WestRock: WestRock 2.0 Strategy & Cost Improvement

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Could you elaborate on the specific ways in which this disconnect manifested? You mentioned that the company's profitability stemmed from the paper mills. What actions did they take that, in your view, diminished the company's profitability potential?

WestRock primarily generates its revenue from corrugated containers and folding cartons. However, they spent a considerable amount of time and effort on these can collars, which sell for fractions of a penny and lack the volume to significantly impact the bottom line. Yes, it does help on the sustainability side, it gets you out of some plastic, but this is just one example of the disconnect.

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Could you provide an example of a decision that was made without considering its impact on operational feasibility?

Certainly. A decision was made without considering the consequences. We had designers at the plants who work with customers to design the corrugated box. One of my designers, who had been at my operation for 45 years, was retiring. Everyone in our chain of command knew about his retirement. However, the Monday before his retirement, we were informed that a designer at one of our sister plants in Northern California was going to be laid off. This decision came solely from the HR organization. When we pushed back, stating that our designer's departure would leave no one in Northern California to fulfill the role, they seemed unaware of his retirement. This decision came from much higher up and it was already finalized. We had to lay off the other designer and then go through numerous hoops to contract our retiring designer. This is just one example of many. They might have saved $120,000 by reducing headcount, but we ended up having to backfill the position anyway.

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Do you think it was already integrated? On a scale of one to 10, where would you place WestRock before David Sewell? Ten being perfectly integrated and one indicating it was running okay but wasn't integrated and there was a lot of duplication. Where would you place it on this scale?

It's challenging to place it on a scale as that would be comparing it to something else. Were there duplications of effort and multiple systems in place? Absolutely. With the continuous addition of new businesses, that's inevitable unless you stop acquisitions for the next five years and focus entirely on integration. So, yes, I would say the One WestRock approach, or whatever they're calling it, has value and opportunity to leverage the size. But as I mentioned, full integration of all these large acquisitions takes years.

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