried to build our business where all three of these could be done in any city. We’re working to perfect that model—destruction, recycling and sheeting—and put it in any city and make it work. Franchise it, so to speak."

To accomplish this growth plan, Duncombe says he’ll rely on the same team approach that has been such a success at the company to date. "You have to have a team approach, and one of my strengths is building the right team," he says. "You’ve got to bring the talent in and give them the opportunity and authority to do their jobs. I think that will help you grow your business."

With an average tenure of 15 years for its employees, Duncombe says WPPP also knows how to keep the right people in place once it finds them. "We have virtually no turnover. We give people an environment that’s challenging and, of course, rewarding and they’re motivated by having a direct impact on the company itself," he says.

More than 100 people make up the team at WPPP among all its plants and divisions, and Duncombe says that each one has something to contribute to the company’s success. "Every time I hire someone with a certain level of expertise, they always seem to bring more to the organization," he says.

A pool of talented individuals working toward a common goal has provided the foundation of the company’s success so far and will continue to shape it as WPPP refines its model of business. "You’ve got to be entrepreneurial," Duncombe says. "We’re just going to keep that spirit in mind and see what opportunities present themselves and continue to build."