HAROLD M. CODY
is Editorial Director of Pulp & Paper magazine

Change a Constant

Last month I talked about changes in paper markets for 2000. Well, changes just keep occurring, so we’ll talk about some more. Of course musical icon Bob Dylan put it best in his classic song entitled: “The Times They Are A-Changin.”

Beloit’s Future Emerges. In certainly one of the biggest changes in the paper industry in decades, it appears that the industry’s largest U.S.-based equipment supplier, Beloit Corp., is finally being sold off. The parent company filed for bankruptcy protection last year and the final stages of this process have recently emerged as several buyers for its assets were announced. This development is symbolic of the changes gripping the industry rather than an important change in structure. Beloit dominated major equipment segments such as papermachines for decades, but even before the recent upheavals and financial problems it had lost its dominant global position.

However, the trend towards globalization that is such a force of change in the industry continued even here. Three major suppliers, in addition to groups representing management buyouts that acquired portions as well bought the assets, pending final government and court approval. Canadian company Groupe Laperriere & Verreault Inc (GL&V) acquired two divisions: pulp and finishing. Finnish giant Metso (Valmet Corporation) acquired the paper after market and roll covers divisions. Mitsubishi Heavy Industries gets the paper technology division. This is just the latest in a wide range restructuring of the supplier industry that was covered in more detail in Pulp & Paper’s feature in the December issue.

Internet and Paper? Another big change that is reverberating throughout the U.S. is the growing influence of companies based on the “new economy” or the information economy. These firms are based on providing products such as software or hardware, for example, or recently that offer services via the Internet. These companies are different from traditional firms that manufacture “hard” goods such as many old line companies—such as pulp and paper producers. Of course, this isn’t really anything new. However, the announcement that AOL, who is not even old enough to vote as one magazine noted, is acquiring an original old line media company certainly caught peoples attention and is new. AOL is buying the company that was one of the originators of mass-market magazine publishing, Time Warner. As the AOL deal illustrates, the whole world is being “dot-commed” or turned upside down faster than anybody ever thought.

This merger is simply the latest, greatest, and grandest example of how the Internet and technology are changing the world. And to assess the impact on the pulp and paper industry of changes being driven by information technology, we have a special report in this issue that examines what all of the fuss is about regarding “e-commerce.”

Many will ask why selling something over the Internet is important to the paper industry. E-commerce is mainly about buying shoes or clothes on-line, some might say. However, as this story details, it appears that much more than this is at stake. The article outlines what it’s all about and attempts to shed some light on why many people view this development—the buying and selling of paper products and related chemicals and equipment via the Internet—as one of the biggest changes impacting the paper industry in the future. And according to some, these developments will force large-scale change not in years, but in the very immediate future.

One thing that’s clear is that the hype and the reality are a bit hard to sort out. So far, only a very small amount of product in this industry is moving via the large number of e-commerce web sites that have popped up out of nowhere in the last few months or in the case of some the last couple of years. However, the speed with which the world is changing means these developments bear watching. We’ll be covering this in future articles in the magazine as the whole thing unfolds.

And finally on the note of change: “You better start swimming or you’ll sink like a stone,” Dylan noted in the song. This is basically what people involved in the “e-commerce thing” are saying about the pulp and paper industry. It will be interesting to see if they’re right.