CASE: Taking Charge at Domtar: What It Takes for a Turnaround*
Domtar is the third largest producer of uncoated free sheet paper in North America. In the decade prior to 1996, Domtar had one of the worst financial records in the pulp and paper industry. At that time it was a bureaucratic and hierarchical organization with no clear goals. Half of its business 12was in “trouble areas.” Moreover, the company did not have the critical mass to compete with the larger names in the field. The balance sheet was in bad shape, and the company did not have investment-grade status on its long-term debt.
In July of 1996, Raymond Royer was named president and chief executive officer (CEO). This was quite a surprise because, although Royer had been successful at Bombardier, he had no knowledge of the pulp and paper industry. Many believed that to be successful at Domtar, you needed to know the industry.