Privatization: A Catalyst for Long‑Term Manufacturing Reliability

I was intrigued by the recent acquisition of publicly‑listed Georgia‑Pacific by privately‑held Koch Industries. As a consultant, I’ve observed that privately‑held firms often implement reliability initiatives more effectively than their publicly‑traded peers. Is privatization the future for American manufacturing and process industries, and can it finally unlock the full value of reliability programs?

Charles G. Koch, chairman and CEO of Koch Industries, told the Associated Press: “By joining our group of privately held companies, Georgia‑Pacific will be able to maintain a long‑term focus on growth and commitment to delivering value for all its constituents.” He added, “As a wholly owned subsidiary, Georgia‑Pacific will benefit from Koch Industries’ historical practice of reinvesting up to 90 percent of earnings in our businesses.”

I want to highlight three key insights from Mr. Koch’s remarks.

1. A privately‑held structure enables a long‑term focus—from life‑cycle cost minimization to proactive maintenance—because reliability is an investment that pays off over time, not just in the next quarter.

2. Delivering value to all constituents, not just shareholders, aligns management incentives with sustainable growth and protects against the volatility that institutional ownership can introduce.

3. Reinvesting up to 90 percent of earnings provides the low‑cost capital necessary to fund reliability initiatives that rarely produce immediate returns but are essential for long‑term resilience.

Reliability management is risk management. The same disciplined investments you make in your health today pay dividends decades later. Corporate strategies that prioritize short‑term shareholder returns often trigger cost‑cutting that undermines future performance—a classic “eat the goose that lays the golden eggs” scenario.

Publicly‑traded manufacturing firms face relentless pressure from institutional investors. A single fund manager’s decision to sell can spark a cascade of selling, forcing executives to chase quarterly earnings rather than build lasting value. This myopic focus can even lead to unethical behavior, as history shows.

Large, asset‑intensive plants cannot pivot quickly enough to satisfy the whims of institutional owners or analysts. A long‑term, private‑ownership model offers the stability needed to invest in reliability and realize true value creation.

While privatization may reduce access to public capital markets, the alternative—allowing market forces to dictate the pace of investment—can be more costly in the long run.

I anticipate a growing trend toward privatization in U.S. manufacturing and process industries, with reliability management at its core.

BRING DREW TO YOU

Looking to elevate your knowledge of lean manufacturing and effective plant reliability management? Invite Reliable Plant’s Drew D. Troyer to speak at your event or company meeting. With an MBA, extensive plant experience, and an engaging delivery style, he challenges and informs professionals at all levels.

For more details, contact Tammy Johnson at 800‑597‑5460, ext. 143.

Drew D. Troyer is a champion of effective reliability management and passionate about helping companies uncover hidden profits in their plants. As a highly sought consultant to Fortune 500 manufacturing firms, award‑winning columnist, and teacher, Troyer understands both management expectations and plant‑floor realities. He is a Certified Reliability Engineer (CRE), a Certified Maintenance and Reliability Professional (CMRP), and chairs the standards committee of the Society for Maintenance and Reliability Professionals (SMRP). Contact Drew at 800‑597‑5460.