An icon falls.

In December, the stunning collapse of Enron and its subsequent bankruptcy became national news. That news has major implications for the pulp and paper industry. With a stock price around US$ 90 a year ago, Enron--the giant energy and commodity trader in Houston, Texas--closed Wednesday, Dec. 5 at US$ 0.61/share. There is hardly anyone in the forest products industry that was not touched by Enron's attempts to redefine markets for everything from dimension lumber to newsprint. It will be months before this is sorted out, but the potential impacts on our industry may be very large, depending on outstanding positions that fail to be covered.

I visited Enron's headquarters in August 2000. The shining obelisk of' a building, the elevators with live financial news broadcast continuously from a CRT in the control panel, and the general excitement was contagious. We'll obviously let the courts decide, but unfortunately, it appears this may have only been an elaborate facade.

The moral of this story? Analysts following Enron for years have struggled to explain its business model and how Enron made money. It was something of a "trust us" scenario. It appears, once again, the old adage is true: if you can't explain it to your ten year old, it probably isn't real. Do you have any other business relationships that fall into this category? Prudent contemplation is in order.

James R. Thompson is chairman and CEO of Talo Analytic International, Inc,, a Duluth, Georgia-based consulting company. He is also a member of the TAPPI Editorial Board. Contact him by phone at + 1 678 206-6010, or by email: [e-mail]