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Vietnam is striving hard to compete in the increasingly open Asian market. One of the ways that the country's mills are hoping to gain a competitive edge is through investment in quality improvements
Vietnam opens its doors to outside business
By Dave Biros
Vietnam is officially open for business. A glance at the trade figures between Vietnam and the US for this year clearly shows that the door has swung wide open to Vietnam. Total trade should reach $2 billion this year, $1.2 billion of which will come from Vietnamese exports. On top of that, experts predict that trade between the two countries will greatly increase in coming years in light of the Vietnam-US trade agreement which is expected to take effect early next year.
With free trade and an open marketplace sweeping through Asia and the recent launch of Vietnam's own stock exchange, Tan Mai Paper Company and Dong Nai Paper Company are two south Vietnamese paper mills that are investing heavily in their future.
Nguyen Dinh Tuan, deputy general director of Tan Mai, looks at value-added options
Tan Mai tackles upgrades
Located in the 300 year-old Bien Hoa City in the Dong Nai Province, Tan Mai has upgraded its three paper machines and nearly doubled production to reach a new capacity of 60,000 tonnes/yr. A leader in its industry, Tan Mai makes wrapping, writing, printing, photocopy and corrugating papers.
Business is good, according to Nguyen Dinh Tuan, deputy general director at the company. "We are selling all the paper we make. Right now, there are sufficient supplies in the market. But because of our recent improvements, we are now capable of producing more product as the market demands," he explains.
The mill's PM 1 is a Black Clawson machine that produces 90 g/m= art paper from Brazilian eucalpytus pulp. PM 2 is another Black Clawson machine with a Pama EuroAsiatic headbox, which makes linerboard in a basis weight range of 120-180 g/m= from recycled stock. Both PMs have a trim width of 2.5 m. PM 1 churns out 30 tonnes/day, while the second machine's capacity reaches 40 tonnes/day.
PM 3, an Alimand machine, is the mill's biggest PM with a 4.75 m trim, 600 m/min speed and 120 tonne/day capacity. The PM produces fine paper. Recent investments have added another 10,000 tonnes/yr of capacity, boosting the PM's output from 30,000 tonnes/yr to 40,000 tonnes/yr.
Tan Mai's power plant consists of two transformers - with a 20 and a 25 MVA 66/15 KV capacity - and two boilers. One of the boilers churns out saturated steam with a 28 tonne/hr capacity while the second boiler produces 31 tonnes/hr of super-heated steam.
ABB Open Control Systems provide overall control and operator interface at Tan Mai and Dong Nai
Looking for additional growth
Tan Mai is the only newsprint mill in Vietnam and all the site's production stays in the country. "Newsprint is a patriotic duty," Tuan says. "We cannot change the price we charge for newsprint." But there are growing opportunities in fine papers that the company is keen to pursue. "Fine papers are more profitable," Tuan points out.
To compete in a more open marketplace, Tan Mai must first improve the quality of its output. Investments over the past four years show how serious Tan Mai is about boosting quality at the mill. In 1996, the company contracted ABB to install a new quality control system on PM 3. Also, a new ABB drive replaced an outdated analog drive, which had substituted a steam drive just a few years earlier. In 1997, Tan Mai contracted Allimand to rebuild PM 3. They also added ABB quality control systems to PMs 1 and 2. In 1998, the mill decided to rebuild PM 2.
"Our operators learn the new ABB computer control systems quickly and can run the paper machines with ease," says Nguyen Dong Hung, Tan Mai's chief of engineering. "Before, we ran the machines with single-loop controllers. Quality was not controlled very well. Now it is," he adds.
At the moment, the mill is carrying out a $10 million investment in a deinking plant from Thermo Black Clawson, including a chemi-thermomechanical pulp (CTMP) upgrade to accommodate higher production. ABB is supplying the control systems, motor control center and motors for this project. Future investments include color control, machine health monitoring and sheet break detection for PM 3, all supplied by ABB.
With aggressive growth targets set by the Vietnamese government, Tan Mai has been careful to choose suppliers that serve this growth well while at the same time maximizing investment. "We chose ABB because they have a very open control system that will enable us to grow in the future," Hung explans.
Tuan agrees with the choice, saying, "We think of ABB as a partner and a companion that we can grow with in the future. This idea has already been proven and we've made more contracts with ABB. We see ABB not only as a supplier, but as a consultant to help us modify our mill," he says.
Feasibility studies are under way to upgrade to a wider machine, but Tan Mai remains essentially focused on quality. "The primary driver for these improvements is quality," Hung says. "When we achieve better quality, we will increase production. When we achieve both quality and increased production, we will work to improve production efficiency, as well as to save energy and natural resources."
