Bigger machines, fewer players, and growth beyond local markets: global paper supply structure will change due to regional shifts of new production, consolidation and globalization of industry players, and larger paper machine scale.North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. and Western Europe Western Europe The countries of western Europe, especially those that are allied with the United States and Canada in the North Atlantic Treaty Organization (established 1949 and usually known as NATO). will continue to dominate the global paper industry by accounting for more than 50% of the world production by 2015. However, the production growth is gradually shifting outside these traditional supply areas. The Western pulp and paper industry The global pulp and paper industry is dominated by North American (United States, Canada), northern European (Finland, Sweden) and East Asian countries (such as Japan). Australasia and Latin America also have significant pulp and paper industries. will continue to have competitive advantages from good availability of raw materials including primary and recovered fiber, supplies, advanced technology, and a highly qualified labor force. Outside the traditional supply regions, supply growth opportunities its lie in areas with good resource availability or areas with lane demand potential. Regions with growth opportunities based on resource availability are Southeast Asia Southeast Asia, region of Asia (1990 est. pop. 442,500,000), c.1,740,000 sq mi (4,506,600 sq km), bounded roughly by the Indian subcontinent on the west, China on the north, and the Pacific Ocean on the east. and Latin America--specifically in hardwood pulp and woodfree papers. Russia's huge forest resources, with large latent demand, constitute the main elements for industry development. Although China's pulp and paper industry has a shortage of wood and recycled fiber, their market potential provides an attractive basis for future investments. GROWTH DRIVERS The search for growth, competitive advantage, arm the capability to serve customers are the main drivers for the concentration and globalization globalization Process by which the experience of everyday life, marked by the diffusion of commodities and ideas, is becoming standardized around the world. Factors that have contributed to globalization include increasingly sophisticated communications and transportation of the paper industry. The continued concentration of the paper industry is a global phenomenon. Despite rapid consolidation, the paper industry is still relatively fragmented compared with other industries. The top five firms control 25%-40% of regional capacity (see Figure 1). The concentration level for the paper industry is highest in North America and Western Europe. The Asian industry is still fairly fragmented. In recent years, the Years, The the seven decades of Eleanor Pargiter’s life. [Br. Lit.: Benét, 1109] See : Time world paper industry has gradually adopted a global strategic orientation. The globalization trend should continue, with firms seeking growth through acquisitions and new investments in overseas markets. [FIGURE 1 OMITTED] CAPACITY RATIONALIZATION Huge differences in new paper machine sizes exist by region (see Figure 2). This reflects the types of paper and board grades produced, industry standards, and capabilities. Paper mills have sought increasing efficiency and lower unit costs through larger plant and machine size. New paper machines have larger capacities; older and smaller machines are shutting down. Consolidation is gradually driving this trend, too. In North America, for example, the frequency of new tissue paper machine start-ups was exceptional during the late 1990s and early 2000. [FIGURE 2 OMITTED] Eastern Europe Eastern Europe The countries of eastern Europe, especially those that were allied with the USSR in the Warsaw Pact, which was established in 1955 and dissolved in 1991. , and especially Russia, could develop into a significant export surplus region during the current decade--particularly in long fiber-based products. The total net import requirements in the Middle East, China, and Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. should grow. The current trade surplus in the remainder of Asia will prevail because of increasing net exports in woodfree papers. With relatively saturated domestic markets, North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. and Nordic paper mills will increasingly depend on export opportunities in other areas of the world. Since the late 1990s, the strong dollar has made selling paper from the United States and Canada overseas very difficult. Recent changes in exchange rates could boost North American exports in some markets. Nordics will continue to be the key source for Central European markets. S! Editor's Note: This article is part of a series by market experts at Jaakko Poyry Management Consulting, Tarrytown, New York Tarrytown is a village in Westchester County, New York, United States. The population was 11,090 at the 2000 census. The Village of Tarrytown is located in the northwest part of the Town of Greenburgh, New York. , USA, which provides marketing and consulting services in the global pulp and paper industry For more information, contact Soile Kilpi, Soile. Kilpi@poyryusa.com, 914-332 4000. |
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