Plant closure continues Kimberly-Clark's evolution

The closing of a pulp mill in Washington state in the next few weeks will be the end of an era for Kimberly-Clark, a company with deep Wisconsin roots that is now headquartered near Dallas.

For the first time in 140 years, the company won't make its own pulp to turn into paper or tissue products.

More important, perhaps, it will be another step in a continual transformation that began in the early 1970s, keeping Kimberly-Clark vibrant while some powerful industrial giants have withered.

"These types of decisions are part of our heritage," said Mark Buthman, chief financial officer and a 30-year Kimberly-Clark employee.

Started in 1872, Kimberly-Clark, built its foundation on forest products -- namely, trees, pulp and paper. But in the early 1970s, a century after the company began operations, Chief Executive Darwin Smith drastically changed Kimberly-Clark's course. He began selling commodity paper mills -- even one in namesake Kimberly, Wis. -- and focused instead on consumer products such as Kleenex and disposable diapers.

It was "one of the best examples in the 20th century of taking a good company and making it great," author Jim Collins writes of Kimberly-Clark's transformation in his 2001 book "Good to Great." Two years later, in an article for Fortune magazine, Collins rated Smith, who retired as CEO in 1991 and died of a heart attack in 1995, among the 10 best CEOs of all time.

Subsequent Kimberly-Clark leaders continued along Smith's path, selling, closing and spinning off commodity mills to concentrate on higher-margin consumer products.

The company, which moved its headquarters to Texas from Wisconsin in 1985, still uses pulp in many products, including Kleenex and toilet paper, but now buys all it needs from other manufacturers.

The company's latest transformation began early last year when it announced a restructuring of its tissue business, including the disposal of its remaining pulp mills, acquired through the merger with Scott Paper in 1995.

One mill, in Australia, was closed last year. The remaining mill, in Everett, Wash., will close by the end of March. The plant, which includes a pulp mill and tissue manufacturing facility, will be demolished.

The process of continual transformation is not without pain. Kimberly-Clark tried to sell the Everett plant, but a deal fell through at the end of last year. Because it will cease operation, about 700 employees will eventually lose their jobs.

"It's a big impact on the community," Buthman said. "These decisions have not been taken lightly."

But ultimately, Buthman said, the pulp-making business did not provide the returns that Kimberly-Clark's shareholders expect.