Dong Nai develops techniques
In the same province, Dong Nai Paper Company, built in 1959 and commissioned in 1961, is also a three-machine mill serving the fine paper market. PM 1 runs at 200 m/min and PM 2 operates at 250 m/min. A coating machine is run for 10 months a year at 40 m/min for 10 tonnes/day of book cover output.
The mill sells everything it produces and could even sell more, according to the company. Under pressure to increase production while maintaining quality, the mill has found a reliable quality control system is vital. "Recently we invested in PM 1 by installing an ABB quality control system," explains Nguyen Duc Trung, Dong Nai's vice director. "This increased our production from 15 tonnes/day to 20 tonnes/day. We also rebuilt the wire section and installed a new headbox from PAMA. As a result, we are making fine paper, printing paper and sometimes base paper. We have increased our production while achieving better quality, which is something that is being stressed by our minister of industry." (Box 1).
Trung says that customers have noticed the quality improvement on PM 1. "Before the ABB quality control system," he says, "making the same paper on both machines, we found that customers preferred PM 2. Now with the ABB system, they prefer PM 1. With the improved quality, we can also increase the price."
Nguyen Duc Trung, vice director of Dong Nai Paper, is pleased with the latest investments at the company
The mill continues on a three-year time line of investments in its machines and technology. Next on the schedule is a change-out of PM 1's line shaft to an ABB sectional drive system. In addition, the press section will be replaced or modified. Also on the drawing board are plans to rebuild the mechanical and automation systems on PM 2.
Trung realizes that as Asia gradually takes down its trade barriers, the mill must be prepared to face competition in the open market by improving the quality of its products. "We must deal with pressure from customers," Trung explains. "For example, one customer wanted to know if they were going to get an adequate supply of notebook paper. If not, they said they would look outside Vietnam for a supply. This shows how we must make sure we are meeting our customer's demands. We know that if we do not upgrade our equipment and our quality, we can't compete with other papermakers in this region.
Dave Biros is the marketing manager for ABB Pulp & Paper
| Vietnamese state lends support to pulp and paper sector
Over the last few years, the Vietnamese government has put its weight behind the pulp and paper industry and supported the industry's drive to expand and improve its facilities. According to Dang Vu Chu, Vietnam's minister of industry, the government has a clear strategy for the country's pulp and paper industry in the next decade.
He explains, "Within 10 years, we want our industry to meet 80-90% of domestic demand, with an average growth rate of 10.4% per year." But the country is not only looking inward in terms of pulp and paper growth, the ministry of industry also has plans to boost trade with the outside world.
Vu Chu adds, "We also want to ensure that the pulp and paper industry is surviving and growing competitively toward ASEAN Free Trade Area (AFTA) and World Trade Organization (WTO) processes in terms of quality and pricing."
In order to achieve these goals, Vietnam needs to invest in major projects to boost the industry's efficiency and competivity. According to Vu Chu, the country's main investments need to focus on high capacity mills equipped with the latest technology, while at the same time expanding the country's forest plantations to ensure adequate raw material supplies. "In terms of Vietnam Paper and the government side, our goal is to consolidate all capital investments, to be a project leader and to enter joint ventures with foreign, privatized companies that can serve as business partners," he adds.
Challenges ahead
Although the government is taking a positive stance on the future of the Vietnamese pulp and paper industry, Vu Chu is not forgetting the hurdles that need to be overcome to achieve these goals. He explains, "There are two main challenges for Vietnam's pulp and paper industry to reach its targets - capital investment and material planning. Investments in high capacity mills with the latest technologies require huge amounts of capital and sufficient raw material supplies." But as Vu Chu points out, Vietnam's pulp and paper industry has not accumulated enough capital during its operation to invest in such projects and government-subsidized capital is not enough. "Of course, Vietnam must encourage its business sector to privatize and we must also clarify policies for foreign investment. Our unclear policy and legislative environment is not attractive to foreign investors."
On top of that, he also sees problems with the mills' fiber resources in the country. According to Vu Chu, raw material planning is not centralized and investments in this area have not been carried out for quite a long time. He says, "Presently, the development of raw material planning is much slower than expected. Difficulties include insufficient plantation capital and an unfavorable financial structure for such investment, with low profit and a long return of 7-15 years." Other difficulties come from limitations in land management, infrastructure, transportation and technology, he adds.
But one area where the country has been able to advance is through investments in automation, which Vu Chu describes as a "top priority". So far step-by-step investment has proved to be the best strategy in Vietnam, where the paper industry operates little advanced technology.
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