Metsä Fibre Echo 1-12_EN by Metsä Group

1/2012

TRUST PROFESSOR TAPANI VUORINEN: THE POTENTIAL OF RENEWABLE cellulose ECO-EFFICIENT PACKAGING REDUCES FOOD WASTE PERMANENT UNDER-SECRETARY MARTTI HETEMÄKI: RESCUING THE CURRENCY

CONTENTS 1/2012

The customer magazine of Metsä Fibre 3 Editorial Trust is the lifeblood of business relations.

4 Tempo News, events and appointments. 8 Reviewing a growth market Fine prospects for Turkish tissue papers. 12 Trust and reliability are cut from the same cloth Ismo Nousiaisen insists that customer requirements must determine product quality. 16 On the trail of the finest fibre Paperboard food packaging is an art form in its own right. 18 Eco-efficient packaging preserves food and reduces waste Agrifood Research Director Juha-Matti Katajajuuri refutes some environmental myths surrounding food packaging.

21 Column: Sustainable development – and then what? Riikka Joukio outlines the current state and future prospects of sustainable development. 22 Collaborating to rescue the currency Permanent Under-Secretary Martti Hetemäki assesses the state of the euro and the future of the Finnish economy. 26 Renewable cellulose gains ground Tapani Vuorinen: a professor predicts the prospects for pulp. 30 Technical quality first and foremost Jiang Fengwei is keen to tackle technically challenging papermaking processes at JiangHE in China. 32 Co-operation 2.0 Koji Kato and Shi Xin of Itochu Shanghai explain how a strengthened partnership will affect their daily work. 35 From solving problems to mutual successes Introducing Metsä Fibre Technical Customer Service VP Tom Nickull. 36 Trust is earned through sustained commitment CEO Ilkka Hämälä considers areas of long-term co-operation. 38 Paper captures the winter darkness and midnight sun of the northlands Paper is the key material for designer lighting manufacturer Sirpa Kivilompolo. 40 The RFID applicator A new series focuses on special technologies used at Metsä Fibre.

22 Echo is the customer magazine of MetsäFibre, published semi-annually in Chinese, English, Finnish and German. Editor-in-Chief: Saija Tuomikoski, saija.tuomikoski@metsagroup.com Editorial board:

Ari Harmaala, Mikael Lagerblom, Ursula Lumme, Tom Nickull, Markku Ruokanen and Saija Tuomikoski

Editors:

Metsä Fibre and Recommended Finland (Hanna-Maija Kause, Niko Kilkki, Päivi Rikala, Arja Rintamäki, Markku Ruokanen, Alpo Räinä and Anna-Mari Vimpari)

Layout:

Recommended Finland

Translations:

RAPU Kielikonsultit Oy

Press: Savion Kirjapaino Paper: Cover: Galerie Art Silk 250 g/m2 Content: Galerie Art Silk 130 g/m2

METSÄ FIBRE — ECHO 1/2012

1/2012

TRUST PROFESSOR TAPANI VUORINEN: THE POTENTIAL OF RENEWABLE CELLULOSE ECO-EFFICIENT PACKAGING REDUCES FOOD WASTE PERMANENT UNDER-SECRETARY MARTTI HETEMÄKI: RESCUING THE CURRENCY

Cover photo: Professor Tapani Vuorinen’s photo by Pekka Kiirala.

ISSN 1795-1089 (printed edition), ISSN 1795-1097 (online edition) The contents of this magazine may be republished with the permission of Metsä Fibre.

EDITORIAL

Photo by SEPPO SAMULI

Learning to recognise each other’s needs is the first step to mutual trust Business journals across the world are reporting how industries, sometimes even entire countries, need to reinvent themselves. While the competitiveness problems that they face have been looming on the horizon for a long time, no action has been taken to avoid them. My point is that in order to develop, you first have to listen and learn.

The pulp business is rapidly evolving from local, integration-oriented raw material production to global market-based trade. This is a market where expertise and value-adding services complement your product and determine your role as the client’s long-term partner. Metsä Fibre is systematically building its position in the market on knowledge of client businesses. In a global marketplace this means getting into new business environments and a variety of competitive situations and learning from them. The most recent example showing Metsä Fibre’s commitment to its business partners and clients in the Far Eastern market is Itochu Corporation’s acquisition of a 24.9 per cent stake in Metsä Fibre. This will further reinforce our marketing and sales co-operation in this region, and strengthen our position as one of the leading pulp market operators globally. In addition to the Far East, we need to look at other growth markets. In this magazine we go to Turkey, and see how tissue companies in that country are investing in new technology and establishing new customer relationships in regions with a booming demand for consumer products. We support these ambitions with fibre knowledge

and other value-adding services that are typically required at the growth and product development stage. Similarly we need to listen to clients in some of the more mature markets where our role is to offer technical services that help solve cost and technology life cycle issues. To maintain a lead in technical services and fibre processing expertise, we benchmark our skills against other leading process industry specialists. It is our ambition to deliver more added value every day. This also includes helping each other when business takes an unexpected turn. Trust is capital that is often accumulated at times of discontinuity or crisis. I am encouraging our teams to recognise and manage exceptional situations as well, and to help our clients use our products more profitably. Our long-term ambition is to secure the status of the world’s best-trusted pulp company, offering superior pulp products and services. All of this is signified with Metsä Fibre’s Botnia brand. Ari Harmaala

Senior Vice President, Sales and Marketing

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in brief

Text by HANNA-MAIJA KAUSE AND NIKO KILKKI photos by LEHTIKUVA, ALEKSI KOSKINEN, MIKKO SÄTERI, TUULA VIITANEN AND SHUTTERSTOCK

Botnia Nordic Pine Botnia Nordic Birch Botnia Nordic Strong Botnia High Yield Botnia to continue as a product brand name

Metsä-Botnia is now Metsä Fibre The Metsäliitto Group changed its name to Metsä Group and revised its corporate image in February, harmonising all of its business areas under the Metsä name. The pulp operator Metsä-Botnia will now be called Metsä Fibre. Under its new name and image, the reformed Metsä Group will present a clearer, more integrated profile as a major forest industry operator. Metsä Fibre is one of Europe’s largest producers of pulp. The company has the world’s broadest product range, focusing on bleached softwood and hardwood pulps developed for manufacturing top quality fine papers, magazine and tissue papers, and paperboards. The other divisions of the Metsä Group are Metsä Tissue, Metsä Board, Metsä Wood, and the wood sourcing and forestry specialist Metsä Forest.

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Despite the change of company name, the Botnia brand will continue to feature in the top class product ranges of Metsä Fibre as part of the brand names Botnia Nordic Pine, Botnia Nordic Strong, Botnia Nordic Birch and Botnia High Yield. The Nordic name element remains to underline the origins of the raw material in northern Europe, the high quality of the fibre, and the sense of responsibility that characterises its production. “The Botnia brand is the customer’s guarantee of a pulp product that incorporates the broad added value of the brand and our Fibres of Success customer promise,” observes Metsä Fibre Communications Manager Saija Tuomikoski. Fibres of Success embodies the values of Metsä Fibre: reliability, renewal, co-operation and responsible profitability, Tuomikoski explains. In practice this means a uniformly high standard product that is manufactured sustainably, providing good value for money, first class technical expertise and a reliable supply chain, all backed by continuous R&D. The core of the Botnia brand incorporates five areas of excellence, beginning with the high quality of the fibre, which reflects considerable human capital and expertise. Respect for people and the environment, for example through high industrial safety standards and environmental certification, constitute the second area of excellence known as sustainable development. The third area forming the core of the brand is competitive pricing, which ensures that the customer always gets full value for money. Technical expertise based on an unrivalled understanding of fibre is the fourth area. This is guaranteed by highly experienced technical specialists, optimisation of tools, and continuous R&D. The fifth area of Botnia excellence is the assurance of logistic reliability, ensuring smooth supply chain operations, traceability and error-free distribution. Stay tuned for further details of how the Botnia product range is growing and evolving.

Itochu Corporation Executive Officer Ichiro Tsuge and Metsä Group President and CEO Kari Jordan on 11 April 2012.

A new gasification plant at the Joutseno mill will begin trial runs in July 2012.

Itochu collaboration with Metsä Fibre becomes a shareholding

Metsä Group Joutseno mill invests in renewable energy

A deal concluded in April between Itochu Corporation, Metsä Board and the Metsäliitto Co-operative (the parent company of Metsä Group) has given Japan’s third largest general trading concern a 24.9 per cent strategic stake in Metsä Fibre Oy. The value of the deal was EUR 472 million, corresponding to a total commercial valuation of Metsä Fibre at 2.04 billion euros. Following the transaction Metsäliitto retains a 50.2 per cent stake in Metsä Fibre, with Metsä Board and Itochu each holding a further 24.9 per cent of the company’s shares. Metsä Group and Itochu have been involved in commercial collaboration for several decades. This developed into regular ongoing marketing and sales co-operation in 2004. The parties to the deal also concluded a new commercial agreement redesignating Itochu as the sales representative of Metsä Fibre in the Far East for long-fibre pulp and reconfirming the status of Metsä Fibre as the sales representative of Itochu for shortfibre pulp in Europe. Under this agreement, Metsä Fibre will sell 500,000 tonnes of long-fibre pulp to the Far East market annually, while Itochu in turn will ship 150,000 tonnes of short-fibre pulp to Europe. The deal is one of the largest foreign investments in Finland in recent years, and this strong commercial partner in the growing Far East market will further reinforce the position of the Metsä Group as one of the world’s leading operators in the global pulp market. Closer co-operation will generate significant synergy benefits for all parties to the new arrangement in coming years. Itochu Corporation operates from some 130 establishments in nearly 70 countries. Check out the Co-operation 2.0 article in this edition of Echo for further details of co-operation with Itochu and the foothold of Metsä Fibre in the Far East (page 32).

