This is the eighth time I have addressed our shareholders in this forum. I’ve used my last seven opportunities to talk about change.
But in the past, I’ve spoken about change in terms of how we operate. Today, I want to talk about a different kind of change. I want to talk about changing the way we think of ourselves and how others should view us.
Before I start, however, I want to acknowledge some special guests, our customers.
We obviously don’t have all of our customers here today, but we do have a representative group and I’d like to ask them to stand. Please join me in welcoming this very special group and thanking them for their business.
I’d also like to draw everyone’s attention to a very special announcement we made this morning prior to issuing our earnings report. In that announcement, our board demonstrated its confidence in our financial strength by increasing our second quarter dividend to 50 cents. This announcement also fulfills the commitment we made to shareholders that we would capitalize on opportunities to enhance shareholder value after reducing our debt following the Willamette acquisition.
But it’s also a tribute to our employees. Through their hard work and focus on efficiency, our financial position has allowed the board to take this action. The Senior Management Team joins me in thanking our employees for their dedication to enhancing shareholder value.
I also want to acknowledge some changes to our Senior Management Team and Board of Directors.
This past year three members of our senior management team retired – Mack Hogans, Mick Onustock and Jack Taylor. We thank them for their contributions to our company and our future.
I would like to introduce four members who have joined our Senior Management Team since last year’s meeting and ask them to stand.
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Lee Alford, senior vice president, Residential Wood Products;
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Ernesta Ballard, senior vice president Corporate Affairs;
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Tom Gideon, senior vice president Timberlands; and
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Mike Jackson, senior vice president Pulp and Paper.
We’ve also seen some changes on the board where we welcomed two new members:
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Michael Steuert and
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Chuck Williamson.
Michael, Chuck, would you mind standing?
We are fortunate to have a board with diverse skills, background and areas of expertise. Michael and Chuck complement the existing members by bringing additional skills the board will use to enhance shareholder value and maintain the triple bottom line stewardship that has been a hallmark of our company.
As I mentioned earlier, our board loses a very valuable member this year with the retirement of Bill Ruckelshaus.
Throughout his long career, Bill has demonstrated strong ethical convictions and put the greater good ahead of his own ambitions. As the first and fifth EPA administrator, he pioneered the integration of risk assessment and risk management that are the hallmark of environmental regulation today. He has been without peer at straight talk about pollution, conservation, the economy, and shareholder value. His wit and humor are legendary – even though he is a lawyer.
As senior vice president for law and corporate affairs, Bill helped Weyerhaeuser become one of the first companies to have an environmental policy. We also were one of the first companies to write a code of ethics and start a Business Conduct Committee – both of which remain central to how we manage Weyerhaeuser.
On a personal note, I have relied on Bill’s wisdom and insights as lead director as we have charted a new direction for Weyerhaeuser. Thank you, Bill.
Bill, would you please stand so that we may honor you.
One of Bill’s enduring principles is this: you must act today with tomorrow in mind.
To many, this is simply the concept of sustainability.
It seems as though everywhere you turn these days – newspapers, magazines, radio, television – we bump into the word “sustainability.” Sustainable development, economy, agriculture, energy, communities, resources. The list goes on.
So what does sustainability really mean?
Although there are many, most definitions view sustainability as an economic, social and ecological concept that balances meeting today’s needs without compromising the future.
In our industry, sustainability is usually associated with forestry – and that’s certainly a good place to start at Weyerhaeuser.
We’re proud of our forest stewardship and the leadership role we’ve played in sustainable forestry. At Weyerhaeuser, forest stewardship and sustainability are more than words. We put them into action. Every year, for example, we harvest less than 3 percent of the land we manage. That means that 97 percent of our forestland is growing to produce wood for future generations.
We test seed stock and understand the chemistry and botany of tree growing. We fertilize, thin and prune our trees to ensure we get the most value from our land. Through our leadership and similar efforts by others, the forest products industry has significantly increased the rate of wood fiber grown on a single acre. As a result, today it requires a very small portion of the nation’s forestland to meet all of our society’s increasing need for wood fiber. That leaves the vast majority of forestland available for recreation, watersheds, wildlife habitat and other uses.
Sustainable forestry is not new to us. We’ve practiced it for more than 100 years. Frederick Weyerhaeuser was an early believer in managing forests with the future in mind. In the early 1940s, Weyerhaeuser pioneered the American Tree Farm system of sustained yield forest management. On some of our private land, we are preparing for our fourth growing cycle. We remain committed to forest renewal and silviculture research.
