A GOING GROWING CONCERN
In 1994, the Swedish company SCA (then producers of paper, packaging, tissue, and personal care products) faced a paradox. Out of 200 or so production sites, it had invested hundreds of millions of dollars into one mill in particular over several decades. SCA was known for its solid analytical capabilities. Because of this, it was able to identify an issue at this site. The company used the same capex approach it and their peers had used forever. Yet something didn’t add up.
Of course, before deciding to implement any one capex, the company’s leaders calculated the project’s IRR. Over the previous 15 years, they estimated ...
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