Disrupting the process

How will disruptive technologies shape the pulp and paper industry of tomorrow?

August 2007
By Graham Moore

Paper and the industry that manufactures and supplies the paper product in its myriad of grades and forms have consistently undergone development and modification to meet changing end use demands and requirements.

This relationship has been in step over many decades, but in recent times this relationship is starting to break down as developments such as digital technology are starting to create new markets, competitive products and alternative working practices. Such disruption can have major implications. As a result product sectors such as newsprint and graphic papers are continually facing new challenges and competition from alternative technology. These challenges are bringing into question the long-term viability of such papers as a vehicle for the printed word.

What are disruptive technologies?

The concept of a disruptive technology was introduced by Clayton M Christensen in his book The Innovator's Dilemma.(1)

A disruptive technology is one in which a new technical innovation, product or service displaces or overturns an existing leading technology, product or service.

This occurs even though initially the new technology or service appears inferior, too expensive, or has too many problems associated with it to displace a dominant technology.

A disruptive technology typically comes to dominate an existing market by either offering or filling a role in a new market that the old technology could not fill - for example the more expensive and lower capacity but smaller sized hard disks which found a market in newly developed laptop computers of the 1980s; or by successive performance improvements that eventually displace the existing market technology -- for example digital photography overtaking and replacing film photography.

Such technological developments can have a positive as well as a negative effect on the paper industry. Liquid packaging board, for example, provided the means to replace glass for many liquid packaging applications. On the other hand the development of the e-book has the potential to supersede paper for books and other reading applications.

The pulp and paper industry has often been slow to adopt new technologies even where such technologies are effectively incremental or sustaining technologies. Thus, although there have been technological developments that have led to wider and faster paper machines that have increased productivity and lowered costs, the paper machine of today is essentially similar to the Fourdrinier paper machine of 200 years ago.

Even if paper companies wanted to explore more radical technological development, severe cost cutting as a result of low profitability and global competitive pressures has meant that relatively few paper companies maintain an effective research and development function. Companies instead rely on suppliers for steady technological advances. This means they can access new sustaining technology, but are unlikely to gain a competitive position from such technology, as it is effectively available to all.

Fig. 1 - A changing world

A changing world

A large number of trends and factors are changing the way in which people live and work, Figure 1.

The paper industry is being affected by many of these factors, including changing world demographics that affect the products people use; global fiber supplies that are not aligned with traditional papermaking regions, and sustaining technology advances that have occurred quite rapidly over the last decade or so. These and other issues will change forever the need for and use of many paper grades.

The impact of Disruptive technologies

Recently published research(2) has identified 25 disruptive technologies that may have an influence in the paper supply chain. The chosen technologies were rated by a cross section of industry experts who ranked each for its probability of success (POS) and its impact on the industry.

The top 10 technologies ranked on this basis are shown in Table 1.

A close examination of the top five shows how there are both real opportunities and threats to the industry as these technologies develop and become established.

Gasification and biorefining was ranked the number one disruptive technology. Biorefining and black liquor gasification (BLG) in particular, has the potential to make an integrated pulp and paper mill self-sufficient in energy, producing electricity by conventional high-pressure steam and gas turbines. The success of black liquor gasification in pulp mills will more than likely lead to additional installations. Some materials and processing conditions do create problems, such as excessive tar, and they will need to be addressed.

Tree cloning and biological fiber treatments are both already used commercially and improvements will continue, so it could be argued that these are sustaining technologies. However, somatic embryogenesis and fiber modification by genetic engineering, including nanofibers, do represent major technology shifts. They provide the potential for improved future papermaking pulps with uniform fiber properties by 2016. Such techniques are very likely to succeed and have the potential to be further refined to develop, for example, improved recyclability and/or development of properties in line with specific end uses.

Information trends that are developing on the back of digital technology will change forever the way paper is used as an information carrier. Increasingly paper and paper-based processes will be replaced by electronic systems and many current printed products will not be produced on paper in future.

Intelligent packaging, which under this ranking also includes functional coatings, is a broad area with very large potential benefits. It encompasses barrier properties for specific gases and liquids, sensors for interactive feedback to consumers and retailers and audio and video functionality. Protecting the contents and printing a good image are still very important but there is growing trend toward added value for consumers. It is likely to be a success story for paper and enable it to maintain or even increase market share with competitive materials in the packaging sector.

Consequences

The industry needs to monitor and where appropriate exploit the opportunities offered by these and other disruptive technologies. It is clear that each will affect the paper supply chain in some way and affect the future structure of the paper industry. For those companies that choose to ignore such developments or are unable to muster the resources needed to explore the 'future' world, their future looks very uncertain. For those companies that are able to successfully develop and implement disruptive technologies the future looks brighter and more assured.

Graham Moore is the strategic consultant for the paper and board industry at Pira International. For further information please contact the author on +44 (0)1372 802127 or email graham.moore@pira-international.com.

References
1. Christensen CM, The Innovator's Dilemma, Harvard Business School Press, 1997
2. Baum GA, Ten-Year Forecast of Disruptive Technologies in the Paper Supply Chain, Pira International, 2006