In February 2011 the Board of Metsä Fibre gave the green light to a gasification plant installation that will increase the use of renewable energy at the Joutseno mill. Construction work began in summer 2011, and the new facility is due to begin production trial runs in July 2012, with full commissioning scheduled for September. The gasification plant will cost about EUR 20 million, including tree bark reception and drying facilities, and the carburator and lime sludge reburning kiln burner complete with accessories. The employment impact of the construction stage is about 120 person-years. Surplus heat from the mill will be used for drying tree bark. The 48 megawatt gasification plant is the first pulp industry technology application on such a scale in Finland. “The gasification plant will take our mill to a new level in terms of environmental friendliness and energy independence,” explains Joutseno mill manager Henrik Söderström, and continues: “The lime sludge reburning kiln will replace natural gas with biofuel made from tree bark. This will further increase our high rate of self-sufficiency in energy and also make the mill carbon neutral under normal operating conditions.” The Joutseno mill investment will serve as a bridgehead for further deployment of this new technology, which will subsequently be an option for other Metsä Fibre pulp mills. Metsä Fibre is currently working with Gasum and Helsinki Energy to study the feasibility of constructing a biorefinery to produce biogas at the Joutseno mill. Such a project would boost the use of forest-based raw materials in Finland, bringing greater energy-efficiency and environmental friendliness. The pulp mills of Metsä Fibre in Finland already generate more energy than they consume. Their electric power output accounts for one fifth of wood-based electricity generated in Finland, with about 40 per cent of this energy sold for use at other locations.

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Botnia FIT for board simulates folding boxboard The Botnia FIT for board modelling program further supplements the uniquely broad and diversified range of Metsä Fibre technical customer services. Without time consuming laboratory tests or costly trial runs, this program provides highly reliable forecasts of the way in which a customer’s product will change when adjustments are made in raw materials and manufacturing processes. As the name implies, Botnia FIT for board is a tool for simulating folding boxboard and multi-layer structures. The pro-

gram is a further refinement of Botnia FIT (Furnish Improvement Tool), which has already been in use for some years. Metsä Fibre VP, Key Accounts and Technical Customer Service Tom Nickull explains that the Botnia FIT for board tool is based on furnishing data for the company’s own pulps and those of many competitors, and on the lessons learned in dozens of paperboard projects. “We know the technical characteristics and furnishing behaviours of these pulps, and working with the customer on R&D projects we can forecast such aspects as the effect of changing the pulp on the stiffness, thickness, strength or brightness of folding boxboard. Obviously as each paperboard and paper machine is unique and individual, the program forecasts cannot be regarded as absolutely reliable, but they do very quickly reveal the most worthwhile R&D trends,” Nickull explains.

Unexpected ideas for product and process R&D Introduced in April 2012, Botnia FIT for board has already provided some surprising results for customers. “Even based on preliminary studies of the pulps used by a customer, we have been able to formulate immediate suggestions for worthwhile lines of research,” Tom Nickull says. Botnia FIT for board has also stimulated discussion of the ultimate impact of pulp properties on the quality of folding boxboard. “The modelling tool has enabled us to question old beliefs and even show that they were mistaken. For example, it was found that there is no need to use pulp products of higher brightness when making very bright paperboards,” Nickull reports. Besides technical quality, the simulation program can also forecast the effect of changes on such aspects as manufacturing costs and energy consumption.

METSÄ FIBRE — ECHO 1/2012

In brief

RFID one step closer to final deployment We have now reached an interesting stage of the Metsä Fibre RFID project, with all four pulp mills and their warehousing operations converted to RFID. The necessary infrastructure is in place and every pulp unit leaving the company’s production lines now contains an RFID tag. The RFID readiness of Finnish port operators in Rauma, Kemi and the Mussalo terminal in Kotka is steadily improving as the required reader devices are installed and ERP systems are upgraded. As far as foreign ports are concerned, the pilot stage at Bremen will soon be concluded. “The pilot stage has proved an excellent opportunity to find last-minute enhancements and ideas for improvement,” explains responsible RFID project leader Matti Alanen. Work will start in the summer to introduce the system at other destination ports, following an order of implementation beginning at the major pulp harbour of Flushing in the Netherlands. “Most of the upcoming data system work will simply be reduplication, with previous implementations facilitating and accelerating system installations elsewhere.” These foreign ports will also become the best display cases for the Metsä Fibre RFID system. “Customers, logistics operators and competitors are sure to take a keener interest in RFID as we gain increasing visibility at ports. The watchword will be flawless and dependable operation,” Alanen explains.

Assuring reliability through training and information

He stresses the challenges that must be overcome at the transition stage. Effective training is crucial to the success of the project. “With two ways of working, the current situation is prone to confusion. The training process seeks to provide clear performance requirements and guidelines to stakeholders and operators, enabling swift and sure solutions to any problems that arise.” The effectiveness of the system and accurate readability of RFID tags were tested extensively at the pilot stage, and we were highly satisfied with the outcome when readings were taken using handheld and gate-mounted readers. “Indeed in many cases we have come very close to absolute 100% precision,” Alanen reports.

“Currently we are seeking to improve and maintain general precision throughout the supply chain, and we are working with our operator partners to ensure that even minor defects are detected and fixed,” Alanen reports.

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METSÄ FIBRE — ECHO 1/2012

Serving

growth markets Three Turkish tissue paper companies – Hayat, Lila Kagit and AK Gida (Tul Kagit) – have recently started up new machines. We met them to discuss market views and a pulp supplier’s commitment to learning together.

Text by ALPO RÄINÄ • Photos by HAYAT, ALPO RÄINÄ AND SHUTTERSTOCK

Over the past decade Turkey has emerged as a major economic powerhouse with close ties to Europe and the Middle East. Even a short visit to Turkey is enough to gain an impression of a dynamic nation, with the cosmopolitan hustle and bustle at Atatürk airport or the hundreds of construction projects under way on both sides of the Bosphorus. This has fuelled growth of more than 8 per cent, putting Turkey into the same league as Mexico, Indonesia and Korea to form the MIKT group. The government agency Invest in Turkey lists 10 reasons underlying the country’s success: a fast-growing economy, a youthful population, a competent labour force, a favourable investment climate, solid infrastructure, a cen-

tral location, Europe’s energy corridor and terminal, low taxes and incentives, a customs union with the EU, and a large domestic market. “We have 75 million people and the average age is less than 30. Privatisation has created numerous new business opportunities. No wonder, then, that demand for consumer goods is growing rapidly. Tissue consumption, for example, is expected to increase by 10 per cent annually,” says Sarp Erkaya, Sales Director, Pulp, at the Interpap agency serving Metsä Fibre clients in Turkey. “Turkish banks are also in good shape. We had our financial crisis in 2001, and many measures were implemented at that time to ensure that risks would remain limited.”

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“We entered the Turkish tissue market only six years ago, and we are now the largest producer with a wide product range, including the premium brand Papia, the value for money brand Familia, and the economy brand Teno,” explains Hayat Board Member Prof. Dr. Orhan İdil. Orhan İdil.

A growing tissue market Pulp imports are growing due to the booming tissue market, with annual tissue paper output in Turkey close to 600,000 tonnes. As domestic demand stands at approximately 410,000 tonnes, the surplus production is exported. Turkish tissue manufacturers are also located near Middle East countries with no forests or local production. Turkey also has good trade relations with Europe and other overseas markets, and an efficient port system. Pulp is literally shipped in and the finished product, tissue in this case, rolls out.

