By Anders Thorén, communications consultant, pulp and paper industry
KARLSTAD, SWEDEN,
Sept. 16, 2009
(RISI) -
The pulp and paper industry has long and proud traditions in the Swedish region centered on the province of Värmland. By the middle of the 19th century there were already over 50 mills here within an area that now takes less than two hours to navigate by car. But by the end of the 1990s the industry was facing severe challenges. In 1999 the region's pulp and paper businesses formed a cluster organisation called The Paper Province - today ranked as one of Europe's most innovative clusters. In September 2009 The Paper Province celebrated 10 successful years of co-operation.
The Paper Province supports the development of innovative forms of collaboration that improve competitive strength and increase growth within the pulp and paper industry. This is one of the busiest pulp and paper regions in Sweden and the world, with over 230 companies active in the industry.
"The unique context, with businesses active in all parts of the chain of value, provides benefits through partnerships that boost both development and results," says Mats Williams, president of The Paper Province.
The region is home to major machinery and process system suppliers such as Metso, Andritz, GL&V, Voith and BTG, as well as technology and IT consultants such as ÅF, Pöyry, Citec KPA, Sogeti and Tieto. There are also paper mills and packaging production units operated by Stora Enso, Billerud, Rottneros, Nordic Paper, Tetra Pak and Mondi, alongside an extensive network of suppliers and contractors.
"Our strong history has given us unique opportunities, which we have managed well through proactive partnerships and competition between global giants and local suppliers," says Mats Williams.
The forest industry's answer to Hollywood
A special event to mark the 10th anniversary of The Paper Province attracted over 700 people to Karlstad and featured specialist seminars and a big party with a Hollywood theme. The theme was chosen carefully. The Paper Province has been frequently compared with the film industry cluster in California.
"Hollywood is a good example of how a region manages to bring together a large number of key players in an industry and makes them succeed together, thus attracting even more talent from all over the world. We wish to function in exactly the same way for the global pulp and paper industry," says Mats Williams.
One man who thinks The Paper Province is well on the way to fulfilling its aims is Örjan Sölvell, a professor at the Stockholm School of Economics and one of Europe's leading researchers into business clusters. Örjan Sölvell spoke on cluster development at the 10th anniversary celebrations.
"Värmland and its forest industry should be congratulated on the way it links businesses, the university, public bodies and investors to create development and business success," says Örjan Sölvell.
One of Europe's leading clusters
When a survey of the internationally competitive clusters in Sweden was made in the 1990s, neither Värmland nor the pulp and paper industry were considered. That would be impossible today.
Two years ago the EU surveyed over 2,100 European clusters and identified 16 with top marks for innovation. One of them was The Paper Province.
"That means The Paper Province is now one of Europe's leading clusters," confirms Örjan Sölvell.
More jobs, new products and increased sales
The Paper Province focuses on co-operation in marketing, competence procurement, project development and regional growth. Independent surveys are carried out each year to measure the performance of the organisation and its impact on member companies.
The most recent survey, carried out in the midst of the financial crisis, shows that pulp and paper companies in and around Värmland draw significant benefits from their involvement in The Paper Province.
"Co-operation between businesses and Karlstad University boosts competitiveness, which in turn results in new and improved products, leading to concrete growth effects such as higher sales and more jobs," explains Mats Williams.
This year's survey shows that around half (47%) of companies have increased their research and development co-operation with the university thanks to participation in The Paper Province, while seven out of ten companies confirm that the partnership will lead to new products and services. More than one in three companies (34%) consider that sales have risen thanks to membership of while one in five companies say that membership has led to the recruitment of new staff. These positive signs are strengthened by the fact that the pulp and paper industry has invested an average of SEK one billion ($US145 million) per year in the region over the past decade.
"Furthermore, 97% of members say they co-operate with other businesses in their competence development. It's quite unique for competing businesses to work together in this way and it results in concrete success factors," says Mats Williams.
Focus on the future
There is absolutely no doubt that The Paper Province's activities produce good results. Over the past decade the cluster has initiated a series of projects and initiatives that have contributed to the development of the global pulp and paper industry.
In 2004 The Packaging Greenhouse was formed. This is an independent and commercial R&D centre featuring a pilot machine and laboratories. Companies from across the world apply to the center to test new products and services within the packaging industry.
In 2007 The Energy Square, the world's first international centre for energy efficiency in the pulp and paper industry, was formed. Its aim is to simplify the process for developing new products and services that reduce energy consumption within the global pulp and paper industry. The Energy Square has a strong international appeal and co-operates with, among others, the China National Pulp & Paper Research Institute (CNPPRI).
