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GLOBAL INDUSTRY ANALYSIS
World Paper: A global industry from a
national perspective
By Rod Fisher, President, Fisher International Inc.
Sometimes it’s useful to go way up to
100,000 metres to try to see the big
trends and patterns in an industry.
It’s easy in this busy world to stay so
close to the details required to operate
a business that we don’t see the larger
picture. So, in this article, we’ll look
at patterns in the pulp and paper
industry from a national perspective,
worldwide. The industry data are from
FisherSolve™, Fisher International’s
business intelligence database and
analytical tool. Country economic
and demographic data such GDP,
population, education levels, etc. are
from Wikipedia.
HOw IMpORTANT IS THe pULp AND pApeR
INDUSTRY TO eAcH cOUNTRY?
The pulp and paper industry makes
dramatically varying contributions to
economies around the world. It makes
an out-sized contribution to employment
and the GDP in Finland, Sweden, and
China for example, as Figures 1 and 2
show. In those countries – located above
the bisecting line in the bubble graph
– the paper industry is a relatively more
important contributor to the economy.
As a result, pulp and paper in those
countries tends to have relatively more
political and social influence.
On the other hand, in countries situated
below the line, the industry contributes
relatively less to the economy and,
therefore, tends to have less influence.
Examples of the latter group are France,
UK, Italy, Russia, Mexico, Spain, and
Australia.
The graph (Figure 1) compares the
amount of cost added in each country
in the process of manufacturing paper
products. It accounts for market pulp in
12 world pulp&paper
Figure 1. Pulp and paper production relative to national GDP
Employees/Capita (mm)
It’s easy in
this busy
world to stay
so close to
the details
required to
operate a
business that
we don’t see
the larger
picture
Finland
Sweden
Austria
Slovenia
Slovakia
Canada
Belarus
Russia
New Zealand
Uruguay
Germany
Portugal
Norway
Estonia
Chile
Taiwan
United States
Brazil
Bulgaria
Bosnia-Herzegovina
Lebanon
France
the countries that produce it. Countries’
purchases of market pulp, therefore,
are not included in their value added
calculation. On average, the costs
incurred in manufacturing pulp and
paper add about 0.3% to the world‘s
GDP.
0
500
1,000
1,500
2,000
2,500
Employees per mm population
Figure 2. Nations with the highest ratios
of paper industry employees per captia
Figure 2 shows the number of pulp
and paper industry jobs per million
inhabitants by country. There are a few
clear leaders where the pulp and paper
industry has a disproportionate amount
of per capita employment. The industry’s
influence in local and national politics is
affected in part by the number of jobs
at stake.
HOw weLL IS THe pULp AND pApeR INDUSTRY
DOING IN eAcH cOUNTRY?
The next bubble chart (Figure 3)
shows the relationship between paper
industry growth and growth of the overall
economy in each country. The most
noticeable pattern is that the paper
industry has grown more slowly than the
national economy in nearly every country;
India, Nigeria, and a few other smaller
producers being the exceptions. Even
China’s paper industry has growth just
slightly slower than the overall economy.
There are a few countries where there
has been rapid growth over the last 10
years in both the economy in general and
the pulp and paper industry in particular.
Note, however, how unique China is in
that regard. China represents 84 percent
of the industry’s net growth in the last
10 years (net of negative growth that
occurred in some countries) and virtually
all the growth where both the industry
and the economy grew more than 200
percent in 10 years.
Twenty-five countries actually suffered
a decline in their pulp and paper
industries over the last 10 years totalling
39 million tons of capacity loss. Among
these are larger producer counties such
There are a
few countries
where there
has been
rapid growth
over the last
10 years
in both the
economy
in general
and the pulp
and paper
industry in
particular
Figure 3. Most
national pulp
and paper
industries grew
more slowly than
their respective
economies from
2004 to 2013
as Canada, U.S., Finland, France,
Netherlands, Norway, Sweden, U.K.,
and Japan. With close to 100 million
tons capacity growth in the world in the
last 10 years, developed regions (North
America and Europe) lost a net of about
25 million while all other regions added
close to 125 million tons. While still
very large and, overall, still growing, the
industry has clear markings of maturity.
Over the last 10 years, Europe and North
America lost a combined 9 percent of
total capacity. North America took much
of its pain earlier than Europe, shedding
15 percent whereas Europe, net of both
Western Europe where production is
contracting and Eastern Europe where
production still grows slightly, closed only
3 percent of total capacity during the
same period.
Another way to measure how the
industry is performing is to compare
the economy’s rate of reinvestment to
the national paper industry’s need for it.
The investment climate in each country
can be represented by the percent
of GDP that is devoted to investment.
The industry’s need for investment is
represented by the “technical age” of its
stock of equipment, a factor drawn from
FisherSolve’s asset quality data.
