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Global insights delivered by Deloitte at PAPTAC Annual Meeting


February 3, 2010
By Pulp & Paper Canada

Industry experts at Deloitte’s delivered cautious optimism tempered with realism on the subject of global mark…

Industry experts at Deloitte’s delivered cautious optimism tempered with realism on the subject of global markets and increasing competition during the first day of the PAPTAC Annual Meeting in Montreal. Opening the session, Pierre Pettigrew, executive advisor – international for Deloitte, pointed to a “fragile hope” and a net improvement in the economy across the board in 2009. Commenting on the global geopolitical situation, Pettigrew told PAPTAC delegates that the financial crisis accelerated trends that had already been emerging before the crash, such as the “rise of Asia”. Despite the acceleration, he claimed that China is not ready for prime time, and that global leadership would rest with the United States. Pettigrew highlighted as well the return of “big government” and the often overlooked role of governance in economic matters.

Sébastian Lavoie, assistant chief economist with Laurentian Bank Securities, confirmed in numbers what Pettigrew had suggested in generalities.  A modest recovery over all, but GDP growth in Asia is projected to outstrip North America by a factor of at least 3 in 2011. Lajoie closed by noting that credit remains a problem, and that diversification into emerging markets (naming China, India, and Brazil, specifically) is key to a successful future.

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Go global, and stay price competitive, was the take-away message, summed up by Luc Martin, global leader – forest, paper, and packaging with Deloitte, who chaired the session. To that end, the session offered presentations on cost cutting, in the form of an industry specific case study of cost reduction and a discussion on improving transportation costs by more carefully integrating the supply chain with business strategy.

Climate change and carbon credits were the topic of a presentation by Skip Willis, senior advisor for climate change with Deloitte. Willis discussed problems with, and potential benefits of, the carbon credit system and specifically with biosequestration. If handled properly, he said, biosequestration represents potential low cost compliance units in the credit system. Potential disparities between U.S. and Canadian regulations, and a weak industry lobby complicate the potential benefits, however.

Jean-Francois Nadon, partner at Deloitte, delivered a presentation addressing issues of industry challenges in North America, such as lowered demand for product, and industry trends, such as consolidation, specialization, and restructuring. Nadon offered an overview of restructuring as a process, options for a successful restructuring, and red flags to look for in other businesses.  Continued restructuring is expected in 2010, but increased liquidity could mean opportunity for smart players.

All of these issues were raised and discussed in the panel portion of the session, where John Dixon and Pierre Pettigrew were joined by Kunitaka Toyofuku, executive director of Japan TAPPI. Toyofuku expressed agreement with the necessity of competitive pricing as a key to success in the global market. Questions from the audience spurred discussion on the Indian and Chinese markets, the graying of the North American workforce, and debates over the consolidation/specialization (North American) and highly integrated (European) models. The discourse also turned to the dangers of government using carbon concerns as a means of taxation, and the emergence of stiff competition from South America, where production out-paces demand for finished product, driving export to the same markets North American pulp and paper needs to turn to for continued success in the future.


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