Pulping R&D: the key to competitive advantage?

The pulp sector can often be a source of puzzlement. Traders, vendors and paper companies are constantly searching for signs that will help them figure out where market trends are heading while technicians, mill personnel and academics seek to unravel the mysteries of fiber properties in the pursuit of higher quality products.

A recent "Fiber in Focus" conference hosted by Sodra Cell sought to shed light on some of the issues. Participants met for a two-day seminar at Burgenstock, Switzerland. The program covered three main topics--choice, treatment and control--but an introductory session took in more "blue sky" topics such as the future direction of the pulp market and the role that Sodra would like to play.

According to Leif Broden, president of Sodra Cell, companies operating in the market pulp business are likely to see dramatic changes in the years to come. Broden noted that after the environmental focus of investments in the 1980s and 1990s, the industry is now keen to pump more money into projects that help to reinforce customer relationships.

Due to business developments such as vendor managed inventory and similar plans aimed at boosting cash flow and profitability, companies and their customers have much to gain by exploiting efficiency gains for mutual benefit. But Broden argues that it also means successful suppliers in the future will depend on their ability to offer innovative business solutions as well as a quality product.

"We want to spend less time discussing price and more time on creating value for our customers," he explained. "We want to reduce the need for interchangeable pulp suppliers and in this new world of cooperation between customer and supplier we will use R&D as a competitive tool."

That theme was carried forward by Ulf Edman, Sodra Cell's marketing director. Edman pointed out that while customers were still extremely keen on price in deciding where to source market pulp, new factors were becoming more important.

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"We as pulp suppliers cannot simply act as we did before. We asked our customers what they wanted and their answers were low price, consistent quality and environmental care. But these are what we term old demands as customers have wanted these things for a long time. Today, though, there is a list of new demands as well. Customers are increasingly interested in stock management, logistics, IT, technology projects, fixed prices--which we now do through the use of price indices. There is also a need for better pulp market information, especially for smaller customers."

Edman went on to list some of the initiatives that the company had launched to meet these new demands, including Sodra's Pulp Academy, market updates on the company's extranet for customers, and financial hedging contracts covering more than 150,000 metric tons of pulp to date. In addition, Edman used the event to launch a new pulp productivity service aimed at creating customer value via increased technical support.

Aside from the marketing announcements, Sodra also highlighted that its core business was growing and offered many opportunities for expansion in the future. Ake Axelsson, the company's market research manager, noted that bleached softwood kraft pulp today accounted for 52% of the 40 million metric tons or so of capacity available around the globe. That was up from around 43% in the early 1970s and the trend looked set to continue. Not only that, but pulp consumption continues to grow steadily across the board even in more mature markets such as Western Europe (Figure 1).

Among the other presentations at the conference was one on point-of-use pulp information given by Magnus Dahlblom of Metsa Tissue Paulistrom and Annica Larsson Ahlstedt of Sodra Cell and a paper on mill-scale refining studies given by Michael Seifert of M-Real.

Some of the other speakers had a slightly more academic focus, but here too the presentations covered a broad range of pulp-related topics.

BY JIM KENNY, CONTRIBUTING EDITOR EUROPE