But you don’t have to take our word for it. All of our U.S. forests are certified to the standards set in the Sustainable Forestry Initiative. In Canada, we abide by the Canadian Standards Association’s Sustainable Forest Management Standard. And worldwide, all of our forests are registered to the ISO 14001 standard for environmental management systems.
In all cases, these standards rely on diverse groups working together with mutual respect to reach a common ground that benefits all parties.
Such approaches also rely on facts, not slogans. For example, some people believe we are running out of trees. Nothing is further from the truth. In fact, there are more trees in the United States today than there were 80 years ago. And because more trees are growing than are being harvested, there’ll be plenty of wood fiber for future generations.
So, if you were to ask me who is responsible for sustainability at Weyerhaeuser, I could answer “Tom Gideon.” After all, Tom, our new senior vice president for Timberlands, is responsible for millions of acres of trees in the United States and Canada. So many would agree with that statement that Tom is responsible for sustainability at Weyerhaeuser.
Some might limit their view of sustainability to the forest.
But I don’t agree. I believe sustainability is more than trees. I believe sustainability is more than rationing resources.
I believe it’s about operating more safely.
I believe it’s about growing tomorrow’s leaders.
I believe it’s about attracting investors, creating new products, and operating more efficiently.
I believe sustainability includes manufacturing in a way that results in cleaner air and water.
In other words, sustainability is at the core of everything we do. Every Weyerhaeuser employee has a role in sustainability.
For example, Mike Jackson and his cellulose fiber and paper team play a role in sustainability when they meet customer needs.
But they can’t do it alone. They rely on George Weyerhaeuser and the researchers to create new products. They look to Marvin Cooper and his engineers to design, build and operate clean and more efficient facilities to manufacture those products. When Marvin’s team is successful, we operate safer and more efficiently. In the process, we reduce our environmental footprint and increase profits.
So these three and their capable teams are part of our commitment to sustainability.
But leadership in sustainability comes in other forms as well.
It comes from Ernesta Ballard and our Corporate Affairs department. Through clear communication with opinion leaders and elected officials about our operations, we can influence legislation and contribute to common sense regulation. But it’s not one-way dialogue. We must also understand what’s on the minds of our stakeholders and how that will shape our future.
Our sustainability also requires attracting and developing the next set of leaders – a set of diverse leaders who aren’t wedded to the ways of the past. We need leaders who are trained to address the issues and take advantage of future opportunities.
We have stiff competition in this market. We need to create an environment that attracts people like Shaker Chandrasekaran who moved to the United States from India. Today, he heads our Cellulose Fibers manufacturing organization that produces nearly 3 million metric tons per year.
We need more people like Lees Seymour, managing director of our New Zealand operations. In his job, Lees draws upon his formal education and prior work experience with his Maori culture to manage our operations on a sustainable basis.
We must find more opportunities to move women into key manufacturing roles as we did with Nancy Arend who heads our Appearance Wood Business. Nancy managed some of our box plants before assuming this new role late last year.
While it is the role of every manager to create a diverse culture, it falls upon Ed Rogel and our Human Resources department to develop an environment that attracts and keeps our future leaders.
We also rely on Bob Dowdy and his legal team for sustainability. They ensure we operate legally and ethically.
Sandy McDade’s team helps us work with the government, First Nations people and other stakeholders to develop mutually beneficial methods of operating in Canada. That’s another area of sustainability.
Earlier, I focused on the cellulose fibers and paper businesses, but the story is the same for our wood products, containerboard and real estate businesses.
Lee Alford is challenging the Residential Wood Products team to integrate our business lines in a new and customer-friendly alliance. In the process, we will provide superior products and services to targeted customers.
Bill Corbin is leading our effort to operate internationally and to grow in selected global markets. Together, Lee and Bill will ensure that Weyerhaeuser remains one of the world’s largest producers of softwood, hardwood and engineered lumber products.
Dan Fulton and his outstanding Real Estate team are well positioned to benefit from favorable demographics and economic forces to sustain the housing markets where we operate. Our real estate companies are recognized leaders in the area of “green” construction which ensures the efficient use of energy and the preservation of land and water around a community.
