TALL TIMBER
When Doug Ducker joined a new development in Hawkes Bay as a young engineer in 1974, he never imagined he would be retiring as CEO of Pan Pac 45 years later. We take a look at his journey through the company and his contribution to the forestry sector.
WHEN DOUG DUCKER JOINED A new development in Hawkes Bay as a young engineer in 1974, he never imagined he would be retiring as CEO 45 years later. Pan Pac was just developing its plant then, with cutting-edge technology for its time, already expanding.
“The Hawkes Bay area is where I’m born and bred so I’m very much a hometown boy,” says Doug. “Since that time Pan Pac has been able to grow and develop on the back of the forestry resource. People say, ‘How can you stay with one company for 45 years?’. The answer is that the company was presenting differently at pretty regular intervals and I had the opportunity to change my role reasonably regularly, which gave that diversity without moving out of home territory. The diversity of the company has been a critical feature of its success.”
He soon moved away from engineering and over the years took up a variety of roles in the company, incorporating the operation of the laboratory teams, environmental management, quality management on the pulp mill side, all the way up to production management. “I moved away from the engineering field, although the plant was very capital-intensive so there were always engineering issues to be working with of course. I went into the production management role inside the first ten years, as production manager of the pulp division which also incorporated the energy plant and other equipment. Then in 2004 I stepped up into the role of Managing Director of the company itself,” says Doug.
Over the years he has seen significant change in the industry and at Pan Pac in particular. Thinking back, Doug says the evolution was “quite dramatic”. The initial basis for the mill operation in Hawkes Bay was to provide fibre for the newsprint manufacturers in Japan. So there was always strong Japanese interest, with an initial 60/40 NZ shareholding.
It was in the 1990s when the NZ government put the forest blocks up for sale, that Pan Pac was able to secure some 30 thousand hectares of forestry which Doug says underpinned the company business, pushing the acquisition to 100% Japanese ownership by the Oji paper group. “So there were all those dynamics in dealing with changing shareholders, changing relationships and the like, at the same time as we were developing and expanding the plant on the pulping side, on the lumber side and ultimately in our whole forest management group as well,” says Doug.
He emphasises that they were changes for the better: “They were pretty much ordained in terms of the direction and the sheer nature of the forestry industry with its commitment to Radiata for a 25 to 30 year cycle – so capital was being invested with a mind to being utilised for a substantial period.”
Added to this, there was a need for adaptability to markets and adaptability of processes that saw developments on the pulping side for Pan Pac, with increased exposure to international markets as opposed to pure contract manufacturing.
The two large dragons of the company as Doug dubs them are the sawmilling operation, which is substantial, producing half a million cubic metres of cut lumber a year, and the pulping operation producing some 280 000 tonne of pulp a year. Products include everything from boardstock to packaging and paper cups.
Industry involvement
It’s been no nine-to-five workday for Doug. Over the years he has become involved extensively in the wider industry: “Being part of a company that’s been able to continue to grow and develop and play a very strong role in terms of both the local Hawkes Bay economy and utilising a natural resource, has been important for me and it saw me become involved over the years in industry activity outside of the company itself. ”
In the early days it was with organisations like Appita (the Australasian Pulp and Paper Technical Association) as a local
representative. From there he became heavily involved in the development of new industry training systems in association with Woodco (the Wood Council of NZ) which led onto representation at a higher level of the industry as Pan Pac grew, including being active in Hawkes Bay local economic development.
Asked what drove him to success and leadership roles over the years, he answers with a practical humility: “It’s not a question I’ve ever really asked myself. It wasn’t just me, there was a team behind it, as is always the case, but I guess at a fundamental level I’ve never really had an issue with taking on responsibility.
“I had an email recently from one of my Japanese colleagues who has just been promoted to a senior role, commenting on how he was impressed with everything he learned from me. Well I wasn’t even consciously aware that I was teaching him.
In turn, he said he came into his role by accident. When I asked what that means…you know it’s about being in the right place… it’s not the Japanese style to say, ‘I was striving to get there’. Certainly, in my own case it’s just come naturally.”
