Failed strategies, external events or just life in the global markets? Discussing the downturn of the pulp and paper industry in Finland
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After the recession of early 1990s the major pulp and paper companies in
Finland engaged in further consolidation and widened their earlier “European”
investment orientation into “global” business strategies by mill acquisitions
in North America and elsewhere. In the search for better profitability,
the shareholder value paradigm was gaining strength as a business model.
Profitability peaked in 2000, but then turned downwards as it largely did
also globally. Product demand, prices and costs developed unfavourably.
Global competition increased and problems of excess capacity became more
severe, in particular in Europe. In Finland the strategies of belt tightening
and leaning, ultimately called “survival strategies”, were adopted. The pace
of mill closures, production breaks and personnel lay-offs, started in 2005
and has lasted until today. The paper discusses what went wrong and can be
learnt, if anything, as the survival test seems to be passed, profitability of
paper companies is improving, and shareholders are gradually gaining back
what belongs to them.