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41st Annual PRIMA Conference
EMBRACING TOUGH REALITIES
The search for VALUE and being VALUED in a mature industry
25 - 27 April 2010, Gothenburg, Sweden |
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| It´s always been a tradition to stargaze when PRIMA members get together. In previous years, the annual conference has focused on what the future may bring and what to do about it. But for its 41st conference, the theme brought the future back to the present - because the future is here.
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"Embracing Tough Realities" turned out to be a highly apposite title given the background against which the meeting took place - volcanic ash from Iceland disrupted flights, an earthquake in Chile and strikes in Finland had contributed to record-high pulp prices and strikes among paper workers in Sweden (resolved still during the conference) prevented the appearance of the keynote speaker, Magnus Hall, CEO of Holmen Paper.
In the bustling historic city of Gothenburg, an important trading hub for many industries, including pulp and paper, PRIMA delegates enjoyed the traditional fun and festivity that has come to symbolise the PRIMA annual meeting. But while the jokes and the wine flowed freely during the evening, business during the day was a sombre affair. As the expert speakers picked their way through the realities of demand, industry and global economics, it became clear that listening is no longer enough. The industry needs a new business model for the future, and it needs it now.
The unprecedented mix of challenges for the industry is complicated. Session one tackled the factors impacting demand and the speed at which the new digital age is evolving. As consumers and businesses embrace new forms of communication, paper is in real danger of failing to compete. Emerging from the greatest global recession in decades, the fall in paper consumption in 2009 was unprecedented and some consumption has been lost for good.
The industry has a fight on its hands to win the hearts and minds of the Cyborg generation. As session chairman Joachim Klein, Managing Director of StepChange Consulting pointed out, it took 38 years for the radio to reach 50 million users, and 13 years for television, but there were one billion users of iPhone applications within just nine months. This is the reality. It´s no longer a question of whether there will be a substitution of paper, but by how much. The iPad is now a reality and publishers are already talking to Apple about what they can do with digital magazines.
It´s clear that print media will have to work harder to maintain a place alongside e-media in the future. The competition is not what it was; as Owen Mitchell of Pearson pointed out - the founder of Facebook is 25 years old
the new giants on the block such as Google and Apple have unafraid, unconventional management.
If print is to remain a valued medium, it will need to offer more value and to prove its worth. And this challenge comes at a time when paper as a concept is being attacked from all sides - deforestation, excess packaging, litter, all upset the younger generation. The drive to reduce paper consumption is often cost-driven but under the guise of environmental concern - "don´t print an email and save the world´s forests". Once again the industry´s woeful track record of communicating its environmental credentials is in the spotlight. There´s nothing new about the gaping hole between the industry´s inherent sustainability and the misconception that paper helps destroy the planet. But the sense of urgency to bridge that gap is growing.
Having heard the grim realities of the threats from experts outside the production chain, a handful of leading producers looked at what the industry is doing to improve the value of paper and of their companies. In the face of declining long-term demand for many grades, it´s clear that to remain valued and valuable, profitability will have to increase. And for the supply-demand imbalance to be rectified, consolidation and capacity closures are inevitable. The drive South in search of low-cost fibre is well underway and there is potential for some in the industry to redefine themselves as bio-combines. Without a strategy to manage costs for the long term, however, without the potential to harness bio energy or to come up with value-added products, the future looks bleak.
There are some bright sparks on the horizon. Delegates were introduced to Print Power, a new collaborative project to promote print which aims to fight and dispel the environmental misconceptions surrounding paper as well as promoting its advantages. But, delegates were warned, Print Power needs everyone: it´s not enough to sit back and listen to others taking action, a proactive approach is needed by all if the initiative is to work. Print Power has already succeeded in getting a major UK company to withdraw a statement claiming that paperless billing helps the environment - it´s a step in the right direction, but only that - one step.
Delegates also heard about the Espresso Book Machine which can print a book in the time it takes to make and drink a cappuccino and which could have far-reaching consequences for education and books in the developing world. Packaging, meanwhile, has huge potential to eat into the plastics market, if the industry can manage capacity, regain sustainable operating rates and once again, communicate the inherent sustainability of its products.
Best practices abound, as a handful of leaders in the market demonstrated. Producers can diversify into completely new markets and products (Södra has made a lamp and a chair out of a new pulp composite to prove it), some have already made the move South in the search for cost-effective fibre with highly promising results. Others have cut capacity and focused on niche value-added products. A visit to Södra Cell´s flagship Värö mill to round off the event showed a mill at the forefront of environmental progress, independent of fossil fuels for its day-to-day operations.
But none of these examples are nearly enough. In an ever-changing world, embracing change and finding ways forward will be the theme of PRIMA for a long time to come. But this time the call to change has an urgency rooted in the present, not the future. Pre-crisis levels of consumption look unlikely to return and change in many forms is inevitable.
The take-aways: Believe in forest products and in the industry. Accept and understand change and keep pace with it. Play to win. Be the best in your chosen segment. Spread the word on Facebook (and everywhere else) that paper is cool - paper is only part of the mix, but it IS still part of the mix. In Jouko Karvinen´s words: "The industry better wake up soon, talk less and do more."
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