Now I bid a very special welcome to customers, employees, retirees and shareholders who join us here today.
This is the tenth time I’ve had the privilege of leading a Weyerhaeuser Shareholders’ meeting. As I do, I think of the words of baseball player and infamous philosopher, Yogi Berra, who said, “This is like déjà vu all over again.”
I say that because every year I’ve used this forum to talk about the unrelenting change in our industry. Every year, I’ve said that the latest changes were greater than the year before and every year the people of Weyerhaeuser rise to conquer these challenges. This past year was no different as we undertook significant steps to execute our business strategies with a special focus on our portfolio.
An important achievement was the recently‑completed Domtar transaction. Through this effort, we delivered an installment on our commitment to focus the Weyerhaeuser portfolio on those businesses where we have scale and scope to succeed.
In the new Domtar, we created significant value for shareholders through a tax-free transaction that allowed them to participate if they chose. This ground‑breaking transaction also benefits shareholders by reducing our outstanding shares by more than 25 million.
We’re very proud of the work our people did to complete this transaction to create North America’s leading white paper producer. From this position of strength, the new Domtar will be a formidable competitor in the global market with additional growth opportunities.
We also made significant changes to our other businesses. We announced a major change last year when we launched iLevel and combined five separate wood products businesses into a single, powerful brand.
While markets for wood products are extremely difficult right now, iLevel is an unqualified success with our customers. They understand and support the solutions we offer and appreciate having a single point of contact. As a result, the use of iLevel products in residential frame and panel construction runs from a 5 to 14 percent increase.
We have applied the same sharp focus to the manufacturing system that supports iLevel.
Our work on improving productivity, efficiency and return on investment included selling or closing certain mills over the past three years while we invested 500 million dollars during the same time period to improve our remaining manufacturing facilities.
Strategy execution and clear performance expectations also drive our other businesses. Containerboard Packaging and Recycling operates today with a tighter, customer-driven supply chain.
Customers give us high marks for the focus our new organization brings to their accounts, but our work in this business is not complete.
It is now the task of Tom Gideon and his leadership team to build upon this work and accelerate improved performance.
We have a record of success in creating and managing, forests, cellulose fiber and land to the benefit of shareholders, customers, employees and communities. Our success is rooted in technology and innovation. Our product and market achievements include sustainable forestry certifications throughout North America and a reduced environmental footprint.
Last year, for example, we responded to the challenge of climate change with a commitment to cut our companywide greenhouse gas emissions by 40 percent from the year 2000 levels and to do it by the year 2020. That’s the most aggressive target in our industry. It will make a significant contribution to air quality in the communities in which we operate and benefit the planet we share.
In Campti, Louisiana, for example, the replacement of two recovery boilers and an old turbine will reduce the mill’s emissions by 53 percent, the equivalent of removing nearly 15,400 cars from the road.
Meanwhile, our real estate business is a leader in green building. Thirty-six percent of Pardee’s new homes include LivingSmart® options that improve air and water quality, reduce energy use and resource consumption. That’s over and above the benefits inherent in wood construction. It takes 16 percent less energy to produce a home framed with wood than with concrete or steel. And, unlike other building materials, wood products store carbon and come from a renewable and recyclable resource.
In our forests, we use 22 percent less fertilizer while still producing more wood per acre than ever before.
It’s part of a system we call “Vision Forestry” and we will call on this expertise as we expand our timberlands management in other geographies.
This spring we open a new chapter in our legacy of innovation with an agreement with Chevron to assess the feasibility of biofuel production. Both companies are industry leaders and will now work together to release the potential of wood and cellulose fiber to fuel cars and trucks with renewable, non-food resources.
But even as we celebrate our achievements and success, we know that our stakeholders expect more of us.
Shareholders seek higher returns, the world’s citizens hold us to ever-higher sustainability standards and employees and communities seek economic growth and stability. We embrace the same goals. Our board and Senior Management Team share this sense of urgency. Our results today only set the bar higher for better performance tomorrow. To achieve these goals, we will continue to make changes.
To the many employees here today, my continued call to action for even higher levels of performance provides no rest from your accomplishments in 2006. But I believe that you understand the reality of doing business in 2007 and the scope and magnitude of our challenges.
Daily, you demonstrate that we can focus, leverage and grow our company. We can be innovative, more efficient and more decisive. I know that we can take on these global challenges together because we already have.
One of the reasons this company is so great is that we have maintained our momentum with our focus on the future. We have never shied away from a challenge.
We will not stand still, now or ever.
When I first stood here 10 years ago, I could not have foretold all of the things that have happened to our industry, markets or company over this past decade. Nor can I foretell the changes and challenges that will unfold over the next 10 years.
What I can do, however, is share some general thoughts about the actions our board and senior leaders are undertaking to shape and direct Weyerhaeuser’s future.
First, all of us are committed to creating value for shareholders and we take this responsibility seriously.
Second, the board and our management team share our shareholders’ sense of urgency.
Third, while any discussion of Weyerhaeuser will always involve trees, we are not wedded to one structure or particular mix of business.
We have a demonstrated capacity, backed by a 107-year history, to be leaders, to change, to be preferred suppliers to customers.
We have demonstrated that we safely operate best-in-class mills and are outstanding corporate citizens in communities where we operate.
In short, we have a record of accomplishment in an ever-changing world.
Our current portfolio of businesses provides us with a significant number of options and flexibility to increase shareholder value today and tomorrow. As we demonstrated with the Domtar transaction, we can pioneer innovative solutions.
We will continue to manage our company in a way that delivers our promise to release the potential in trees. It is a vision that touches all aspects of our operations: from the forests we grow, to the fiber in our products, to the land we develop. To fulfill the promise of our refreshed Roadmap we commit to:
- Lead. We are out in front. We set high standards. We are decisive and own what we do.
- Perform. We work safely. We deliver competitive returns to our shareholders. We deliver on our promises. We add value at every step.
- Invent. We take risks. We reward innovation. We embrace the new when it profitably replaces the old.
- Grow. We nurture talent. We empower people. We grow our communities.
Great companies never stop changing; never stop striving to be better. Great companies never rest on past performance. We are a great company and we have an exciting journey ahead.
I am proud to be part of this company and to work with our shareholders and with the men and women of Weyerhaeuser. We have unbeatable combination here: the ingenuity of remarkable people combined with the world’s greatest natural resource – renewable, sustainable forestland. Together, this combination will take us to even greater heights in the future.
Thank you for your investment in the assets and people of Weyerhaeuser.