Expanding across borders Turkish tissue exports are destined for mature European markets and growing Middle Eastern markets. “The Greeks consume about 16 kg of tissue paper per capita annually, with the corresponding figure for Bulgarians standing at around 5.3 kg. Our neighbours in the Middle East, on the other hand, still fall below the global average of 4.2 kg but they are catching up. A RISI report shows Armenia and Azerbaijan with growth levels of more than 10 per cent, whereas Iran, Syria and Georgia all expect more than 5 per cent growth in tissue consumption,” says Prof. Dr. Orhan İdil, a board member of Hayat, which is one of Turkey’s biggest tissue producers. “Economic uncertainty in Europe means that most tissue mills there rely on rebuilds rather than investment in new machines. They therefore balance paper demand by purchasing jumbo rolls, especially from Turkey. MiddleEastern producers have launched new tissue projects that have reduced our export potential. Iran is the only exception to this, due to a high investment risk. There seems to be potential for exports,” he continues. Hayat nevertheless sees significant opportunities in the region, and Prof. Dr. İdil has a clear strategy for the company’s continued success. “To become a leading global tissue producer one day, we need to invest in the most advanced technology and

METSÄ FIBRE — ECHO 1/2012

sell our product in markets with low per capita tissue consumption but high potential for growth. We shall seek to create the strongest brands in these markets and secure market leader status.” “We currently sell tissue products to more than 40 countries. Azerbaijan, Georgia, Bulgaria, Moldova, Cyprus, Syria, Algeria, Iraq and Armenia account for almost 80 per cent of our export sales. We are not only increasing our export levels, but also investing abroad. Our 60,000-tonne tissue production capacity is expected to come on stream in Iran by the end of this year, and we are also investing in Russia, with production set to begin in 2014,” he points out.

Knowledge exchange Pulp is the key raw material for paper companies. The relationship between pulp manufacturers and paper companies is built on technical expertise and solid co-operation. “We only use pulp that meets our stringent quality requirements,” Prof. Dr. İdil explains. “To be competitive in domestic and foreign markets, we also seek to buy pulp on the best possible terms. Some clients prefer tissue paper that has the FSC certificate, and so we favour these pulp suppliers in some cases.” “We also appreciate the wealth of technical information provided by Metsä Fibre that enables us to optimise fibre use. We should arrange exchange visits between our technical staff from time to time. Your experts could visit our mills and our technicians could learn from your mills in turn,” he concludes.

Vision for growth Since 2006 Lila Kagit has operated a tissue paper machine in Tekirdag, a major city on the European side of Turkey 100 kilometres west of Istanbul. Another tissue machine has just recently come on stream. Chairman Orhan Öğücü is confident that growing output will fuel an increase in exports. From the begin-

“With growing manufacturing capacity, Turkey is becoming a major tissue exporter in the region,” says Chairman Orhan Öğücü.

The Hayat tissue paper mill is located in Yeniköy near the city of Izmit, slightly to the east of Istanbul.

Orhan Öğücü

ning, his company has focused on exporting jumbo reels to Europe, northern Africa and Asia. He views this as an opportunity, and as a reason for further expanding the jumbo reel business. “Production capacity has been increasing in Turkey for years. We are fast becoming a major exporter of jumbo reels and finished products. Lila Kagit’s strategy is to export more jumbo reels,” he explains. The Istanbul office of Lila Kagit is on the 23rd floor of a modern office skyscraper, overlooking the ageless metropolis with traffic flowing on six lanes below. This is a perfect setting to discuss a pulp hub that would serve all manufacturers around the Sea of Marmara. “We have great ports on both sides of the Marmara. We should establish a hub together with our suppliers. They would bring pulp to our warehouses and we would distribute it from there. This would help the region’s growing tissue production, not only during the cold winter months when ice threatens Finnish and Swedish ports, but also through periods of price volatility,” says Chairman Orhan Öğücü.

The power of distribution AK Gida Group (Tul Kagit) operates a brand new tissue paper mill in Pamukova, an industrial town about 150 kilometres east of Istanbul. The mill came on stream in August 2011 after only fifteen months of building and installation. AK Gida also has a dairy business on the same premises. General Manager Erkan Tırnavalı says that the mill was built with growth in mind: the site layout and the converting and storage facilities allow for rapid installation of a new tissue production line. “Consumer goods businesses need efficient distribution channels – and tissue is no exception. Our owners, Ülker and Topbas Groups, have significant retail operations, which brings us closer to the consumer throughout Turkey. We also export a major segment of our output to the UK as jumbo reels,” Erkan Tırnavalı explains.

“High quality pulp, an excellent company reputation and valueadding services: these are the language of commitment to me,” General Manager Erkan Tırnavalı explains.

Erkan Tırnavalı

Technology-driven branding The AK Gida Komili product range was test marketed in March. Komili tissue packages also feature Viscosoft, the brand term for the company’s new tissue manufacturing solution. “While Komili is a well-known Turkish consumer brand, this is our début in the tissue business. We believe that our tissue products fit well in the reasonably priced premium category. Viscosoft refers to the technological solution that we use to create the paper’s softness and water absorption properties. It gives us more thickness with the same density,” Erkan Tırnavalı explains. A devoted process industry specialist, Tırnavalı is pleased with the growing discussion of fibre expertise. “Pulp affects key paper properties such as thickness, softness and bulk. We have to look at these factors to decide which combination of fibres we use – softwood or hardwood or both – and in turn which properties we want the end product to exhibit,” he says. “Metsä Fibre’s northern softwood pulp offers good bulk, though we need to improve its water absorption properties and softness, so we warmly welcome further discussion and joint brainstorming,” he observes.

A global view from Istanbul Driving home, Sarp Erkaya points to the busy traffic on the Bosphorus bridges, and says: “What makes Turkey special compared to many other business cultures is the mix of new ambition and commitment to business relations, and the urge to grow.” “Interpap’s principle is to offer value to its suppliers through versatile expertise covering financial systems, shipping and products, combined with openness and information flow. Metsä Fibre’s softwood and hardwood portfolio gives us technical advantages,” he explains. Besides pulp, Interpap serves clients in need of papers, chemicals and many other commodities. This family company has offices in Istanbul, London, Moscow, Toronto, Sao Paulo and New Delhi.

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Ismo Nousiainen

METSÄ FIBRE — ECHO 1/2012

When it comes to quality management, we need to consider all experiences.

At the root of innovation and product quality Production and quality management staff compete in all industries to make product quality a better match for the needs of the customer. Ismo Nousiainen of Metsä Fibre reveals some essential ideas about how this work increases trust in the pulp business. Text by alpo räinä • Photos by JERE HIETALA, MATTI IMMONEN, PEKKA KIIRALA AND SHUTTERSTOCK

“To start with, you can’t separate the concepts of

reliability and trust. They go hand in hand.” After serving as a production engineer, production manager and mill manager at Metsä Fibre for over fifteen years, Ismo Nousiainen knows what he is talking about. As Senior Vice President, Production, he is nowadays responsible for production at the company’s four mills in Finland. An engineer at heart, Nousiainen provides a rare insight into the technology of pulp manufacturing. He also appreciates the importance of the human factor is in this highly automated industry.

“My managerial duties include ensuring that we deliver on our technical and service promises to customers and leading production teams in line with the shared values of our mills,” he says.

Leading from the front “Our staff operate highly advanced technology independently, and they are all highly motivated to succeed. Multi-skilled teams perform preventive maintenance and repairs. Everybody is up to the challenge of achieving world-class quality,” Ismo Nousiainen explains.

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Trust is a key cultural issue in Finland, and respect is guaranteed to anyone who willingly shoulders responsibility. Managers do not supervise for the sake of supervising, but rather lead by guiding, supporting and setting a good example. Modern shallow organisation schemes are more the rule than the exception at pulp mills. “The role of management in Finnish corporate culture is to focus on finding opportunities for improvement and organising teams to carry out specific projects. Our organisation has fine-tuned its ability to manage change,” Nousiainen proudly adds.

Putting safety first There were fifty employee injuries resulting in lost workdays at Metsä Fibre mills in 2008. Not surprisingly, the company has made occupational safety a top priority in recent years. “To show how seriously we took this issue, we made it our mission to become the most desired workplace in the pulp industry. The number of injuries has fallen by 80 per cent since we drew up and implemented a practical action plan at production sites.”

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“Safety is one of those issues that help to build trust among owners, management and mill staff, and between customers and suppliers. And obviously good occupational safety also ensures reliable deliveries and minimal disruptions,” Ismo Nousiainen points out.

The components of reliability

The conventional sampling technique is too slow for measuring pulp quality, and so we created a quality index that provides production data to customers.

Among the essentials of reliability – meeting all-important quality and supply expectations – it is apparent that keeping your word has become a crucial factor nowadays. Real transparency is a key element in any modern business partnership. “We need more co-operation between participants in the value chain. Often the first step is to increase and improve communications. Technical specialists, sales and marketing staff, production teams at the mill and the technical departments of customer organisations must work together to find the components of reliability, and therefore also of value,” Nousiainen explains. A 40-year union with Metsä Group integrated paper mills has given Metsä Fibre a unique advantage. “Some people think that this relationship has limited our freedom, but I disagree. It has given us a huge real-life testing ground enabling us to research, develop and apply all of the latest ideas and innovations from the pulp industry in partnership with our customers,” Ismo Nousiainen explains. He also gives an example of how customer input helps to enhance fibre quality. “A universal quality index is an ambitious goal, but by using actual customer experiences we have managed to develop one that really works. This would never have been possible without data from the customers who have relied on our pulp for decades.” Innovations like this go a long way towards increasing the reliability of fibre in the paper processes of the future. They are also proof that reliability and trust are woven from the same fibre.