He was Captain of the first 11 soccer team in his school days though he admits he “wasn’t the best soccer player on the team” and was also Head Prefect of his school. “So you might say it was just naturally there but came easy to me. And just giving that back by way of association with the industry in different forms, to me was quite important,” Doug explains.
His involvement has taught him that any company and any region inherently requires stability and capacity in the strength of its businesses. It’s not all been smooth sailing and he is quick to point out that the industry has seen variations and “calls which to me have been disastrous for NZ”.
He gives the example of pruning trees: “Certain elements were, ‘let’s be expedient, we don’t believe we can make money from pruning logs, so we’ll stop pruning and take that cost out and get short-term profitability’. But that creates problems of long-term viability of the resource. Our own Pan Pac operation is now very dependent on the processing of wood at our sawmilling end to meet the premium markets we’re supplying in Europe and the US.”
He goes on: “Woodco as we knew it, to me was a major step forward because it was targeted to bring together the forest owners and the wood processors. The wry twist to that is that almost 20 years on we are as dysfunctional as we’ve ever been in terms of our capacity to actively work together. We respect one another, but as a company, as an industry, processing is only strong if forest landowners, particularly, are willing to plant trees and tend those trees and then provide
those trees for harvest and utilisation.”
Doug says the uncertainties around that have always created a complex issue given the “limited capacity to internally process or the limited confidence to grow the internal processing elements and develop the markets”.
“Pan Pac has done that because we have been a forest owner. Nelson Pine with Sumitomo forestry has been able to do that. Carter Holt inherited that in the context of NZ Forest Products but then broke it up. They dissociated the forest ownership from the processing unit and with one or two decisions of that sort of nature, it’s left the industry very vulnerable and fragile which for me is a disappointment that we were not able to close that out in a more effective way than I feel we have,” he says.
Though Doug has officially retired he’s still one of the go-to figures in forestry. “I was fortunate enough to be invited to join a small team that went up to China just ahead of Christmas that was targeted to endeavour to gain some understanding and develop linkages,” he says. “This was initiated by the government and supported by the Wood Processors and Manufacturers Association of NZ (WPMA) and the Forest Owners Association (FOA), looking to progress the concept under which Pan Pac developed – that we have a major client offshore that saw merit in putting a key component of the processing plant here onshore and gave NZ employment. It gave NZ retention of the supplementary biomass that could be utilised in a good form.
“The discussion with China was, how can we and China invest in a similar form and that’s the thrust and a change I’d like to see over the next year or two – active work to ensure that we optimise the value of the trees that we grow through that immediate processing. What was evident in China was that many of the customers didn’t know what
Radiata could really be used for, because the only Radiata they saw were logs that were six weeks to six months old, heavily stained, already in various stages of deterioration, as opposed to being able to be used immediately by processing quickly and taking them to high quality product for building fit-out or construction," says Doug.
Health & Safety paramount
Of course, that was before the Covid-19 crisis and that line of thinking may change, but one thing that won’t change is Pan Pac’s strong focus on health and safety, says Doug: “On the Health & Safety front there’s never enough that’s going to be done. It’s a continuing challenge on all fronts. Mechanisation in the forest was a positive step but it came with degrees of risk that need to be well managed. The management of forestry crews is key. Pan Pac doesn’t directly employ a lot of the crews, but we have a forestry support team of some
40 staff that support our contractors working in the planting, harvesting and transport of log products.”
He says the “tragedy” of his time at Pan Pac was six fatalities that “I just wish never happened” – three of them forest-related and in recent years. “They weren’t Pan Pac employees, but they were employed with our contractor who was 100% dependent on Pan Pac. One Pan Pac employee died some 30 years ago, “really just being in the wrong place at the wrong time when there was a weakness in the plant that wasn’t recognised,” says Doug.
“The plant has its dangers without question. The old adage that I’ve often used with the staff is we want people to go home a little tired, meaning that they’ve done something physical in the course of their working day, but we want them to be going home intact without loss of limb, and certainly any kind of loss of life,” he explains.
