Financial Reports & Markets
Media Coverage of the Industry
March 1, 2008 By Pulp & Paper Canada
As an editor of a business-to-business magazine about pulp and paper, I must read -on paper and online -as much about the industry as possible. I receive a barrage of emails everyday from mills, suppl…
As an editor of a business-to-business magazine about pulp and paper, I must read -on paper and online -as much about the industry as possible. I receive a barrage of emails everyday from mills, suppliers, PR films and the like; I read local and national newspapers, trade magazines and journals; I also subscribe to services that help me sort through all the news of the day.
Lately -I’m sure you’ve noticed – there’s a lot of bleak news out there. I’ve read more than enough less-than-complimentary clichs about the pulp and paper industry -I cringe when I see yet another “clever” headline foretelling doom and gloom about anything made from wood.
No one can deny the industry has been suffering for more than a few years: Plant closures, mergers, consolidations, more foreign ownership. All of these have meant job losses and this hurts -in most cases – smaller communities and the families that reside there. It also hurts the Canadian economy and the future strength of the industry. As the industry shrinks and loses momentum, so do college and university forest-resource programs: young people lose interest in the industry. The result: we have fewer trained individuals entering a field that needs well-educated people. This need is especially acute as the industry fights to become meaner and leaner. But I digress….
On the note of doom and gloom in the media, a recent front-page Business in Vancouver article featured an interview with Jimmy Lee, Mercer International president and CEO. Mercer recently purchased the Celgar mill in Castelgar, BC. Celgar is one of three NBSK pulp mills the company owns and, built in 1993, is one of the most modern BC pulp mills.
Mr. Lee makes some very good points in the article. He says that Celgar is the weakest financial performer of the company’s three mills. (The other two are in Germany -one of them is Stendal mill, Europe’s largest built in 2004.) He points to operational differences between Canada and Germany. His concerns are: the single rail line in Canada (Canadian Pacific Railway) that can “dictate” prices; the chemical supplier monopoly in Canada (he feels competition between suppliers in Germany yields better prices); a lack of new pulp mill construction in BC means local engineering is not as advanced as it could be; competition for raw materials from pellet manufacturers and the bio-energy industry; a depressed lumber industry that is reducing the availability of fibre and driving up the price; fewer talented people interested in the pulp and paper industry in Canada; and high port-shipping costs (at $100 a tonne, the price to ship from the BC interior to China is more than double the cost of shipping from the Stendal mill).
I do want to say that I truly enjoy reading Business in Vancouver -a well-respected business newsmagazine in Vancouver. However, I was left wanting for more. There were questions left unanswered.
If things are so bad in Canada, why did Mercer International buy Celgar? And what does the company plan to do to improve the mill’s performance? As one of the industry’s global leaders, Lee is no fool. We know the company did its due diligence and research -and fully knew all of the above encumbrances -before signing on the dotted line.
Perhaps I am one of those annoying optimists that people don’t want to invite to a dinner party, or a wake. Always noting the positives and finding light in dark places. But I am a firm believer that attitude is powerful and has an impact on ultimate outcome. In other words, we need to stay positive to ensure we do have a positive future. And the facts speak for themselves: Canada’s wood products do have a bright future. If they didn’t, companies like Mercer wouldn’t be snapping up our pulp mills.
Look past the gloom; there is a brighter future ahead. Even Konrad Yakabuski sees it -the same Globe and Mail columnist who wrote “It Ain’t Pretty” in our January issue. This time, he asks us to think outside the woodbox (see page 25).
Let’s stand up straight and walk with pride through these tough times. Perhaps even the media will start taking their cue from us.
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