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g n i e Ey ht

g ri the re

fib

Food packaging is almost an art form nowadays. Minimal pieces of paperboard carry brand messages, protect the product and its flavour, and enable effective management of logistics and inventory. What is the role of fibre in this modern masterpiece? Text by Alpo Räinä • PHOTO AND IMAGE BY JERE HIETALA AND SHUTTERSTOCK

To understand how packaging board satisfies the needs of modern brand owners and consumers, we talked to Development Managers Kai Hellsten and Antti Aronen at Metsä Board, one of the world’s leading producers of primary fibre paperboard. “Product safety is very much the primary criterion,” says Kai Hellsten. “This includes properties such as purity, taste and odour neutrality. Nothing must harm the product, even during storage.” Safety is guaranteed through regular testing and laboratory procedures. Both board mills and those of the pulp supplier must also be certified to ISO 22000 standards. Quality assurance goes even further – all the way to the forest, in fact. “Sustainability issues such as the origin of wood raw material and forest certification are broadly discussed in product development and client meetings. You must have a clean record,” confirms Antti Aronen.

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Purveyors to the best-selling brands Whether you are shopping in a high street department store or at your local supermarket, you will be surrounded by appealing brand promises. These may be national brands or delicacies from around the world, and often a major contribution to the sales pitch comes from the box. After taking in the visual impact of packaging, many consumers perform a fingertip test. Once you hold a package in your hands, you instinctively gauge the board’s stiffness and lightness. “Our board consists of three layers: the top and bottom are made of strong and pure Metsä Fibre softwood pulp, whereas the middle layer is our own chemithermomechanical pulp. The top and bottom ensure stiffness and high print quality, while the middle layer provides lightness and bulk,” Kai Hellsten explains, and continues: “It’s interesting that properties like high brightness and gloss are no longer critical competitive factors. Customers nowadays expect consistent quality and good runnability on their packaging lines. In other words, they seek value for money.”

It takes years to build the connection Metsä Board sells packaging material globally, and much of its R&D effort is dedicated to upgrading the features of paperboard made with Metsä Fibre. “We have achieved major breakthroughs in pulping processes over the years. We promise our clients that we can always meet their targets. Only long-term co-operation creates trust that filters through to the client,” Hellsten and Aronen insist.

Metsä Board sells packaging material globally, and much of its R&D effort is dedicated to upgrading the features of paperboard made with Metsä Fibre. ECHO 1/2012 —

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Eco-efficient packaging preserves food and reduces waste

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Agrifood Research Director Juha-Matti Katajajuuri refutes some environmental myths surrounding food packaging. Text by Hanna-Maija Kause • Photos by PEKKA KIIRALA AND SHUTTERSTOCK

Fibre-based paperboard, cardboard and paper

JUHA-MATTI KATAJAJUURI

are excellent choices for packaging material, thanks to their renewable raw material, suitability for recycling and versatility. The status of paperboard and similar packaging materials is also improving all the time through advances in material efficiency and innovative packaging solutions. The Futupack-CON study completed last year by the Technical Research Centre of Finland – VTT found environmental soundness to be one of the most important consumer requirements for food packaging. The study indicated that the popular view of an ecologically ideal solution is typically minimal and suitable for recycling, or a pulp-based paperboard package. While all of these factors affect the ecological impacts of packaging, the main contributor to the environmental footprint of food packages may surprise many people. Research Director Juha-Matti Katajajuuri of MTT Agrifood Research Finland co-ordinates the Responsible Food Chains and Choices research programme. This initiative covers several themes, including responsibility in food chains, the environmental footprint of foodstuffs, and responsible and healthy consumer food choices. Katajajuuri’s FutupackEKO2010 study and its complementary Foodspill project focusing on food wastage have busted some of the myths surrounding the environmental impacts of food packaging. The principal research finding was that, generally speaking, the environmental impact of the packaged product itself clearly outweighs that of the packaging. “A study of the environmental footprint of food indicates that the contribution of packaging is not as great as is commonly supposed,” Katajajuuri observes. More specifically, he points out that the negative environmental impact of food packaging is not especially great, and that it can also have substantial positive effects. While packaging itself causes no especially significant

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An ecological package will result in complete consumption of the packaged food product. environmental burden, it can reduce the environmental footprint of food by helping to ensure that the food is consumed. The most important function of packaging from the point of view of the overall environmental footprint lies in reducing food wastage and thereby avoiding the environmental loading caused by needless overproduction of food. Good packaging achieves this by protecting the food and ensuring that it sells. “An ecological package will result in complete consumption of the packaged food product,” Katajajuuri explains. This means, for example, that the conventional approach of minimising packaging on ecological grounds is only justified when the reduction in packaging does not lead to greater product losses and the packaging continues to satisfy all functional requirements. “In the case of paperboard or paper manufacturing the contribution of wood growth is again not a critical factor for determining an environmental footprint,” Katajajuuri says. Sustainable forestry is more environmentally significant for paper and paperboard. Although this does not

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necessarily show in the carbon footprint, it is important to ensure that natural resources are not used in excess of their replacement rate. Figures compiled by Metla in Finland show, for example, that the annual growth of wood stock is about 100 million cubic metres, with total harvesting and other reductions amounting to about 65 million cubic metres. This is a sizeable annual surplus. Good packaging has global consequences Katajajuuri observes that the volume of losses at the end of the food supply chain is much greater in the developing world than in industrialised countries especially due to problems of food preservation. Losses are exacerbated by inadequate or defective food packaging. Katajajuuri explains that food has proved to be one of the prime sustainability concerns both in Finland and worldwide, not only because of the environmental impacts of food production arising in particular from an imbalance in nutrient recycling and climate change, but also because of the imperative for food sufficiency. This means that it is environmentally important to develop effective packaging for the food markets of the developing world, and pulp-based packaging is one good example of this. “This would indeed be a genuine and entirely authentic positive step for the environment,” Katajajuuri insists.

Photo by MetsÄ GROUP

COLUMN

Riikka Joukio is responsible for sustainable development and lobbying at the Metsä Group. She has 20 years’ experience working in the packaging paperboard industry.

Sustainable development – and then what? Sustainable development has become part of mainstream operations in every enterprise. The pressure to follow this path from customers, consumers, partners, environmental organisations, public authorities and the media is increasing all the time. Sustainable development can no longer be compartmentalised in a business and consigned to some department that responds to the persistent queries of marginal interest groups. The core of sustainable development at Metsä Group was defined through an analysis of essentials. This gave rise to four main fields that also conform to the value chain of companies in the Group: sustainable products, sustainable supply chain, environmentally efficient manufacturing, and the welfare of stakeholders. As sustainable development is an extraordinarily broad subject, the analysis project was divided into stages. We used interviews and workshops to encourage individual commitment within the Group, we arranged an in-depth survey of stakeholders, and we made use of external consultants. The findings of the analysis will also not be eternally set in stone, but updated through an ongoing process of dialogue. Analyses and fine declarations nevertheless come to nothing without practical action. Among the greatest problems of sustainable development are the complexity of the topic and the breadth of its context, and so various aspects of work in this area must be illustrated through concrete examples. Admittedly the difficulty of choices may lead to a danger that the entire notion of sustainable development is understood in terms of allocating blame, but there is no denying the fact that people would not be able to manage without natural resources, and so they simply must be used sustainably. Consumers are now more conscious of the impact of their personal choices, making value-based assessments and choosing ethical and responsible options. Their good intentions cannot fail to influence the behaviour of traders and brand owners, and this will affect operations at the Metsä Group. On the other hand, people often tend to view things much too narrowly, making choices based on imaginary and fanciful considerations. There is clear ignorance of certain basic

facts. Packages are often viewed as bad for the environment, for example, even though they account for less than five per cent of the environmental impacts of a product. Packaging protects products and plays a role in dramatically reducing global food shortages. Indeed, it has been estimated that all of the poor and undernourished people of the world could be fed with the foodstuffs that go to waste each year. Global coal use continues to increase, even as the European Union adopts tough new emission targets and tighter legislation. There is a danger that lower energy prices will lead to the manufacturing of a growing proportion of products outside of Europe. This means that European emission limits will indirectly increase emissions in countries where carbon-intensive industrial enterprises are permitted to use fossil fuels freely. Besides environmental impacts, this phenomenon of carbon leakage impairs global competitiveness in the European Union. So what should we do to bring about real change? The European Union will impose broad guidelines within which various industries will set out their own views of the best way to reach the objectives. This is leading to a fashion for road maps to a low-carbon, resource-efficient future. The road map published last year by the European paper industry association CEPI, for example, is important from the point of view of climate change and shows ways in which the forest industry can move towards a low-carbon bioeconomy. A plan for economic, social and ecological sustainability relies heavily on new innovations to help achieve an 80 per cent reduction in carbon dioxide emissions from fossil fuel combustion by the year 2050. Fortunately we are already largely living in a bioeconomy, and forest industry enterprises have been pathfinders in this transition. We have a splendid renewable and recyclable raw material that can often replace the use of fossil resources. Besides its application in paper and paperboard products, wood can also serve as a source for making biofuels and new fibre materials, and it can be used in sustainable construction. Work to combat climate change should be a global endeavour. Ultimately the solution will always depend on how people think.

