Sweden's Grycksbo Paper aims to build on the strength of a well-known brand
June 2007
By Justin Toland, Editor>
Grycksbo Paper is one of the newest names in the paper industry, but it has a long history: the mill, located in Grycksbo, near Falun, central Sweden, was founded as far back as 1740.
In 2006, the plant, which had been part of Stora (and then Stora Enso) since 1966, became one of the first mills in Europe to be acquired by a private equity firm. The new owner, Accent Equity Partners, specializes in investing in buyout and later stage expansion capital transactions in the Nordic region.
Given the historically low rates of return on investment in the paper industry, what did Accent Equity Partners see in Grycksbo that persuaded it to buy the mill from Stora Enso? "Accent saw a mill that was well invested -- SEK 2 billion ($300 million) invested in the machines in the last 25 years -- and then they saw the product," says managing director, Grycksbo Paper, Mikael (Mike) Frölander.
The product they saw was G-Print, "A coated paper with a unique surface, that provides excellent printability," explains market and sales manager, Grycksbo
Paper, Jaana Ahlroos. "It's a thick, bulky paper and yet it has a good surface," she notes. "G-Print is especially suited for applications that require a strong paper with an even surface."
"Our paper is really highly appreciated in the market: everyone knows about G-Print," says Frölander. "In the paper industry there are not many brands. G-Print is a brand -- it is a paper that runs, works and delivers what it says."
G-Print is designed to offer very good printability when there is a mixture of image and text. The product is widely used for coffee table books (such as the best-selling cookery book, Jamie's Kitchen by Jamie Oliver), as well as magazines, direct mail, maps, catalogues and packaging (H&M bags).
According to Frölander, the coated paper market consists of approximately 40% gloss, 40% silk and 20% matt papers. Grycksbo's products straddle both matt and silk markets. "We want to change that mindset: is this matt or silk? This is G-Print."
Becoming independent
Grycksbo Paper's aim is to be an effective business partner with a unique paper quality. The transition from the Stora Enso stable to full independence has been carefully structured to minimize disruption and maximize the mill's chances of success. A three-year bridging agreement with Stora Enso Logistics ensures a steady supply of pulp and a continuation of deliveries through established channels. Some 90,000 to 100,000 tonnes/yr of output goes by rail, mostly by SECU (Stora Enso Container Units). "So far it is going well," says Frölander. "We have a good cooperation and it is fruitful for both of us," he comments.
Although Grycksbo Paper was established on April 1, 2006, it was six months later, when the sales and marketing bridging agreement with Stora Enso expired, that the mill really had to learn to stand on its own two feet. This has been'the biggest change', according to Frölander: "It was really a Big Bang, the 1st of October," he recalls. "We cut the lines to Stora Enso and our sales team took over."
"It has worked very well," says Ahlroos. "We have fewer claims caused by administrative mistakes."
For Frölander, the advantage of going it alone is that, "We are getting closer to our customers. We are not just sending production to the Stora Enso portfolio, of which we were quite a small part, now we are talking to the customer ourselves. We have gone from a production oriented mill to an independent specialist. We are able to follow market trends and developments and respond to them much better."
"The customer gets an answer immediately," adds Ahlroos. "This is a strength."
"We are a specialist, niche producer. We have to be fast, flexible. That's how we will survive," explains Frölander.
Inside the mill
A sign of the mill's specialization is the fact that it has gone from having 13 product lines and a capacity of 60,000 tonnes/yr in 1980 to two product lines and a 265,000 tonne/yr output today. There are three machines at Grycksbo Paper:
- PM 7 -- 2.36 m wide; 115-170 g/m2 basis weight; 50,000 tonnes/yr
- PM 9 -- 2.52 m wide; 115-250 g/m2 basis weight; 55,000 tonnes/yr
- PM 10 -- 3.86 m wide; 70-115 g/m2 basis weight; 160,000 tonnes/yr.
All the units were rebuilt between 1995 and 2000, adding equipment from the likes of Voith, ABB, IBS, Trancel, Jagenberg and UMV. "Grycksbo is known for using prototypes and new technology, for example mirror blade coating," says Ahlroos proudly.
Some 62-65% of output is sold as sheets, the rest as reels. The mill has five sheet cutters with a total sheeting capacity of 190,000 tonnes/yr.
The mill sells a large part of its paper through merchants. Some 93% of output is exported and 52% of sales are in western/central Europe. The UK is the #1 market, followed by Germany. "FSC certified paper is becoming more important, which is why it is important that we are able to deliver it if the customer needs it," says Frölander. As a sign of Grycksbo Paper's good environmental profile, the publisher of Nationalnyckeln (the Swedish encyclopedia of flora and fauna) selected G-Print for its whole edition.
Another "bit of environmental thinking", says Frölander, is the use of plastic rather than PE-coated paper for wrapping the mill's output. "This creates one waste stream rather than two."
On the energy side, Grycksbo Paper uses a combination of oil and electricity bought from the grid. The percentages vary depending on the price of oil. For the future, the company is investigating the possibility of building a combined heat and power (CHP) plant in tandem with the municipality, however this is at a very early stage of planning.
The paper company is aiming to increase market share in its'home' markets (Germany, UK, France, Netherlands, etc). Poland and the Czech Republic are other targets and, believes Frölander, "The Russian market looks very interesting for us. If it continues to develop as we think it is really a market that could boom. We want to put a foot there and grow there." Outside Europe, sales are healthy in Singapore and Hong Kong.
From a name to a brand
G-Print accounts for some 83-84% of the mill's output. Grycksbo Paper's second product is Arrow. Formerly known as MultiArt Silk, Arrow has a smoother surface than G-Print and is "a little more suitable for 4-color printing," says Frölander. "It is perfect for book production," he adds. "We are hoping to relaunch and reposition Arrow in Europe in October/November. Most likely we will change the name: Arrow is not a brand, it is a name," explains Frölander.
Brand-building takes both time and money of course. G-Print was launched in 1975 and a lot of investment has been made in the brand in the last nine years in particular. Gryckbo Paper's aim with all its products is, "To find out where the paper is highly appreciated and position it there," says Frölander.
The Grycksbo Spirit
For the MD, everything Grycksbo Paper does is built on its core values. "To define our basic concepts we decided to go down and see what we have in the mill." From a series of interviews and work groups with employees and customers, Grycksbo Paper position was able to identify its position: "We have a more personal approach and a more customized offering." This'Grycksbo Spirit' can be summarized in four key concepts: Together; continuous improvement; nothing is impossible; dare to be personal.
"Continuous improvement is in the blood among the people here," says Frölander. The'nothing is impossible' philosophy, meanwhile, is all about David against Goliath - an attitude of'we're going to show them we don't need to be big to survive'. "We have to stick out our cheek a bit as a small company," believes Frölander.'Daring to be personal' means believing that, "It's the people who make the difference, not the machines," he adds.
"Purchasing is a whole new world for us," admits Frölander. But, the mill's personal approach means that, "Both customers and suppliers like to come here," says Ahlroos. Grycksbo Paper has retained most of the suppliers it used when it was a Stora Enso mill.
Pulp is a mixture of northern hardwood and softwood; the mill is testing eucalyptus fiber from Latin America. "Non-integrated mills have a better chance to survive today than in the past because of new pulp capacity from Latin America," believes Frölander.
The new environmental permit for the mill (valid until March 2017) increases the maximum allowable output from 275,000 to 310,000 tonnes/yr. "It's a step in the right direction," says Frölander.
"Perhaps we can get more tonnage out of PM 10," he ponders. "Low grammages are where we have most demand." However, the MD notes, "First we have to earn more money, then we can invest."
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