Believing in pulp and paper - exclusive Metso interview

By Mark Rushton, Editor, Pulp & Paper International Magazine, RISI

BRUSSELS, May 23, 2011 (RISI) - I interviewed Pasi Laine, the incoming president of Metso's Paper and Fiber Technology (and deputy to the Metso group's new CEO, Matti Kähkönen), at the company's global headquarters in Helsinki, Finland. At the time of the interview, Laine had only been in the post for approximately one hour! However, with a background such as Laine's - with more than 22 years experience immersed in the very depths of Metso's pulp, paper, automation and power operations - he is far from a newcomer to the business and the down-to-earth Finn appears to be a solid choice to have at the helm of the company as it tackles future challenges.

So, how does it look from the hot seat of one of the leading suppliers to the world wide pulp and paper industry? Laine says: "Well, I may have only been in the post for a short while, but I spent the previous three months travelling around and really getting a grip on our global situation. That has involved two trips to Brazil, one to China, and of course a number of visits to our facilities in Sweden and Finland, and I have to say that from where I stand, Metso's Paper and Fiber Technology is in great shape.

"Because of the global nature of the pulp and paper business there is a lot of adjustment that has to take place in different regions and markets, which includes the appointing of all the right people down the line," continues Laine. "One of my key objectives in this appointment is to make sure we maintain, progress and evolve this ethos which has become one of our priorities over the years. Personnel - particularly local to our operations around the world - are instrumental to our success. An example of this is that in Brazil we have a highly skilled Brazilian team, and in China, we have a highly skilled Chinese team, which all helps to maintain a close link with our customers and an ability to communicate all the features of our technology and service offerings across the complete pulp and paper scale."

The "Old World" is still a big world

Laine's busy schedule so far, and more importantly the destinations of those visits, perhaps reveals what the company sees as the "hot" areas of the world when it comes to pulp and paper. Laine responds: "Actually, whilst Latin America and China are important, the fact is that all regions of the world are important to us. Take for instance North America; this region may not have many capital projects going on, but it is still a vital player in the production of pulp and paper - in fact somewhere around 40% of global pulp production is still produced in the region. It is also a massive market for paper products, and therefore the paper production that serves it. So North America in turn is vital to Metso for the service business it generates for us."

The service business within the Paper and Fiber Technology represents a healthy 41% of its total sales, and Europe is also key in this area. "The European region is again of high importance," stresses Laine. "The ‘Old World' is still a big world; capacity and consumption is high and we have good demand from customers in Europe. Again, this is mainly in the service and rebuild markets, but as we all know, high value new capital projects pop up every now and then. So as far as we are concerned, Europe is still a vibrant region and will continue to be so.

"And yes of course, Latin America, China and the rest of Asia are incredibly important to us. In the case of Latin America, the pulp capacity increase is a big part of our business in the region, but there is also the opportunity in the coming years of the increase in papermaking capacity. China is and will remain interesting to us, particularly over the next five to 10 years for two reasons; new capacity of papermaking, and the increasing service market due to the growing installed base of modern machines."

Areas of growth

According to paper industry analysts in terms of business segments, packaging and tissue are showing the most growth, which are also areas that Metso has strong offerings in. In fact on the packaging side, Nine Dragons, one of China's rapidly rising producers, has recently started up two new Metso containerboard machines. Laine comments: "In terms of capital projects, board machine production is prolific, particularly in China as the packaging market continues to rise, and we believe that this market will continue to be strong. Of course we plan to remain as the leading supplier in that market.

"The tissue area is looking really good as well," continues Laine, "And the good thing about this product is that it is not so China-centric, and is generally made and produced where it is consumed. We are currently building machines in several countries. We have done a lot of work on our tissue machine offerings, and have developed good modular concepts. This is a market that continues to look promising."

Metso spends around Euro 60 million on pulp and paper related R&D annually. Laine says: "R&D in the growing regions and business areas is vitally important to us going forward. We currently have most of our research facilities and pilot plants in the Nordic countries, and one of the challenges we have is developing R&D facilities in the growing regions."

Keeping in the current strong position

One of the big questions that everyone likes to know when a new president comes in, is what, if any, changes are going to be made? Laine says: "The management team in Paper and Fiber Technology at Metso have been hard at work over the last few years making their own changes and adjustments, mainly to respond to market conditions and the fact is Metso has to continue to be agile and constantly challenge the way we do things. But I don't see it as my role to come in and make sweeping, radical changes. I strongly believe that we have to continue in exactly the way we have been operating, but in some areas we have to quicken the pace, and certainly throw further challenges at the competition. The main thing in my estimation is to keep us at the current strong position at the same time as constantly improving.

"If there are any areas I am looking at to make further changes, it will be in the manufacturing and service footprint," continues Laine. "For instance a lot of production and engineering is carried out in Scandinavia and then shipped to customer sites all over the world. Logically the next step would be to have a close look at how we can reduce that footprint and perhaps move some manufacturing closer to the customers. And on the service front, it is critical to develop the service core all the time. In the service business, you can't take big steps, you have to do everything on a small scale, consulting with the customer constantly. This is an area we will be working on."

When commenting on his particular management style, Laine admits to being more orientated to the overall holistic operation as opposed to being purely sales or production driven. He says: "Because of my engineering background, I am more inclined to make machines work, rather than sell them, but my strength is in picking the right team for all areas and making sure that the whole organisation is functioning as well as possible."

Does Laine have a message for Metso's customers all around the globe about the future? "All the people working for the Paper and Fiber Technology business at Metso believe in pulp and paper. When you look at this business in a global sense, you see that it is a fascinating and most importantly, a growing industry. And when you take into account the sustainability factor, and the fact that half of what is used as raw material in the paper industry is from recovered paper and the other half is from renewable resources, what better industry could we choose to be in? Metso is a proud and committed supplier to this great industry, it is also one of the largest. So whether it be pulp, paper, board or tissue, our position as one of the leading suppliers to each sector will continue way into the future."

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