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COLLABORATING TO RE

Martti Hetemäki

After working all hours in recent years to rescue the single currency and stabilise the euro zone, Permanent Under-Secretary Martti Hetemäki of the Finnish Ministry of Finance fully deserves the title of Finland’s Mr Euro. Echo asked him for an assessment of the state of the euro and the future of the Finnish economy. Text by Anna-Mari Vimpari • PHOTOS AND IMAGES BY PEKKA KIIRALA AND SHUTTERSTOCK

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ESCUE THE CURRENCY

On a typical Monday morning in March a man sits peacefully on a sofa in an office filled with official papers of all kinds. There is nothing in the demeanour of Martti Hetemäki to reveal yet another week spent discussing the euro at conferences in Brussels – initially attending preparatory meetings with fellow public servants and then moving on to accompany the Prime Minister at the Summit proper later in the week. Merely through the composure that we might expect from an enthusiastic track athlete, Hetemäki makes it plain that there is still a long way to go. The current uncertainty in the global economy differs from the recession of the early 1990s, insofar as Finland is not a beneficiary State this time round, but instead belongs

to the club of countries that have run their economies systematically and now enjoy an unusually receptive audience in discussions of crisis management. This exclusive club of TripleA countries enjoying the highest credit rating also continues to include only Germany, the Netherlands and Luxembourg. Hetemäki explains that it’s all a question of confidence. “Indeed this is an area in which several euro zone countries are now facing an uphill struggle. Market pressures are here to stay, and any restoration of confidence will require steadfast, long-term economic policy. Confidence in the ability of many countries to rectify their situations is poor. We can see this in the way that the market is assessing the economies of such countries.”

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“Confidence and credibility now depend on swift implementation of jointly agreed measures. We are keen to see that corrective action is really taken. This means that new promises, speeches or even solemn commitments no longer suffice. The focus of attention has instead shifted to concrete implementation of decisions and a recovery in economic indicators,” Hetemäki explains. The situation will be monitored and results are now anticipated in all European capitals and stock exchanges. “The euro zone is currently operating on two tracks: some countries have their economies in order, while others are facing major problems. The difficulties are not confined to a public sector deficit or negative balance of trade, but reflect deeper structural problems associated with public administration, corruption and social functioning in general. These will obviously require some profound and thoroughgoing reforms.” “Naturally it is up to the countries concerned to resolve these problems, and they really have few options. The countries included in the rescue package have been given an opportunity in the same way as Iceland and Latvia when their economies failed,” Hetemäki explains. “Iceland and Latvia are good examples of how prompt implementation of the right decisions can salvage a seemingly hopeless situation in spite of the skepticism expressed by many at the time. They said that Latvia could not survive without devaluing, and that its structural problems were too severe to be rectified, but confidence has nevertheless been restored, at least for the time being, and even surprisingly quickly. The same goes for Iceland.” Hetemäki is a staunch supporter of the single currency, and he believes that the measures taken to stabilise the euro zone have been necessary. He is convinced that these measures were inevitable, and that there was no scope for alternative solutions. “Keeping the euro afloat has at least been a worthwhile endeavour so far. While we can never know what would have happened if other measures had been taken, we know that the steps that were made did not result in total chaos or collapse. Obviously the problem countries still have their problems, but economic growth has nevertheless been satisfactory since the financial crisis,” Hetemäki says.

Politics returns to the economy Hetemäki feels that despite, or perhaps even because of the heightened emphasis on market reaction, the political decisions to be made now will be increasingly important for national economies and their prospects. “Politics has become more important in both a favourable and unfavourable sense. We have also seen the major importance for the market in the Far East of the decisions that have been taken or not taken in Europe and the USA. A high degree of interdependence has emerged. On the other hand, the situation will remain difficult if decisions are not reached. We have also had experience of this in recent years,” he says.

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There is no end to the variety of shapes that things can take. Even in the forest industry there are certainly inventions waiting to be made, and many people continue to regard wood as a splendid raw material. Hetemäki acknowledges that some decisions should have been taken more rapidly. “Deregulation of the financial markets obviously went too far in some respects. There was too much risk-taking and too much trust was placed in market self-regulation. We were also confident that public authorities would be able to supervise risks taken on the market, but when they regulate and supervise things, then they also assume responsibility in problem situations, even though it is not possible to oversee everything in practice.” Hetemäki praises the closer global co-ordination and stricter ground rules for the world economy that have been introduced in recent years. “The rapidly progressing global crisis that struck at the end of 2008 showed that a wholly interdependent environment must have global ground rules that will enable us to head off similar situations in future. For example, this quickly led to a call for larger capital buffers for banks in the USA and Europe.” “Many new ground rules have already been agreed during this present financial crisis, beginning with such measures as tackling tax havens and moving on to regulating financial markets or managing risk. The crisis has also clearly given new significance to G20, which brings together the world’s principal governments in this field,” Hetemäki says.

Problems of our own The Finnish economy will have enough problems of its own in coming years. Hetemäki feels that the currency crisis has deflected attention from these purely domestic issues recently, and he is anticipating a public debate on the outlook for growth in Finland. “We shall see what this reveals when the dust has settled from the euro crisis. Finland faces a couple of obvious challenges. Our affluence has been built on favourable demographic trends in which the working age population was increasing. Together with Japan and certain other countries, Finland is now becoming a testing ground for discovering what happens when the working age population shrinks.” “Another question concerns the way in which our extensive traditional industrial base will deal with fierce international competition. Some industries can expect to see major restructuring, and the pace of change – mean-

ing the speed with which business operations and markets evolve – will be a challenge for everyone. Enterprises will have to react rapidly to changing circumstances, as will the world of work, as these changes filter through more evidently and more quickly into the everyday lives of ordinary people,” Hetemäki observes. But it’s an ill wind that blows nobody any good, and this Doctor of Economics can also see benefits for Finland in global competition. “A clearer international division of labour and exploitation of our own special advantages will also open up limitless opportunities for a country like Finland. Expertise is our key strength and yet we are still underachievers in this area. People in Finland are typically educated to high standards and society is generally characterised by a high degree of trust between various stakeholders, all of which is conducive to exploiting new technology,” Hetemäki insists.

The limits of public service When asked about the best way to ensure competitiveness, the Permanent Under-Secretary passes the ball to the business community. He feels that competitiveness comes from people and enterprises, and not from government policy. The role of the State in boosting competitiveness is confined to arranging favourable conditions. “Finland has long emphasised a demand-oriented innovation policy that means, for practical purposes, that the government retains a role in such matters as public procurement and in the extent to which contracts can be awarded to innovative businesses. Many start-up companies are most in need of operations and revenue. We also invest a great deal in R&D and in training, but for some reason we are always disappointed at the returns that are thereby secured. On the other hand, expertise is also nowadays no longer so much a matter of knowledge and skills gained at some educational institution,” Hetemäki observes. “The long-term policy for economic development in Finland has been to increase added value and to progress towards the top of the economic value chain. We have a long heritage of working in this way, and now we should be considering ways of perpetuating this.” “For a long time our competitiveness in the forest industry was largely based on our ability to get more out of wood, for example, and now it must be based on more highly processed products and superior processing. It’s as simple as that,” Hetemäki concludes.

We are not merely cargo at the mercy of the waves in a global economy. Our own decisions will determine whether we end up as wheat or chaff in the markets of the world.

Top of the A class

A new financial industry player has impinged on the public consciousness in recent years, as the leaders of national governments have become increasingly interested in, and even fixated on the decisions of international credit rating agencies. Besides classifying securities, these raters also classify the financial solidity of national economies. In practice there are three such operators: Moody’s, Standard&Poor’s and Fitch. We asked Permanent Under-Secretary Martti Hetemäki of the Finnish Ministry of Finance to evaluate the role of these institutions for our readers. “It’s clear that the credit rating agencies gained a role that they did not originally intend to claim well before the start of the financial crisis in 2008. For example, they acquired a status in bank solidity legislation when bank risk exposure came to be assessed on the basis of credit ratings. This was a convenient way for various parties to outsource their risk management to the rating agencies.” “The financial sector is highly centralised and involves tricky conflicts of interest, for example when the rating agency is paid by the rated institution rather than by its customer. On the other hand, it would be too simplistic to reject the operations of rating agencies out of hand. Ratings of this kind are necessary, and it’s hard to see how they could be done by regulatory intervention. This is why competition is important and should be encouraged. It is also good that ground rules are established for this work.” “Good decisions taken by politicians or businesses under open market conditions are swifter and more rewarding, whereas bad decisions correspondingly backfire more clearly nowadays. In other words, under the present circumstances all evaluations seeking to sort the wheat from the chaff are of heightened significance,” Hetemäki observes.

