Capital effectiveness - The forest products industry Agenda 2020

In the U.S., industry financial analysts suggest pulp and paper as an industry has been criticized for not yielding an adequate return to its shareholders on the capital invested over the past decade. As a result, this has put the industry under extreme pressure. Capital intense Fragmented Large scale Commodity oriented Technically advanced, but with technologies available globally An industry under price/margin pressure Two key ways by which the U.S. industry can address these challenges are: Individual corporate competitive strategies with the application of best management practices, innovation and utilization of advanced practices and technologies. Pre-competitive strategies through focused research and development, along with the joint advancement of critical technologies. AF&PA's 'Agenda 2020' is one mechanism to help align the pre-competitive efforts of the industry to improve capital effectiveness over the upcoming decade. 1. Developing and sharing best capital management practices. 2. Black liquor and biomass gasification. 3. Paper machine production and quality improvements. 4. Improved materials of construction. 5. Improved modeling, simulation, optimization and operator training. 6. Biotechnology - raw materials/pulping and bleaching. 7. Minimum-impact manufacturing. 8. Intelligent maintenance approaches. 9. Direct causticizing. A business case has been developed for each of the strategic opportunities. Most areas can be dealt with through existing industry coordination processes. Only the first area, sharing of best capital management processes, will require significant discussion and agreement since most companies' view this as an area of proprietary advantage. One potential industry model exists in the process chemical and refining industry. A significant culture change will be required, however, if we choose to follow their model. Black liquor and biomass gasification technologies appear to be suited for near term joint industry and supplier development and would have a significant, positive impact on the industry. The Agenda 2020 'Capital Effectiveness' team also encourages a continuing, better understanding of how the U.S. Forest Products industry, specifically pulp and paper, can compete effectively in a global economy.