Operations snapshot: WestRock working to cut costs, increase productivity at mills, box plants, invest in assets, innovate products; company has consolidated its supply chain, now reviewing underperforming assets or assets tied to less-attractive markets

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LOS ANGELES , January 25, 2022 () –

WestRock is pulling key levers to improve margins and returns, including cutting costs, increasing productivity, investing in its assets and innovating on new products.

In the containerboard business – in addition to reducing its exposure to the export market – there is opportunity on the productivity side, CEO David Sewell said during the Citi Basic Materials Virtual Conference on Dec. 1. WestRock is working “very closely on multiple productivity programs, both at our mills and our box plants, and we hope to see that flow through," he said.

WestRock has also now consolidated its supply chain, which presented a “tremendous opportunity to become more efficient” and drive material savings by consolidating warehousing, tightening sales and operations planning with consolidation of mills, and reducing freight spend. The company had been running multiple supply chains, so “we're going to see a lot of productivity and efficiencies there as well,” Sewell said.

Both productivity and cost-cutting present opportunities to enhance margins. WestRock is “really focused on assets that might not be giving us the return that we want, so we'll look at that,” Sewell said. The company will look at underperforming assets or assets that are tied to markets that aren't as attractive as part of its strategy – something Sewell will discuss more during WestRock's Investor Day in February. 

WestRock is pushing to find ways to significantly improve productivity on top of inflation, “so we have multiple projects, both at our mill system, as well as our conversion sites," he added. Executives have identified several areas where the company can reduce waste, improve its digital manufacturing footprint using predictive analytics, and improve unscheduled downtime.

Additionally, WestRock plans to invest, like it did at its mill in Florence, South Carolina, where three older paper machines were consolidated into one new kraft linerboard machine.

The company also recently consolidated its Multi Packaging Solutions (MPS) business, which WestRock acquired in 2017, and its consumer business.

“We were really running those as two separate organizations, so several months ago, we brought those two organizations together,” Sewell said. “We've already identified and executed on multiple efficiencies and opportunities.”

“So we're trying to attack it all three ways, and I think that's why we talk about leveraging the power of the enterprise because it's that scale,” he said. “We'll take cost out where we absolutely can and can be more efficient, but … we're not going to cost our way out of it. … We're going to use innovation, work with our customers, use our machinery business, and we'll start to see continued margin expansion, which is a huge focus for us across all of our businesses."

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Jason Irving
Jason Irving
- SVP Enterprise Solutions -

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