ICT and e-Business in the Pulp, Paper and Paper ... - empirica

Pulp, paper and paper products
However, closer reflection on drivers of the competition increase indicates that ICT is not
among the main ones. Certainly, ICT will be intensively used by all parties involved; but
as e-business activity among larger companies within the industry is quite mature, there
is little opportunity for gaining competitive advantage for a single company. It will
predominantly be other factors (such as developments in labour costs, strategic
partnerships, capabilities for managing global logistics) which will shape competitive
developments.
Moreover, a distinction has to be made in this context between the situation in the paper
market and in the pulp market. In the paper market, production units in the EU are losing
out on export markets in Asia and South America. This is why European companies are
consolidating the development of new production capacities, and – in some cases –
closing mills. There are contrasting views, however, on whether Asian or South America
paper producers will make any large inroads into the EU. One line of argument is that
they have enough expansion room in their own fast growing markets and will, therefore,
not focus their expansion strategies into Europe or the USA. On the other hand, it cannot
be excluded that Asian and South American companies temporarily increase their paper
export to the EU at times when they expand their production capacity too fast in relation
to their own regional demand increase.
For pulp production, on the contrary, imports are increasing, in particular from South
America. A growing part of this trade flow is, and will continue to be, within EU-based
companies which have built and are building capacity in South America. The main reason
for this shift is the very low wood costs (about one quarter of the EU level). Imports from
Russia have also reached significant size. The expansion of the Russian production
capacity and their foreign investments have been relatively slow, but could pick up in the
near future.
In summary, for European P&P manufacturers, the expansion strategies of competitors
from emerging markets will probably be a very influential factor determining market
developments and their own strategy in the next 10-15 years; but this development is not
strongly induced or reinforced by ICT and e-business.
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