May 4, 2018
Interviewed by: Privcap
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Meeting an Environmental Challenge

When a paper mill ran into trouble with management, environmental issues and the local government, Blue Wolf Capital Partners did not play the part of a passive investor but a business leader who’s hands on approach reinvigorated a company and ultimately regained the confidence of the community. 

When a paper mill ran into trouble with management, environmental issues and the local government, Blue Wolf Capital Partners did not play the part of a passive investor but a business leader who’s hands on approach reinvigorated a company and ultimately regained the confidence of the community. 

Meeting an Environmental Challenge

Adam Blumenthal, Blue Wolf Capital Partners:
The important part about managing in a complicated society is understanding there are other aspects to what you do. Things that are important to other people, and they’re not all necessarily in conflict by recognizing how a business is important to its employees, to its community, to the government that regulates it. You become a business leader, not a passive investor, and I think that’s what private equity is about.

David Coles, former Energy and Paperworkers Union of Canada:
Blue wolf operational styles stood out quite significantly against most other operators in North America, not just in Canada, even though Northern Pulp was fundamentally a fairly solid mill, management was dysfunctional, they were in constant dispute with the community, environmental groups.

Blumenthal: What we saw that we could do was systematically repair the relationships that the company had by managing it better with more transparency, and more clarity, and more discipline.

Coles: It wasn’t years before it got better, it was months.

Blumenthal: We worked heavily with the government to craft a long term strategy to reassure all of those constituencies that even in the depths of a global financial crisis that the province was thinking long term, and because we and the government were aligned on that, other people in the forest products ecosystem, they didn’t panic. As the economy came back, we all were well positioned to take advantage of it.

It’s critical if people want to have paper, and toilet paper and lots of other products that these kinds of businesses exist, and they have to be managed effectively, but they can’t be managed with no environmental impacts.

There were three pressing issues at the mill. Each of which we addressed, not because we had to, but because we knew that improving our environmental footprint would help align everybody in the province with the idea that this mill should be a long term part of the community.

There are obligations to consult with First Nations’ bans and to treat them with the utmost good faith. We took those obligations very seriously, we engaged in consultative practices before we made every environmental change. We also of course made an effort to hire First Nations’ groups.

Coles: Adam held a number of town hall meetings, personally himself, shirt off, no holds bar. He dealt truthfully and honestly and exuded confidence that he knew what he was talking about, and would not run from any question.

Blumenthal: We were able to get to a broad understanding of the objective of a highly productive, very safe long term mill, and that let us sit down and negotiate a plan transition from the current state, which was quite dysfunctional, to a future state, which was highly productive.

Our ability to work with a provincial government to stabilize the entire sector and really the rural economy of the province only three years after we had gotten there for the first time, really was a testament to our efforts in finding constructive solutions to how the sector can continue to exist despite the ups and downs of the global economy.

We parted with some regret because we valued the partnerships that we had created, and we enjoyed working with them to stabilize and create a long term business. As they move through that curve, over four or five or six years, our greatest value add is over. We helped them change, we get them on a solid footing, we fix things.

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