"Together with a series of other initiatives within the field of training, this is a concrete example of how we can use both partnership and competition to strengthen the innovation and strength of our member companies," says Mats Williams, who considers this work to be especially important as the industry once again faces major challenges.
"We have built a solid base and learnt a lot during the first ten years of The Paper Province. I am therefore convinced that we will surmount the current challenges and that in 20 years time there will be even more member companies celebrating our 20th anniversary. This will mean that we will be an even better example of an industrial cluster," concludes Mats Williams.
Members comments on The Paper Province
"The Paper Province has attracted labour and businesses to the region, which is why it has never been difficult to recruit competent staff here. The good climate of co-operation between machinery suppliers and mills makes it easier for us at Metso to test new products. It's helped us cut the time for our development and therefore the time it takes to get new products onto the market." / Per-Åke Färnstrand, Metso
"Our relations with colleagues at small and large companies have improved thanks to The Paper Province. We all benefit from that. The organisation also gives us valuable contacts outside our industry, with the university for example, and with other organisations. When Andritz expanded its business in Sweden two years ago we chose to do so in Karlstad, since we knew we could find competent staff here. We have not regretted that decision." / Mikael Forslund, Andritz
"The pulp and paper industry has a long and significant history in our region. By participating in The Paper Province, Stora Enso and many other companies have managed to build up a profile of a highly advanced sector with great significance for the region and the international pulp and paper industry." / Carl-Johan Albinsson, Stora Enso, Skoghall mill
"Co-operation within The Paper Province has led to the establishment of unique skills resources in our local region. Billerud has drawn a lot of benefits from this, because the competence helps our development, not least when, like other mills, we have focused sharper and sharper on our core business." /Per Bjurbom, Billerud Gruvön
"In ten years The Paper Province has managed to bring together an impressive group of businesses, which has had great significance for the region. Through co-operation and competition between small and large companies, unique opportunities for development are created. Then it's up to us, the member companies, to benefit from The Paper Province based on our own special requirements." /Håkan Bremler, Pöyry
"Participation in The Paper Province strengthens the image of Tieto as an important player in the global pulp and paper industry. At breakfast meetings and other events we can exchange experience and learn from other competent players. This is where we build the relationships that lead to concrete business for us. In brief, being a part of The Paper Province improves our competitive strength and our business opportunities." /Lars-Göran Envall, Tieto
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Facts about The Paper Province
230 businesses with 12,500 employees
Companies are active in over 100 countries
Companies have invested SEK 1 billion per year in the region over the past 10 years
13 mills (one third of all mills in Sweden)
40% of Sweden's fiber-based packaging material produced here
2 universities
8 research centres with commercial operations
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Effects of The Paper Province at member companies
Proportion of companies where participation in The Paper Province contributes to:
Concrete growth effects
- Increased sales 34%
- Increase in no. of employees 20%
Improved competitiveness
- Improved products and services 70%
- New products and services 65%
Research and development (R&D)
- Increased R&D co-operation with university 47%
Competence procurement
- Makes it easier to recruit the right skills 80%
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Cluster facts
A cluster is a geographic concentration of several businesses competing in the same industry. Research has shown that businesses in a cluster develop faster than other businesses, and that businesses in a cluster are more competitive.
Research done at the Stockholm School of Economics has identified six key stages in the process of cluster formation. The development of The Paper Province matches this process closely.
1. Local conditions
Business history in Värmland has been strongly influenced by the region's natural wealth. Successful exploitation of the forest started early, which created unique local knowledge and helped the region become a unique competence centre for the global pulp and paper industry.
2. Enterprise
In recent decades a rich flora of businesses has grown up out of the traditional forest industry base. The times have now passed when paper mills, with a small number of suppliers outside the gates, dominated the business scene. Today the relationship is rather the opposite, with a multi-faceted technology and service sector increasingly expanding its field of operation into new markets in Sweden and abroad.
3. Social capital
Nowhere else in the world is so much competence and experience gathered around the pulp and paper industry as there is here. Through formal and informal networks, knowledge and technology are shared among the region's pulp and paper companies, which boosts development and earnings.
4. Smoothly functioning components
Around the region centred on Värmland there are today 230 companies and over 12,500 employees active in the pulp and paper industry. Through participation in The Paper Province most of these companies work together with Karlstad University and other public bodies, with benefits for everyone. This work is simplified by the existence of sophisticated demand, specialist knowledge and extensive research and development in the region.
5. Politics
Close co-operation with Region Värmland, the County Administrative Board and The Paper Province member companies has resulted in constructive and creative cluster innovation policies. Politicians are thus able to support organisations within the cluster.
6. Global links
The Paper Province has become a hub for the global pulp and paper industry. People and businesses move here to develop. Goods and services developed and produced by the region's pulp and paper industry is increasingly reaching international markets.