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A scientist sees potential in pulp

Renewable cellulose

excels in versatility Technology professor Tapani Vuorinen, a leading specialist in wood processing chemistry, says that nanocellulose and its applications have become the most interesting research topic in his field. Pulp can provide applications as diverse as building insulation, fabrics and even packaging plastic. Text by Hanna-Maija Kause • PHOTOS AND IMAGES BY PEKKA KIIRALA, MIKKO SÄTERI AND SHUTTERSTOCK

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TAPANI VUORINEN

Nanocellulose (also known as microfibrillated cellu-

lose: MFC) is a typical component of materials that need to combine lightness and structural strength. It can provide reinforcement in packaging materials and papers, or serve as a surrogate plastic. Research into nanocellulose is attracting considerable interest throughout the world. Tapani Vuorinen reports that even sections of the research community that have hitherto shown no interest in studying wood processing are now beginning to examine the potential of nanocellulose. “Expectations are currently focusing on commercial applications of research findings. Many businesses have announced commercialisation research programmes.” The construction industry is one field where nanocellulose may prove useful as a base for fillers, coatings and insulation materials. “A lot of research is going on with a view to making lightweight, strong nanocellulose foams for use as insulation material. It can even be used as reinforcement in concrete,” Vuorinen explains.

“While there are always plenty of opportunities for pure research, this is inevitably a limited option in the long term. Research must always lead to some commercial application to ensure that funding remains available for subsequent research in the same field,” Vuorinen points out. Another current research interest of Vuorinen’s department is regenerated cellulose. This refers to cellulose that has been dissolved and regenerated as new fibre. “Textile applications of cellulose are currently increasing as cotton is no longer readily available,” Vuorinen explains. The search for alternatives to cotton has gathered pace because cotton cultivation causes a substantial environmental burden, and because of pressure to use arable land for food production. “We have ongoing research programmes in this area. Many established pulp manufacturing businesses are interested in making soluble forms of cellulose for use in fibre regeneration. Demand for this has been high in recent years.”

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Trust brings results Manufacturing of nanocellulose and regenerated cellulose requires advanced technology and Finnish companies are well placed to respond to this R&D challenge. “Finland has a reputation for engaging enthusiastically in pulp manufacturing research, and is always keen to see technological progress,” Vuorinen explains. Mutual trust is nevertheless required whenever businesses collaborate with higher education in the field of research. “I have personally been involved in research work with the forest industry for 20 years, and I have realised that mutual trust between the parties is important for success. Businesses must be sufficiently willing to broaden their horizons in order to advance, and they must be able to trust that we will not abuse the information that they have provided.” “I personally have the utmost respect for the business community, and I am confident that they will act responsibly as research partners.” Vuorinen notes that co-operation also involves a degree of confidence that gives a partner the patience to wait for the findings of long-term scientific research programmes. His own findings have clearly been well worth waiting for, as he has been involved in several important research projects leading to valuable practical applications. One of the most recent of these initiatives is the interdisciplinary Virtual Pulp Bleaching (VIP) project at Aalto University School of Chemical Technology. The VIP model enables more economical and environmentally friendly pulp bleaching, assisting in the design and optimisation of industrial bleaching processes.

Sustainable research – Sustainable development Trust is also an expression that applies to responsible forest industry production. Vuorinen says that the Finnish forest industry is continually seeking to minimise environmental impacts and voluntarily invests in research to this end. “My own experience of the forest industry and its associated industrial cluster suggests a genuine effort to find sustainable solutions over such aspects as environmental impacts and use of water, at least in relation to the technologies that I have mainly been working with.”

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Businesses must be sufficiently willing to broaden their horizons in order to advance, and they must be able to trust that we will not abuse the information that they have provided.

“Several ongoing research projects are in no way particularly urgent. It’s not as though the authorities were calling for some cut in environmental impacts, for example. This research is proactive,” Vuorinen explains. Finland is heavily oriented towards pulp industry business operations, and so technological progress gives the country considerable global influence over environmental impacts in the sector. “Naturally we would not like to find that inferior environmental practices provide a competitive edge anywhere in the world,” Vuorinen says.

Innovation can lead to new applications “Renewable natural resources provide a wealth of edifying prospects. Our expertise with wood need not be confined to current applications. It can and should be open to diversification. Any replacement of non-renewable natural resources with renewables is already a good thing in itself,” Vuorinen observes. “I think that packaging has everything to gain as a natural resource-based industry, and must respond to the challenge of changing application priorities. Although the use of printing papers is falling, there are prospects for securing a corresponding increase in the market share of wood fibre used in the packaging industry. Innovations like nanocellulose are also on the horizon, bringing the prospect of entirely new applications.”

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Jiang Fengwei

When technical quality matters most To Jiang Fengwei, good pulp characteristics are the most convincing sales pitch. Jiang Fengwei, the Chairman of Henan Province JiangHE Paper Company, is truly a hands-on man when it comes to papermaking. The technical aspects that govern paper properties are his passion. So it came as no surprise to be advised on arriving at JiangHE paper mill that Mr Jiang would be joining us as soon as he had completed his inspection of the production line.

Text by niko kilkki • PHOTOS AND IMAGES BY NIKO KILKKI AND SHUTTERSTOCK

Jiang Fengwei has been involved in paper manu-

facturing all his adult life: for over 20 years now. When asked why he is so fascinated with the technical side of papermaking, his answer was earnest and straightforward. “In my opinion you MUST take an interest in concrete, basic things in this business, no matter whether you work at mill floor level or as General Manager. How can you hope to compete and create better products if you aren’t devoted to papermaking?”

Up to the technical challenge Situated in Wuzhi County, the JiangHE plant site is about an hour’s drive from the provincial capital, Zhengzhou. On the day of our visit this region, sometimes referred as the breadbasket of China, was hit by an all-out spring storm. The streets were flooded as the surroundings bloomed, thirsty after the winter. Besides agriculture, Henan province depends on a diversified industrial sector. Established in 2002, the privately owned JiangHE Paper Company mainly manufactures specialty papers, including carbonless and thermal paper grades. This is the second largest exporter of specialty papers here in this second most populous province in China.

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“Our JHE carbonless paper in particular is an essential export brand. About 30 per cent of our output of carbonless paper is exported to over 50 countries. Our papers are used in South and East Asia, North and South America, the Middle East and Europe,” Jiang Fengwei says. JiangHE’s current annual production capacity is 200,000 tonnes of various specialty papers. “Specialty papers are a niche market, but also a smart business choice. Compared to other paper product markets in China, our segment is one of the few that has no severe problems of overproduction,” he explains. Before founding his own business, Jiang Fengwei managed several other paper companies and tenured in a government papermaking institute in Beijing. His earlier career laid the foundations for his interest in challenging paper applications. “Carbonless and thermal papers are quite complex products that require manufacturing expertise.” Besides this specialty paper production, JiangHE is also involved in several paper machine R&D projects.

Demand mirrors economy growth Carbonless paper is used for duplicating handwritten or mechanically typed text. The copy is produced by a chemical reaction between two coatings. JiangHE’s other major specialty paper grade, thermal paper, is used in cash registers and ATMs.

Carbonless and thermal papers are quite complex products that require manufacturing expertise.

“Our customers are mainly printing houses. Typically they convert our paper into various forms and templates,” Jiang Fengwei explains. “JiangHE products aren’t your everyday papers. The quality of our specialty papers is highly competitive when compared with other papers in this price range.” Over the last 20 years the Chinese economy has recorded annual growth of at least 8 per cent. Mr Jiang explains that the demand for specialty papers has increased at the same rate. “Demand for carbonless and thermal papers has been steadily rising. The increase in per capita GDP has been a precise indicator of our company’s success.” JiangHE has also big plans for the future. During our visit to their plant site JiangHE technicians were putting the finishing touches to a new paper machine. “A new 200,000-tonne production line will almost double our capacity. This machine will commence trial runs at the end of June.”

A good start to co-operation JiangHE and Metsä Fibre began working together quite recently. “Although we mainly use hardwood pulp, such as eucalyptus and acacia, for papermaking, we still need a certain

amount of softwood pulp,” Jiang Fengwei says. JiangHE conducted extensive production testing before choosing its new softwood fibre supplier. “We did test runs on several pulps. We wanted to find a good balance of fibre properties.” Eventually JiangHE narrowed the field to three suppliers, choosing Metsä Fibre from this trio of finalists. Besides the reliable supply of consistent quality pulp, Jiang Fengwei was personally interested in all of the specification data available. “We found that the fibre quality of Metsä Fibre products was good and well suited to JiangHE specialty paper products. We will probably need Metsä Fibre to increase its pulp supply when our new paper machine is operating at full capacity,” Mr Jiang says. Besides technical accomplishments, there were also other factors that tipped the scales in favour of Metsä Fibre. The company’s services earned a special mention from Mr Jiang. “I’m satisfied with the current level of their technical customer service.” JiangHE also has a long-standing close relationship with Itochu, the sales agent for Metsä Fibre long fibre pulp in the Far East. “Itochu has been selling our papers and providing us with pulp since 2005, and we are now even developing a specialty paper with Itochu exports in mind,” Jiang Fengwei reports. We concluded the interview by asking what Mr Jiang regards as the cornerstone of a successful, long-term business partnership. The jocular answer at least indicated that his enthusiasm for technology is not an all-consuming obsession. “A good price.”

