Wall St. hones in on KapStone

ON BUSINESS

It has been an anchor of the industrial landscape along the Cooper River for more than seven decades. Suddenly, Wall Streeters are fixated on the former MeadWestvaco paper mill.

The hulking blue complex was the subject of numerous queries that industry analysts served up last week to the top brass of KapStone Paper and Packaging Corp. , which last month took ownership of the business from MeadWestvaco Corp.

Staffed by 1,000 workers, the mill is KapStone's largest, hence all the newfound attention from the industry's profit-and-loss sentinels.

For example, one analyst during the conference call wanted to know about the cost savings the company expects from an on-site co-generation plant MeadWestvaco built about a decade ago to supply the mill with electricity and steam.

Roger W. Stone, KapStone's chief executive officer, declined to give a precise figure, saying only that "it's a very healthy number."

"That mill, because of the co-gen, has low energy costs compared to most comparisons I've seen. ... It burns coal, and I guess the good news is it has one year to go on its coal contracts. So the recent up-and-down pressures in the coal market should have little effect, although ... transportation costs will rise as all transportation costs do," Stone said.

The CEO then made the first of at least two unprompted remarks during the call that strongly suggest it's no longer business as usual for the folks on Virginia Avenue. He noted that the North Charleston mill is one "where we think that there's lots of opportunity to use very good assets and to decrease operating costs."

Stone didn't elaborate about how he plans to trim those expenses, but later during the same call, he revisited his theme: "I believe we have huge productivity opportunities in Charleston, and we're going to concentrate a great deal of our time at that," he said.

KapStone has said since the deal was announced that no job cuts at the mill were in the works, at least not in the short term.

Analyst Mark Wilde of Deutsche Bank this spring told Stone during a call that the numbers don't seem to add up. By his measurement, the local mill has nearly twice as many employees as bigger paper factories.

Stone didn't disagree: "I think that's a fair observation."

The Wall Street crowd will likely get the chance to satisfy their curiosity and draw their own conclusions this October, when KapStone plans to invite analysts to visit the North Charleston mill.

Flight delay

Boeing Co. ushered in a late arrival last week, direct from the Lowcountry to the Northwest. Make that a very late arrival.

A 787 fuselage section damaged by a worker at a North Charleston factory in June was finally delivered last Monday to the aerospace giant's assembly plant near Seattle, some five weeks later than expected.

This latest scheduling snag for the company's new Dreamliner goes back to June, when a local employee of Boeing supplier Alenia Aeronautica LLC did not follow instructions and damaged the upper portion of an 84-foot-long fuselage section. The worker was fired. The structure was repaired, but its delivery was postponed until last week.

The test-flight phase of the 787 has been delayed several times by glitches. The first plane is now set to be delivered in the third quarter of 2009. The company has racked up orders for about 900 of the jets, making it the fastest-selling commercial aircraft in history.

One customer has changed its mind. Boeing last week reported its first canceled 787 order. Azerbaijain Airlines opted to buy a 767 jet from the company instead.