The US tissue supplier von Drehle has in recent years steadily moved from its original role as a manufacturer’s rep to become a tissue manufacturer itself with nationwide coverage. Later this year, it will take a further step up the value ladder when it becomes the first US producer using the new NTT technology. The result will be higher quality and capacity, and hopefully market share.
Hugh O’Brian
Steve von Drehle, Chairman of von Drehle Corporation in Hickory, North Carolina, comes across as a no-nonsense guy who is intent on systematically growing and developing the company that his father started in 1974. Like many leaders of second-generation family-owned companies, he no doubt feels the pressure that people in his position are under to continue the legacy of a family business. All indications are that he and his team are making the right moves to succeed.
“We’ve had double-digit growth every year for the past few years,” explains Steve, “Of course we are still tiny at about 3% market share, but that equals big volume for a producer like us.”
Today von Drehle has 380 employees with the capability to make over 14 million cases a year, and producing about 65,000 tons per year of parent rolls of paper. As a sign of the positive growth von Drehle has been undergoing, the company is now installing an ultramodern new NTT tissue machine at the Natchez, Mississippi, deinked pulp mill which it purchased a few years ago. By January 2016 when the NTT machine is running, there will be about 120 new employees and 30,000 more tons per year of paper production.
STARTED OUT SELLING FOR OTHERS. Von Drehle Corporation started 40 years ago when Steve’s father Frank saw an opportunity as a manufacturers’ representative. “My father had worked for 17 years for a company that made the cellulose wadding for protecting wooden furniture during shipping,” recalls Steve. “He knew the tissue sector pretty well as he was on the board of the American Tissue Association at the time. One day in 1974 he got a call from Nick Marcalus from the tissue manufacturer Marcal who wanted to know if he could help him sell some bath tissue. My father said ‘consider them sold’, and that was the start of our business selling tissue products.”
Over the years one thing led to another and von Drehle worked with companies such as Diamond International, Georgia-Pacific and Pope and Talbot, as a Manufacturers’ representative for Away-from-Home (AFH) tissue. Along the way, they also began working closely with Laurel Hill Paper located in Cordova, North Carolina, quite close to the von Drehle headquarters in Hickory.
MANUFACTURERS’ REP BECOMES A MANUFACTURER. The rep business was the main focus of the company for its first 25 years. However, since 1999 under the direction of Steve and his brother Raymond, von Drehle has systematically moved into tissue manufacturing, first with converting and then papermaking. Today von Drehle is strictly in the Away-from-Home tissue sector providing a wide range of towels, tissues, and dispensers.“As we grew,” continues Steve, “we decided to set up a warehouse in Memphis, Tennessee, and then put three converting lines in there. In 2003 we added another converting facility in Maiden, North Carolina. At about the same time Laurel Hill started having financial trouble, and we decided to buy the old Edwards Paper mill in Miami, Florida, to help secure our paper supply. We ran Edwards for about four years. Then in 2007 Laurel Hill went bankrupt for the second time so we stepped in to buy the Cordova mill.”
Steve explains that von Drehle got out of the rep business because it was too reliant on other people for service, quality and supply. “We decided we wanted to control our own destiny and thus started as a converter. But when you start as a converter your competitors say ‘they are only a converter’, so we bought the paper mill in Miami. There was a paper shortage around 2005-06 and we were very happy to have that small paper machine supplying us.”
LAUREL HILL IS A GOOD FIT. Laurel Hill has turned out to be a smart move. That mill had installed its first paper machine in 1984 and added a second in 2006. After von Drehle took over, it invested quite a bit to bring the mill up to standard. Today, Steve says, the mill is truly state-of-the-art with both machines in good shape. A new ribbed Yankee was recently installed on the old machine giving an increase in production of 5,000 tons per year.
To give von Drehle broader nationwide coverage, a converting operation was opened in Las Vegas, Nevada, so it now has three converting operations, in Las Vegas, Maiden (North Carolina), and Memphis (Tennessee) in addition to the paper mill in Cordova. Converting lines are also operational in their recently acquired Natchez, Missisippi, facility.
In early 2013, again sensing an opportunity to secure both the quantity and quality of its paper supply, von Drehle bought a bankrupt Natchez (MS) deinked pulp mill. With 130,000 tons of deinking capacity there, the initial idea von Drehle had was to produce wet lap pulp and sell it while it was installing the paper machine; however this proved to be economically unfeasible, so instead the deinking equipment is running at a very slow rate just to keep it in good shape. By the end of the year, when the NTT machine is installed, pulp capacity will be ramped up to feed it.
NTT WILL GIVE HIGH QUALITY WITH LOW ENERGY INPUT.
The NTT machine is by far the largest piece in the tissue-manufacturing puzzle that von Drehle has been systematically assembling. This will be the fourth NTT machine in the world, and the first in the United States. This new technology, developed by Valmet, is reported to give much higher quality and production capacity at lower energy input.
Von Drehle ordered the NTT machine in March 2014 and expects it to be up and running in 2016. The Natchez deinking line will feed the new paper machine making 100% recycled paper. Natchez presently also has four converting lines in operation.
“The reason we chose NTT is because, presently, we are weak in the Class A office building market. This market prefers a higher quality tissue and towel. While our current product is of excellent quality, it doesn’t quite measure up to the TAD tissue and towel products being offered into that segment. TAD (through-air-dried) tissue and towels have been widely accepted. We felt we needed an answer to that. We looked at the different options and technologies.
NTT was the best fit for us. We can produce tissue and towels at a much lower cost than current TAD technology. It will also give us lower production costs than conventional and Atmos systems. We needed another paper machine and saw NTT as a good opportunity to get both conventional and premium production from the same machine at a very effective cost.”
SMALL FISH IN A BIG BUT TURBULENT POND.
The company’s biggest competitors are Kimberly-Clark, Georgia-Pacific, Cascades, SCA, and Wausau/Bay West. von Drehle specifically aims to go up against the big companies in the Jan-San market.
“We don’t want to compete with all the little converters as that is a very messy business with a large amount of short sheeting, lighten basis weights, narrowing sheet sizes, etc. occurring. We prefer to compete up against the majors. We are one of the few mid-size companies that can service the whole country.
We can make a good living off of what falls off the big guys’ plates. Some of them only view the away-from-home market as a place to move tonnage when the at-home market is down.”
“Right now we clearly see a lot of TAD-quality paper coming into the at-home market and the problem will be that it may well spill over to the away-from-home market.
In the face of these challenges,” concludes Steve, “we are confident that the NTT technology will make us well-positioned to both survive and thrive.”