Paper Industry Facts

Industry Needs

The pulp and paper industry is a major branch of US manufacturing that plays a critical role in the local economies of virtually all regions of the United States. Yet during the last decade and a half, the industry has been overcome with economic, financial, and organizational dislocations that firms have found difficult to address. Among these are chronic problems of over-capacity, weak prices, poor profit outlooks and deteriorating shareholder value.

Faced with growing competition both within the US and internationally, US firms have tended to respond to these difficulties through redoubled efforts to achieve greater economies of scale - strategies that typically rely on major capital investments (e.g., in newer and faster paper machines) that tend to compound the Industry's problems of over-capacity and weak pricing. Although the current wave of mergers and acquisitions opens up increased potential for newer and more disciplined approaches in formulating corporate strategies, the problems pulp and paper firms currently face are industry-wide and too costly and complex to be addressed by companies operating independently.

This brief history and characterization of the Paper Industry demonstrates a strong need for addressing its challenges and opportunities. The expertise and experience of Industry leaders should be combined with fresh and independent perspectives and options that can be provided by the academic community.  The Center for Paper Business and Industry (CPBIS) combining the resources of the Institute of Paper Science and Technology (IPST) and the Georgia Institute of Technology (GIT) serves this function.

We believe it is critically important for identification of the Paper Industry's issues and needs to be based on direct input from both the Industry itself and the academic community at GIT and IPST. Consequently, a comprehensive survey of Industry Leaders from 20 major North American Paper Industry firms was conducted along with an in-depth dialog with the GIT and IPST staffs. This collective body of input and guidance addressed a wide array of topics and concerns, which were considered in the creation of this proposal. The Industry Leadership Group is very supportive of a Center concept that provides a foundation for creating critically important knowledge of direct relevance to the Paper Industry.

The specific issues jointly identified by the Industry and the academic community that will serve as the focus of Center education and research programs can be grouped into five core theme areas, as follows:

• In terms of globalization - or the cross-national forces, events and structures that, in the aggregate, determine the defining characteristics of an industry sector - what strategic directions need to be pursued for the Paper Industry, a highly traditional, region-based branch of the US economy, to recapture its dynamism and excel as a competitive force in the world-wide economy?

• Regarding enterprise effectiveness - or the economic, social, and organizational relationships that affect the operations, performance and competitiveness of firm - what are the required management structures, operating tactics, and practices that need to be developed and pursued to support the Paper Industrys efforts to remain competitive internationally?

• Concerning workplace transformation - or the organizational structures, management directions, and policies that collectively establish the work environment for those engaged in the development, manufacture, and delivery of products - what organizational changes aimed at developing more effective management structures and more flexible work systems are needed to achieve the higher levels of quality and productivity the Paper Industry will require to excel competitively in world markets?

• Related to innovation - centering on how firms might better harness their scientific and technical knowledge for product or process innovation - what paths should the Paper Industry follow to use technological innovation as a real value creation and sustainable, competitive differentiation mechanism?

• In consideration of the community - or relationships between firms and the social, cultural, and political constituencies they simultaneously serve and depend on - what are the critical issues, questions and trends the North American Paper Industry must be aware of and embrace to achieve and sustain success in the more complicated and engaged business climate of today?

In recognizing the need to address these themes and specific issues, Industry leaders are overcoming one of the major barriers to progress. Another obstacle is the lack of sound, scientifically based information upon which to base change strategies. The CPBIS intends to enhance our understanding of factors affecting the Industry's performance, and help address its needs and opportunities.

Paper Industry leaders know that the pursuit of such knowledge can no longer focus primarily on the purely technological issues facing the Industry. Nor can improved understanding be driven mainly by such a high degree of intuitive, distant advice as in the past. Instead, a dedicated effort is required to bring objective, fact-based, observation-driven, in-depth assessments to a wide array of non-technological issues, as have been identified above. It is through a combination of technological, managerial, and contextual knowledge and understanding that the Paper Industry will rediscover its paths to success. By drawing on the resources of IPST, GIT, and the Paper Industry, the CPBIS is designed to offer a unique blend of multidisciplinary and multi-institutional perspectives and analysis.