In countries reinvesting a high
percentage of overall economic output,
there should be not only a propensity to
invest in paper production assets, but
also, and perhaps more importantly,
a healthy growth in the incomes of
businesses and individuals that buy
Figure 4.
Economies with
high rates of
reinvestment
also tend to have
new stocks of
paper making
equipment. Lowreinvestment
economies have
older national
paper industries
paper. Figure 4 shows a relationship
between the average age of each
nation’s paper making assets and the
rate at which that country reinvests in
itself. There is a cluster of older national
paper industries in low-reinvestment
economies (bubbles on the left). Again,
China stands out as by far the biggest
spender with the newest stock of
equipment.
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GLOBAL INDUSTRY ANALYSIS
By and large, the paper industry’s
labour productivity is a function of the
quality of its workforce’s education.
Figure 5 shows that there is a strong
relationship between the two in that it
is rare for a national paper industry to
have high labour productivity and a low
education level. However, there is a set
of countries in which paper productivity
is low despite a high level of education.
Larger producing countries in this list
include Russia, Venezuela, Ukraine, and
Argentina.
ARe THeRe ANY MAJOR THReATS ON THe
HORIZON?
Greenhouse gas emissions are an
increasingly important political and social
issue in most parts of the world. Since
pulp and paper mills can be very large,
they run a real risk of attracting the
attention of government regulators and
society at large. Moreover, the carbon
footprint of the pulp and paper industry
varies greatly from country to country.
Figure 6 shows that most national
paper industries emit a disproportionate
amount of their countries’ carbon. The
industry may, therefore, be particularly
vulnerable to societal and political
pressure to cut emissions.
As we saw already, the paper industry
is relatively more important to some
national economies than to others.
Since industrial activity is the source
of a large portion of carbon emissions,
implications and consequences of pulp
and paper’s contribution to carbon
emissions is by necessity closely related
to its contribution to the economy. Figure
7 shows how close this relationship can
be. The standouts are Finland, Sweden,
and Austria where the industry is both
highly important to the economy –
shown in this graph as an index of the
importance of paper industry jobs to
the economy as a whole – and also a
relatively large contributor of carbon. It
will be interesting to see whether these
three economies will be different from
the rest of the world, where pulp and
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world pulp&paper
Figure 5. In the paper industry it’s rare to have an undereducated yet productive
workforce; but there are many countries with educated populations and
unproductive paper industry workforces
Figure 6. In most countries, the paper industry is responsible for a disproportionate
amount of the nation’s carbon footprint
The carbon
footprint
of the pulp
and paper
industry
varies greatly
from country
to country
paper are relatively less significant in
both jobs and carbon emissions. This
would suggest that the paper industry
in most of the world may neither have
outsized influence nor outsized attention
regarding carbon politics.
FisherSolve’s carbon database was used
to benchmark one grade globally with
each bar representing one mill (Figure
8). The steep curve indicates that from
one mill to the next, there are large
differences in the amount of carbon
emitted to make one ton of paper. This
suggests that there should be many
opportunities for reducing carbon
Figure 7. Carbon from pulp and paper is significant mainly in countries where the
industry also provides significant employment
even in this
brief highlevel look at
the paper
industry, it
is clear that
large forces
present
paper
industry
players with
different
kinds of
challenges at
the national
level
Figure 8. Global
carbon emissions
curve for a single
grade stacked by
source with each
bar representing
one mill
Figure 9. The
confluence of
energy costs and
carbon emissions
points to
potential national
investments in
paper industry
projects
emissions throughout the industry.
Fortunately for the paper industry,
addressing carbon also addresses
another large issue: the cost of energy.
Figure 9 shows which countries’ paper
industries may have the greatest
incentive to invest in reducing both
energy use and carbon emission.
National paper industries that are more
likely to invest in energy projects are
those in which carbon emissions are
important and energy costs are high
(bubbles in the upper right quadrant).
Those in the lower right quadrant are
likely to be more motivated by cost
savings while those in the upper left may
be more motivated by carbon footprint
issues. Those countries represented by
bubbles in the lower left quadrant are
the best positioned in terms of carbon
and energy. Clearly, different energy
strategies for producers and suppliers
may be appropriate in different national
and local environments.
Even in this brief high-level look at the
paper industry, it is clear that large
forces present paper industry players
with different kinds of challenges at
the national level. We hope readers are
inspired to do more analysis of their own
to draw conclusions about their unique
positions in the paper industry and what
actions will optimise their positions going
forward.
About the Author:
Rod Fisher is President of Fisher
International, a leading consulting
firm supporting the pulp and paper
industry with business intelligence and
management consulting services since
1985. With research resources in nearly
every pulp and paper producing country
in the world, Fisher International’s expert
consultants, proprietary databases,
analytical technologies, and business
management tools are used by pulp and
paper producers, suppliers, investors,
and buyers around the world every day.
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