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Co-operation 2.0 The eleventh of April 2012 marks the beginning of a new era in the long commercial relationship between Japanese trading company Itochu and Metsä Fibre. Text by niko kilkki • Photos by NIKO KILKKI, MIKKO SÄTERI AND SHUTTERSTOCK

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There is never a dull moment on the Chinese market.

Koji Kato

it was announced that Metsä Group, Metsä Board and Itochu had agreed a transaction whereby Itochu acquired a 24.9 per cent stake in Metsä Fibre. The 472 million euro deal was one of the largest foreign investments in Finland of the past ten years. Itochu is currently the third largest trading company in Japan, and has been operating in China since 1972. Its extensive pulp market expertise and vast contact network has made Itochu a strong commercial partner in the growing Far East market for Metsä Fibre. All very impressive stuff, but what will this mean in practice? Koji Kato and Shi Xin of Itochu Shanghai both agree that while the deal was a major step forward for their company and a clear statement of Metsä Fibre’s commitment to China, it won’t drastically change their way of working. “I still remember when our marketing and sales cooperation officially began in 2004. These past eight years have brought the companies very close together,” says Kato, who is in charge of Itochu’s pulp sector in China. “We are already in contact almost every single day, and we visit customers together. Our offices in Shanghai are only a few minutes apart,” Xin adds. “The renewed sales position will make our relationship even stronger. It will have a positive impact on everyday things such as logistics arrangements, information sharing – and of course pulp sales,” Kato observes. Metsä Fibre is not the first Itochu investment in the pulp industry. The company is also the second largest shareholder in Cenibra, the South American hardwood pulp manufacturer. Kato explains that Itochu can now provide paper companies with a more complete product and service portfolio. “Strategic investment in Metsä Fibre was a natural development. We can now effectively sell both hardwood

On that spring day

and Nordic softwood pulp to our customers. Itochu also then often sells the paper manufactured by these customers to printers and converters. We want to make it easy for everybody in the value chain.”

The brand is gaining recognition Aided by Itochu’s extensive contacts and experienced sales force, Metsä Fibre has been systematically building its brand in China. Metsä Fibre initially chose the marketing name Fen Bao on entering the market. Local people were happy to adopt this, and so the name stuck. “Despite the recent major rebranding process of Botnia into Metsä Fibre, the company and product names will remain the same in China for the time being. Fen Bao is already an established brand in China, and we don’t want to confuse our customers,” Koji Kato says. Shi Xin, who is in charge of business relationships in north and east China, says that besides pricing, a familiar brand is a key factor in successful sales efforts. “Potential customers want reliability. They are more likely to choose a well-known pulp manufacturer that is loyal to the Chinese market.” Currently it’s a buyer’s market in pulp. “Making repeat sales can sometimes be difficult with so many suppliers, and customers are very price-conscious,” Xin says, “but this is what I love about pulp trading. The market is constantly changing – there is always something happening. It is interesting to react and adjust to surprises.”

Customers grow more demanding While smaller paper manufacturers are generally after the lowest price, large companies want to secure their supply of pulp. But how do you secure longer, one and two-year contracts with them? “It can be hard to establish a solid relationship with customers in the Chinese pulp business. One must show sincere commitment,” Koji Kato says. “Above all, we have to be honest with customers when discussing the market and various pulp properties. Our success also depends on good contacts. We actively call

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customers and arrange meetings,” Xin smiles as his mobile phone sounds its Nokia ringtone for the fourth time during our interview. Customers also appreciate the fact that Metsä Fibre is a specialised pulp producer that does not make its own paper or board, and they view this as an advantage. “They understand that Metsä Fibre will consistently provide them with raw material, and not divert this to inhouse production,” Kato says. Local presence is required for building continuity and trust. Besides its Shanghai establishment, Itochu also serves paper customers in southern China from an office in Guangzhou. Metsä Fibre, on the other hand, has a good track record in supplying large volumes, and has its own representatives in Shanghai. “Customers understand that they can count on us and we are not going anywhere,” Kato says. “They want to have the feeling that we care about their problems. If there is an issue, or if customers need technical advice, then Metsä Fibre can offer assistance immediately instead of sending someone all the way from Finland,” Shi Xin continues. Even so, the national origins of Metsä Fibre aren’t that significant. “The average purchasing manager has no clear impression of the Finns. The Chinese view Finland as a part of Europe, and fortunately Europeans are often considered reliable and technologically sophisticated,” Kato explains.

Battling overproduction The economic development initiatives – also known as five-year plans – implemented by the Communist Party of China have a major impact on the paper industry. “The government is taking gradual action to control the expansion of paper manufacturing capacity. Unfortunately, they view papermaking as a high-pollution, highenergy consumption industry,” Shi Xin says. Whether it is cars, apartments or paper, there is a huge overproduction problem for almost everything in China. Particularly in commodity items such as printing and writing papers, the excess supply is so great that older mills are being closed down. But, China being China, the situation is not as serious as one might expect. “Based on past experience, I would say that demand will eventually catch up with supply. It always does. This is a unique characteristic of the market”, Koji Kato says. He predicts that the supply of commodity papers will be balanced within a couple of years – though a new overproduction cycle will then probably begin in some other paper category. “Currently there is a shortage of household and catering papers, and many companies have plans to expand their tissue and paper towel output. And if things take their usual course, then there will be an oversupply of household papers by this time next year. The Chinese market is certainly never lacking in excitement,” Kato laughs. 34

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It is interesting to react and adapt to surprises. Shi Xin

A common goal The Metsä Fibre sales team stationed in Shanghai has a clear role in business negotiations when they accompany Itochu representatives. Asked to describe the level of co-operation between Metsä Fibre and Itochu, Harri Vertanen, Vice President, China and Southeast Asia, says that they work seamlessly together. “It pretty much feels like we are working in the same company. We have a common goal: to be one of the best operators in the market and an effective supplier of pulp to our Far East customers.” The other members of the Metsä Fibre office are Sales Manager Jenny Liu and Customer Service Manager Tao Zhang. “Communication between my team and the Itochu sales staff is at times almost continuous. It’s not unusual to exchange 20-plus messages and phone calls a day,” Vertanen says. Metsä Fibre and Itochu share sales responsibilities in customer meetings. “Our team also supports sales efforts with in-depth knowledge of fibre and technical expertise,” Vertanen explains. Although Itochu is now also a major shareholder in Metsä Fibre, Harri Vertanen stresses that this new ownership structure will not change their shared focus. “What matters most are our excellent products and value-adding services. I believe that customers recognise the strong commitment to the pulp business that is shared by both Itochu and ourselves.” Tao Zhang agrees, saying that potential customers in new business meetings are mostly interested in hearing about the benefits and technical features of Metsä Fibre pulp. “They usually want to compare our fibre properties with products from other suppliers, and to work out the pros and cons of choosing one pulp over another.” Chinese paper manufacturers have welcomed the technical assistance that Tao provides. “From what I’ve heard, there are only two or three pulp suppliers operating in China who actively offer this kind of customer service,” he says.

From solving problems to achieving joint targets Let us introduce to you a person whose job is to eliminate unwanted friction in pulping: Tom Nickull, VP, Key Accounts and Technical Customer Service at Metsä Fibre. Text by Alpo Räinä • Photo by PEKKA KIIRALA

How long have you been working in technical customer service, Tom? So far I’ve had 11 years at Metsä Fibre. During this time our team has visited dozens of mills to analyse, advise about and resolve all kinds of quality issues. So it has been more than four thousand exciting days.

All mills and processes are unique. What is the best way to learn this profession? The only way is to keep enhancing your expertise. At Metsä Fibre we emphasise the need to upgrade procedures, and we regularly travel to meet clients and study their processes. This job cannot be done solely at the home base.

So finding the right answers calls for finding the right questions first. How do you do it? Don’t expect any creative gimmicks. It’s better to place your trust in regular meetings and planning workshops with clients. We need to agree on production forecasts and quality targets in order to supply our customers with exactly the right fibre mixes. Then, of course, deliveries must be made on time and as specified.

Board and paper producers continuously enhance their products. How does this affect you? These development projects may affect fibre economy or the technical condition of the fibre processing machinery. As a pulp supplier since the early seventies, we have learned how to understand papermaking processes and how to make them more cost-effective. The more strategic our advice becomes, the more credit it enjoys.

Sales people make the deal and your team takes care of everyday business. How do you retain the magic? Well, business is a team effort. We need each other. We also take pride in sharing our customers’ targets. You really know you’ve done a good job when you meet the client for the sixth or eighth or tenth year in a row.

What are the issues you discuss with clients today? Environmental awareness is increasing in all markets, and we provide information and advice about how Finnish forest owners take care of their property. I am delighted to talk about this, as it is such a great story. We also often discuss health and safety at work, comparing information and ideas about working conditions, motivation and so on. Our modern mills use wood down to the last chip and add no extra emissions to the environment. They are also all ISO 22000 quality certified, which means that they are suitable for manufacturing food packaging materials.

So you are a sustainability agent as well? Yes, we are, and I don’t mind this at all. Whatever it takes to make the bond stronger.