The need for safety and safety development is continuous, he adds: “We’re deemed to be a major hazard facility under the new Safety Act which has meant a high level of control on documentation, on recording, on training and the like. So that’s made things very intense. In a sense if you’d asked me the question three years ago, ‘have we got good safe processes and procedures?’, I would have said, ‘yes I believe so’ but to look back now at what we’ve had to do over the three years to bring ourselves up to another level of standard, you see a marked difference.
“And that’s also working hard on the people to understand the need to be safe, to appreciate those that work beside them. The plant itself is being engineered to be safer all the time and there’s a million dollars or more being spent within Pan Pac every year on new safe processes, on safety barriers, on alarm systems, on warning systems, whatever’s needed.”
New challenges
On a wider level of safety, Doug has already been active in the massive challenge the industry is facing with Covid-19 restrictions. He puts the situation into historical context: “There were times when forests were not good investments. Pan Pac had a substantial forest holding in excess of 700 million dollars. It was being sustainably managed, but the value was lower than what we could add to those trees through the pulping and sawmilling processes to generate value to the shareholder. So as the forest values went up, it became far more challenging to make money in the sawmill.
“Having many legs to our company, we were able to keep the business strong. The challenge for some NZ operations now is that they literally have all of their logs in one basket – or certainly all of their product in one basket – and to make that cost-effective is pretty challenging which is why we’re seeing some of the pressures we are on the NZ industry.”
Nonetheless he is positive about the longerterm outcome: “I have to have confidence in things going right. The big challenge for Pan Pac in all of this has been one of procurement and confirmation of shipping capacity, container capacity… movement of product. But these are all part of the daily challenges that come to a company and it’s that sort of thing that’s certainly kept me totally engrossed in what I’m doing,” says Doug.
He acknowledges that times are tough and unprecedented. His advice to those workers struggling now is to have an appreciation for what they have done and ensure that they are in a position to bounce back “because the bounce back will come”.
“There is a continued growth of the use of wood products across the world. It’s still a great product. People like wood in buildings as opposed to concrete elements. You know the markets will be there. We’re dealing with something now which is being stimulated by fear. The consequence of what we’re doing now is that people withdraw completely and move onto other things or go elsewhere. That would be a concern because there’s a reality that you still need to feed your family,” he says.
“I guess underpinning all of this is that adage for everyone to make sure you do give yourself, to the best of your ability,
the capacity to have a nest egg when there are adverse conditions for whatever reason. Some of them may be personal. Some of them may be at the industrial level, but there’s a future for the use of wood.
“We’ve got a massive volume of woods out there standing ready to support markets, that need harvesting. The opportunity in being part of that is real for everybody. I genuinely believe it will bounce back. This is an unusual set of circumstances for sure, because it’s affected the supply chain in a way that’s going to take a little time to recover.”
The analogy he gives is when his flight out of Hawkes Bay gets cancelled: “I’m always so frustrated because I can’t get on the next one when it leaves. You have to wait until the whole thing clears, until there’s an empty seat for you to fly, or you make a change and say ‘well I’ll do what I was going to do by other means or go another day’… whatever that might be.”
How long does he think the disruption will continue? “I’m not knowledgeable enough to be absolute, but I see it being a three to six-month period before we have anything like stability back,” says Doug. “On the logging side, we’re dealing with relatively full log stocks and we’re pulling back our harvest programme where we can, but we’ve got to keep the wood flowing.”
Towards the future
Doug emphasises that looking back, he’s always been comfortable in this industry, “given that we’re using sustainable, renewable resources”. He says one of the challenges is that looking at a harvest site can be confronting for those who don’t know the industry: “I use the analogy of a market garden and a cabbage patch that’s just been harvested. It looks a mess, but tidy it up and it comes up again six months later. The thing with Radiata, you’ve got the same thing happening. It’s just on a 30-year cycle, crop to crop rather than the six-month cycle.”
