Sobering thoughts on transformation

Sten Nilsson, CEO of Forest Sector Insights AB. Photo: Paper Advance

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At the PaperWeek Canada Tuesday luncheon, Sten Nilsson, CEO of Forest Sector Insights AB, gave a provocative presentation entitled "Transformation of the Canadian Forest Industry Sector, is Tabula Rasa (literally, a blank slate) required."

He takes a pessimistic view of how the complex global economy has dark clouds over it and we may be in for years of bubble-boom-bust cycles or low growth rates in our industry.

He has seen a global shift of pulp and paper capacity form north to south hemispheres and lost capacity in pulp and paper that is gone forever. But he makes the point that 65 % of the NBSK capacity has a technological age of 30 years and that it will be very expensive to transform it. Moreover, embattled printing papers have not hit bottom yet, and Canada's productive papermaking capacity is not in balance with supply. He says that only 10% of currently installed capacity has solid growth potential that the industry is looking for .The industry is not in line with the times and lacks a coordinated strategy he says. Sobering thoughts, But what is the way out?

Nilsson says that barriers must be removed since, in his words, innovation is disfunctional and industry strategy is too small on a global scale. Visionary leadership is needed and short-term, dividend conscious boards of directors need to be replaced with more forward thinkers. Up to one third of margins could be allocated to transformational technologies. He says we need to take new directions to create value. This may involve collaboration with other industrial partners who have deep pockets. He sees a stronger role for governments who must get engaged and encourage more long-term thinking, R&D and perhaps finance bio-economy projects with bonds.

He sees or industry should latch on to transformational technologies like 3-D and 4-D and innovations like UPM's bio-fibre automobile. He even speculates on a wood products city that would be comprised of many parts which are made from fiber. Forward thinking, yes.


An interview with Sten B. Nilsson: A Reality Check for the Industry?

  More info on PaperWeek Canada 2014, click here

 

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