Kevin Clarke

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Clarke faces tough decisions as he gets Catalyst back on track with minimal employee impact.

Kevin Clarke, President and CEO, Catalyst Paper Corp.

It’s been a gloomy and dynamic year for Catalyst. The iconic paper producer is losing scads of money, $44 million in its first quarter this year. Last summer it refused to pay property taxes to four municipalities where it has facilities, suing them for unfair taxation (it has since paid). And now a new player enters the stage: American printing-industry veteran Kevin Clarke, who in 2009 ended a 27-year executive stint at the printing giant known variously as Quebecor World, World Color and now Quad Graphics Inc. In July one of his first acts as leader was to permanently close the Elk Falls mill near Campbell River, ending hopes that the 400 jobs lost when it was idled in 2009 might be saved. It seems he’s a man who can make a tough decision – and at Catalyst he’ll certainly face many more.


How did you get into the printing business?


I come from nine generations of Americans, primarily in New York, and they were all either teamsters or newspaper guys. So my dad and his dad before him, and it goes back seven generations, all worked for newspapers, on the production side. As I left for college, my father gave me this piece of advice: “Don’t get into the printing business.” So I said, “Dad, I have no intention of it.”


So what happened?


I was a 29-year-old kid and I had spoken at a national meeting and this person had found me and called and said, “Hey, we got the job of a lifetime for you. We want you to start a corporate logistics operation for a large printing company.” I said, “No, I’m not interested.” So they did what they do when you don’t want to go: they entice you with all kinds of things, most of which was money at that time. It was a predecessor company to World Color, and over the last 27 years we did 80 acquisitions. But subsequently, we were forced to take it into bankruptcy [protection]. We did successfully get it out, but the shareholders who had taken equity had decided to sell it, and at that point guys like me, all the group presidents, got shot, and off we went. 


How did this job come up?


Like most of them do. I had been sitting on the sidelines for about six months trying to figure out what I wanted to do. I had a good friend who called me and said, “You know what? I know a job where they need you, and you would love these people.”


What are the big challenges in the paper market today?


Capacity. There’s just too much of it. And you have some irresponsible behaviour when it comes to pricing, where people run for multiple years below their price in some markets. Looking at a demand curve for the next three or four years, it looks like newsprint will continue to fall.


The decision to close the Elk Falls mill produced some criticism, even from the forestry minister.


There was some reaction, and it was emotional, and it should be. But we had emotion without response to our facts from some of the people we thought would be here to help us, and that’s disappointing. I would have loved to have had a response from the minister that addressed our facts. When you do the numbers and you see what’s going on in this industry, it’s not hard to understand that the facts are appropriate. Consider a department store that comes into a mall and does very well, and then the town says, “Well, let’s triple their taxes.” Well, they can move someplace. These mills are 3,000-acre facilities. They’re massive. Who wants to put more assets into a spot if you’re not being treated appropriately tax-wise? But let me be perfectly clear here: this is not just about tax. That’s one symptom of a pretty serious cold. I’ve seen it happen in other parts of the world, and it scares me.



Do politicians in B.C. get it?


I don’t know. I don’t have the history. When I sit down and meet with these folks, I would ask some straightforward questions: Where are we going? Who’s going to do it? When is it going to get done? When are we going to get to a point when we can have a logical debate? 


Closing a mill must be a very tough decision. How do you deal with that personally?


We were bleeding pretty hard. That asset was costing us an enormous amount of money for no value. And we would be starting it up in a marketplace for newsprint that we feel is just going to continue to go down. And unfortunately, we were given a clear message that there wasn’t really much flexibility from the local workforce. For me personally, the hardest decision always surrounds the people. I went out in my first week to every mill. Our average employee has somewhere in the neighbourhood of 25 years of seniority or more, about 19,000 years of collective experience. I spoke to all of our employees and union leadership and executives and said, “That’s what we need to protect.” So unfortunately, in making decisions some people get hurt, and that’s a real negative part of any CEO’s job. But knowing that those actions, if you take them, save 1,800 other jobs and gives you the opportunity to put the company back on track, that is the decision-making model I always use.