Though he says he remains open to “some sort of industry support role”, it’s time to take time out for himself and his longstanding partner, children and 13 grandchildren. He’s got a property he’s refurbishing – “classic downsize of purchasing a property that’s twice as big as the one I already had” – along with three vintage cars that need to be rejuvenated and get onto the road. “I’m certainly looking forward to that. We’re also planning a bit of travel,” says Doug.
Though he helped in an advisory role in managing the transition for new Pan Pac MD, Tony Clifford, Doug says after 45 years the time was right to hand over the reins and “take some other pleasures from life”.
As to forestry, “the future is very very strong,” says Doug: “I believe there’s a balance on what land is used for forestry against what land is used for farming and there’s a harmony to be met between the two. The Hawkes Bay area is a classic example of that balance, with forestry taking up those areas that aren’t suitable for horticulture. It’s the same thing with building. It’s a matter of building a complementary structure that incorporates wood, concrete and steel used in the most appropriate ways but in a manner that gives you the aesthetics and that green value in terms of carbon sequestration and the like.”
And the impact of carbon on the business is one of the most interesting changes on the horizon says Doug, one that’s been evolving over the past 10 years: “The desire from our side to secure forestry resource also means securing land, and not necessarily to own the land. We just want to see trees planted on the land that are suitable for our end use, ideally controlling some of the silviculture and aspects that go with it.
“But now we have a new value being placed on those trees for the landowner, in particular in the context of carbon. Carbon credits are now being priced into bare land, even though the trees have not been planted, the landowner is seeking to reap a benefit. It takes time and the risk with that is that some of that does not see harvest. The Radiata crop is still a key part of the NZ business landscape in that respect. Radiata is still that golden crop.
“It’s with some pride I say at Pan Pac we’ve never had to defend what we’re doing, because we were fundamentally doing it right, which is balancing the NZ good and incorporating it in varying degrees of added value. Also, supporting a diversity of product and diversity of market has seen us move from the initial mill that was really only supplying product into Japan, to now going across Asia and across the globe.
It comes down to loyalty
What’s he most proud of? Passing on a
strong, stable business, 45 years under consistent ownership (with just three CEOs), under a consistent core model with varying degrees of development, “some of which we have tried and not been so successful in. And there’s cases to revisit those and see if we can do things differently and more effectively today”.
“Though current profitability may look a bit sad, as I said to Tony, there’s only one way from here and that’s back up again,” says Doug. “We’ve proven what we can do. The company balance sheet is strong, the people are strong, consistent and good performers. There’s always a challenge in keeping the plant as modern as possible, but that’s a perpetual challenge once you get into the older generation.”
There is one thing that stands out for him: “A key element for me in all of this that I look for in employees is instilling that sense of loyalty to your company. And maybe that’s old school, I don’t know, because people say you’re going to have to work at five different jobs over your lifetime and some say 10 and some say more.”
In his time, an 80-hour week was typical and work/life balance has taken on new meaning with “today’s generation, where people are most concerned with if they have their coffee for the day”. “We want them to identify with the fact that they’re only secure if the business itself is secure,” says Doug of his workers.
“But in saying that, I think it’s important to ensure that there’s some fun on the way and that you’re making things pleasurable where possible. Some of that gets tougher as the financials get tougher,” he says.
Reflecting on his 45 years at Pan Pac, Doug says he is gratified to have had the opportunity to do what he’s done “in the way in which I guess I’ve felt I needed to do”: “Could I have done more? Could I have done it better or differently? The answer’s got to be yes, because it always is… But having said that, there is a lot of pride in reflecting back now. When I first took up the role as CEO one of my Japanese superiors said, ‘You’re now responsible for the welfare of 400 families’ and that was huge… it wasn’t just the 400 families, it was probably 1000 families and a lot of others that were affected because of the nature of Pan Pac in the region.
“I think when you have a capacity for loyalty and respect for a company and respect for yourself and your ability to support it, you’re a long way to winning the game of being successful in life," says Doug.