Jim Keller is pushing our Containerboard, Packaging and Recycling sector to develop and deliver the best fiber-based product to his customers. Increasingly, these containers are made from recycled products. Last year, we collected nearly seven million tons of recovered paper and we used about two-thirds in our paper-making process. Our paper averages more than 35 percent post-consumer recycled content across all paper products.
Each of these different businesses is part of a one-Weyerhaeuser approach and each contributes to our overall success and sustainability under the leadership of Rich Hanson, our chief operating officer.
We have learned that it is both more efficient and more effective to run one company than many companies. Common data, common information technology, and common management controls wring much needed capital out of the supply chain. That’s why Dick Taggart, our CFO, and Susan Mersereau, our CIO, and their teams are critical to our sustainability.
But why is all this important? Why have I gone on so long about sustainability?
Because I believe that looking only at the trees is too narrow of an approach to sustainability. Yes, it’s a factor, but it’s not the only one. Instead, I believe we must look at the entire process of using wood fiber. That includes how we grow it, how we harvest it, and how we make it into products. From seedling to lumber, from slurry to tissue, from pulp to paper products. We can, and are, using wood to meet today’s needs without compromising the future.
No substitute leaves as light a footprint on the land or satisfies the customer as consistently.
What I’m really saying is that our operations are sustainable in the woods, in the plants and mills, in the research lab, the legal department, and accounting.
With an expanded view of sustainability, each employee is challenged to operate efficiently. We move beyond trees to all facets of our operations. When we’re successful, all of our stakeholders will see positive results.
For example, any debate about harvesting trees in a given region also involves the sustainability of the communities in that area. If you make a change in the harvest, how do you ensure the sustainability of the communities? How do you help sustain jobs, good schools and opportunities in those towns? If we don’t consider all of these ramifications, the people who can least afford it often are the ones who get hurt.
As a forest products company, Weyerhaeuser has to ask itself what it means by community. Is it the town near the mill or forest where we operate? Is it a region of the country? Is our community North America? The world?
We have enjoyed good relationships with our neighbors and have supported their needs. Since the inception of the Weyerhaeuser Company Foundation in 1948, we have contributed more than $173 million to support projects to improve community sustainability. In addition, our employees have volunteered untold hours to worthy causes. Our plan for the years to come includes continued local partnerships.
As a global company, however, we are taking a larger view of what constitutes our community. Our partnership with CARE and the project we’re supporting in the Terai region of Nepal is a good example. Forests are an important income source for communities in this region which is home to half of Nepal’s population. But lack of sustainable forestry skill, limited resources and a low literacy rate have hampered people’s ability to earn sufficient income to end the poverty cycle.
Working with CARE, we’re helping to improve people’s lives by teaching them sustainable forestry, how to read and write, and encouraging them to become involved in community decision-making. In just a few short years, this project has helped communities to maximize their use of resources while practicing sustainable forestry. In the process, they’re protecting habitat and biodiversity, and conserving soil and water. Our commitment to sustainability extends to sustainable economies for the world’s poorest people.
I am proud of our success in social, environmental and corporate sustainability.
There are those who envision a future in which a North American forest products company such as ours wouldn’t be in a position to lend this kind of a helping hand. These are people who envision a future in which the North American forest products industry is reduced significantly in scope and scale. Such a vision requires other countries to supply our increased demand for wood fiber – countries which may not share the same high standards by which we operate.
I want to offer a different vision.
I want to offer a vision of a robust North American forest products industry. I want to offer a vision where the best forest products practices are exported around the world. While it is true that the communities where we operate will benefit if we’re successful, it’s also true that the world benefits. By raising the competitive standards and taking best practices around the globe, we will deliver excellence to the industry. We can help set higher standards worldwide in the harvest of trees and manufacturing of products made from wood.
Our record of accomplishment proves this is possible. In Uruguay, we’re creating a higher standard of living will increase national capacity for environmental protection.
Studies have shown that when the national GDP increases to about $7-8,000 in U.S. dollar terms, a country can afford to think about such important issues as resource conservation. In other words, raising world GDP will do more for the environment than we can hope to alone. The most sustainable resource in the world is human intellect and ingenuity.
I believe in this vision and I believe Weyerhaeuser will be a leader in fulfilling it.
Thank you for providing me and my management team the opportunity to lead this fine company. Thank you for your confidence in our stewardship and our vision. Thank you for your investment in wood.
