Blue Ridge: Sometimes, different is good.

Customer focus, employee involvement, open communication-pretty standard goals for a modern paper company bent on success. But the employee/owners of Blue Ridge Paper Products want to take it one step further. "We would love to have our customers say, 'you're refreshing to deal with, you do things differently, you get our ideas to the market faster, you respond more quickly.' If we end up with customers saying that, with shareholder value increasing, while growing the business to protect the security of employees, we will be successful on all fronts," says new CEO George Henson.

That seems like a pretty tough challenge for a small paper mill competing with large, multi-national corporations. But Henson obviously believes that Blue Ridge is up to the challenge-and, judging by the progress the company has made so far, he might be right. Blue Ridge was formed in May, 1999, when Champion Paper divested its Canton, N.C. mill and five related converting operations (Athens, Ga.; Clinton, Iowa; Olmsted Falls, Ohio; Ft. Worth, Texas; and Morristown, N.J.) An ambitious employee-buyout plan resulted in a company that's 40% employee-owned. Blue Ridge senior executives hold another 5%; the remaining 55% belongs to KPS Special Situations Fund, a N.Y.-based investment firm. (See box on page 40 for details about Blue Ridge's ESOP.) The company has about 2,200 employees; most (about 1,600) are at the Canton operations.

In May 2000, Blue Ridge picked up Westvaco Corp.'s liquid packaging business, including the Richmond, Va. plant, solidifying Blue Ridge's already strong position in its chosen niches: liquid packaging board and envelope paper. A host of subsequent capital projects-including a modernization project recently completed on the Canton mill's #19 board machine-back up Henson's claim that Blue Ridge plans to keep going (and growing) for some time to come.

CHAMPION ROOTS

While the genesis of Blue Ridge is unusual to the paper industry, the company has the advantage of deep roots. "We are not a new company by any stretch of the imagination," says Henson. "We were already at 35% market share on the liquid packaging side of the business, and a 250,000 tpy producer of uncoated free sheet paper. All we really did was pull down the Champion sign, put up the Blue Ridge sign and try to run the place differently-as owners, instead of a part of a bigger corporation. Our customers and our suppliers already knew what this facility and the DairyPak facilities could do."

Champion had originally announced the sale of its Canton system (the mill, a Waynesville, N.C. extrusion coating plant and the five DairyPak converting facilities) in October 1997. By the time the buyout was completed seventeen months later, workers were excited, but also nervous about what the future would hold, recalls Bob Cicale, vice president and mill manager. "I had spent 20 years with Champion, so I didn't really want to give up on Champion. But on the other hand, there were things that I probably wasn't going to miss. It's exciting to have the opportunity to change, to be part of different kind of company," …