”What could be nicer than the smooth and steady hum of paper machines?” ECHO 1/2012 —

METSÄ FIBRE

Building trust for the long term In industries where the time frame for planning and investment spans decades, suppliers and their clients build the continuity of business relationships together. Metsä Fibre CEO Ilkka Hämälä finds that the key is knowledge that creates value. Text by alpo räinä • Photos by SEPPO SAMULI AND JUSSI VIERIMAA

Wood-processing industries have been the cornerstone of Nordic economies for more than a century, and it is hardly surprising that universities and consultants regularly analyse the strategic choices of forest and paper companies. The higher a company climbs in the global ranking of pulp and paper businesses, the more analysts will be interested in that company. Researchers Juha-Antti Lamberg and Jari Ojala noted a few years ago that the co-operatively owned Metsä Group has stayed true to its original mission for almost eighty years. According to the original mission statement, Metsä Group was established to support the position of private Finnish forest owners in the competition between wood purchasing organisations. The Group’s focus gradually expanded over the years from wood exporting to sawmills and wood processing industries, and by the end of the 20th century the co-operative had become one of the world’s largest wood processing groups.

Ilkka Hämälä stresses the similarities between Metsä Fibre and its clients, which are heavy-duty industrial companies with significant production facilities and staffing: “The owners of both the pulp industry and paper and board manufacturers have to weigh their decisions with regard to long investment cycles. This means that both parties value long-term business relationships and solid trust between partners.” Some critics say that industrial companies are slow to react in a rapidly evolving digital world. This is a superficial perception, because leaps in development require planning and investment. For example, it may take years – if not a generation – to change a company’s operating model from local to global, while continuing to make a profit during this restructuring.

Metsä Fibre takes its expertise to global markets

When Ilkka Hämälä describes the transformation carried out at Metsä Fibre, he points out that the company’s business was gradually changed after the earliest forecasts of declining local paper production and pulp demand. “Nowadays we sell 60 per cent of our pulp to market clients in Europe and Asia, but I want to stress that we started the change from integrated mills to market-driven competition more than ten years ago.” Over the years, Metsä Fibre has created a completely new form of technical customer service. This was also a major leadership challenge. “For example, we have systematically recruited production engineers from paper mills and chemical industries, and technology experts from machinery suppliers, in order to increase our process knowledge,” Ilkka Hämälä explains.

Metsä Fibre is one of the five core businesses of the Metsä Group. The other four include wood products, board, tissue and cooking papers, and wood supply and forest services. The names of the companies engaged in these businesses were recently harmonised with Metsä prefixes. Metsä-Botnia became Metsä Fibre, while the Botnia brand name is still used for manufacturing and for technical services. Metsä Fibre CEO Ilkka Hämälä explains: “We have a clear task – to specialise in the pulp industry solutions that our markets demand. Our own production is based on commercial forests, and our top-notch wood procurement ensures efficiency and sustainability.”

METSÄ FIBRE — ECHO 1/2012

How to create a world-class service organisation

ILKKA HÄMÄLÄ

Our new global service organisation now offers the finest papermaking support in terms of fibre expertise. This calls for continuous learning, R&D and commitment to customer success.

“We also defined our role in the paper manufacturing process, and our new global service organisation now offers the finest papermaking support in terms of fibre expertise. This calls for continuous learning, R&D and commitment to customer success.”

Service must generate value The transition from an integrated business model to market-driven competition has expanded Metsä Fibre’s global client base, and the company is now supplying fibre to some of the leading softwood pulp users in China, for example. Ilkka Hämälä sees this as proof that Metsä Fibre products and services are value-adding. “Metsä Fibre’s accumulated knowledge base enables owners and policymakers among our clientele – especially those who have recently entered the paper business – to have confidence in our resources and problem-solving skills. In less than a decade we have built powerful

capabilities in critical business areas such as availability, dependable delivery, and risk elimination in processes and production. We were even able to maintain our R&D program throughout the 2009 recession.” “Even though these steps have improved our competitiveness, we need to go further. I want to see more rapid development of collaboration between sales and technical service. We should be telling our clients about our entire offering at every meeting,” Hämälä insists. Growth markets have also had a major impact on Metsä Fibre. Ilkka Hämälä feels that his organisation has a lot to offer and learn in these new, dynamic marketplaces. “In growth markets we show our commitment through learning. For example, we must understand the combination of the latest technology and more flexible raw material policies. Strategic approaches are not the same as in Europe. Each market is different – even though they use the same fibre.” “As a whole, I think these challenges are a great opportunity for all of us,” Hämälä concludes with a smile.

ECHO 1/2012 —

METSÄ FIBRE

Paper captures

the winter

darkness and midnight sun

of the northlands Sirpa Kivilompolo runs a small business turning handmade paper into design products in northern Finland. Text by Hanna-Maija Kause • Photos by SIRPA KIVILOMPOLO/PAPERIVALO

METSÄ FIBRE — ECHO 1/2012

SIRPA KIVILOMPOLO

the midnight sun or the crisp snows and endless winter darkness of Finnish Lapland are likely to pass through the little village of Karunki and stumble across Paperivalo, a small business run by Sirpa Kivilompolo. This company produces handmade paper products from a blend that is 50 per cent cotton and 50 per cent birch pulp from the Kemi mill of Metsä Fibre. “Paper is a wonderful material of inexhaustible potential! You never know what we’ll be making next,” Kivilompolo enthusiastically declares. Indeed the extraordinary variety of her handmade white paper products ranges from lampshades to greeting cards, gift boxes and cremation urns. These creations are all watermarked with the Paperivalo trademark, a unique decoration that springs to life when the paper is held up to the light. Tourists who come to admire

Birch pulp fortifies cotton in the blend “The traditional method of making paper by hand uses old cotton or linen fabric, and the expression “rag paper” refers to this cloth that has seen better days,” Kivilompolo explains. “Nowadays we generally use waste cotton that has been discarded from the yarn manufacturing process because the fibres are too short for spinning.” Kivilompolo explains that she is now adding birch pulp due to a recent deterioration in the quality of cotton that hampered reproduction of the distinctive Paperivalo watermark. Birch pulp provided an effective solution to this problem. “Obviously we could dispense with cotton altogether, but the resulting birch pulp paper has a slightly yellowish tinge. We currently use birch and cotton in roughly equal proportions,” she explains.

Products reflecting the whiteness of the north Kivilompolo was living in the eastern Finnish city of Kuopio when she established Paperivalo in 1997, but after ten years she moved back to her native district of Karunki with her family and business. The move seemed appropriate, as the spirit of Lapland was already evident in Paperivalo products reflecting the midnight sun of summer and the long winter darkness of the polar night. “Customers in Kuopio were often unaware of my Lapland origins. This detail would then complete their understanding of our products, many of which are named in ways that allude to the north. The general whiteness of everything also links directly to this location.”

“People sometimes try to weave a story into our products, but it really comes down to my own personal background,” Kivilompolo explains with a laugh.

Paper reigns supreme in an old town hall and village shop The Paperivalo business celebrates its 15th anniversary this year. Kivilompolo lives and works in the old Karunki town hall: a two-storey wooden house. A dilapidated outbuilding was renovated from the outset to provide wet working areas for paper manufacturing, whereas paper finishing and product manufacturing is still done at home. This is about to change, however, as Kivilompolo and her husband have purchased a local former village shop building for refurbishment as a Paperivalo manufacturing facility, showroom and factory outlet. “The aim is to gradually transform this courtyard and environs into an attraction that will interest the large number of visitors using the nearby main road during the tourist season,” Kivilompolo explains.

Paperivalo products for the Far East? The simplicity and elegance of Paperivalo products and the nature of this small business have evident appeal in the Far East. Kivilompolo reports that just over a year ago she was involved in a Finnish event held in Tokyo to exhibit the work and business operations of designers from Finland. Four Lapland enterprises used this occasion to arrange exhibitions of their own. “We were hugely popular there, with ideal products for that market,” Kivilompolo explains. There is definite market potential in the Land of the Rising Sun for these unique creations from the Land of the Midnight Sun: “Japanese culture already greatly appreciates handmade paper products, and our work also has the merit of standing out as significantly different from local paper designs. There is also a strong tradition of fine packaging that values the package as much as the product.” “Finland is a small country for specialised products of this kind, and I feel that Japan could indeed be our most important target market. Tokyo alone would already be more than sufficient,” Kivilompolo says with a smile. She has no plans to move into any kind of mass production. The very essence of Paperivalo lies in sensitive and stylish special editions in which cellulose fibre will continue to play an important role.

ECHO 1/2012 —

METSÄ FIBRE

The RFID applicator

Every pulp unit leaving Metsä Fibre production plants now contains an RFID tag that is specifically designed for tracking pulp, but how do these tags wind up in the pulp bales? This is the job of a special RFID applicator manufactured for the requirements of Metsä Fibre. The device is used in the production line baling section. The applicator automatically codes and attaches tags to a specific small bale of the pulp unit. It is programmed to fasten the tags at a precisely predetermined location that optimises their readability from both sides of a two-tonne export pulp unit. Text by NIKO KILKKI • Photo by ALEKSI KOSKINEN