The Enquirer

What is International Paper Co.'s strategy? Where is it going and how global will it be?

Those were some of the questions John Faraci, IP's chairman and CEO, faced during an employee "town hall'' meeting last week at the company's technology center along Interstate 275, near Loveland.

The Cincinnati Technology Center, opened in 1996, is one of IP's largest, employing 800. It includes headquarters for Xpedx, IP's distribution business.

The world's largest forest products company, Stamford, Conn.-based IP has a production capacity of more than 18 million tons, 83,000 employees, sells products in more than 120 countries and generated $2.5 billion in sales last year.

Faraci, a New Jersey native who started with IP as a financial analyst in 1974, took time during his visit to discuss the paper industry and IP's place in it.

What is IP's strategy?

Our strategy isn't necessarily to be the biggest company in our industry, but be the most successful. ...

Our strategy is pretty simple. We're a manufacturing company; so unless we're world-class in manufacturing, we don't have a prayer of winning. We've also got to combine great manufacturing with a customer focus that differentiates us from our competition.

IP has been pruning some of its businesses. What's behind those moves?

It's making choices about which business we really think we can win in. We'll always be in more than one business, but we're going through a choice-making process. ...

All customers aren't equally profitable. Understanding what customers need and want helps make them more successful, and providing it in a way that's cost-effective enables us to be successful. That's a different mindset than saying we're going to make 5,000 widgets today and give them to the sales force to sell. We don't do that.

Are you satisfied with IP's global reach?

About 75 percent of our sales are in North America, and more than half our earnings are outside North America. We'd like to make that 75-25 sales ratio closer to 50-50.

That doesn't mean getting out of North America. It means finding more growth in some of these fast-growing, lower-cost areas of the world like South America and Eastern Europe and Asia.

Lately, IP's business has improved, with second-quarter profit double a year ago.

It's a function of a couple things, including the rebounding economy. Our business is more manufacturing sensitive. Our biggest businesses are industrial and advertising related. We've been in a manufacturing recession for a long time and we're coming out of it now, and advertising really hadn't rebounded since 2000.

If anything, tough times force you to make tough decisions that at the end make you better, stronger, and more competitive. Our productivity is way up. We've got 20 percent fewer employees with 10 percent less revenues than we had four years ago, but more volume.

--Mike Boyer