11
State of the North American State of the North American Pulp & Paper Industry Pulp & Paper Industry –– An Update & Outlook An Update & Outlook ––
Unstable Times Unstable Times –– Problems or Opportunities?Problems or Opportunities?---- October 2005 October 2005 ----
Value Resolution Group Value Resolution Group –– Dan Cenatempo AVA, CMCDan Cenatempo AVA, CMCCenter for Paper Business and Industry Studies (CPBIS) Center for Paper Business and Industry Studies (CPBIS) –– Jim McNuttJim McNutt
22
OverviewOverview
North America Pulp & Paper Industry North America Pulp & Paper Industry ----Update & OutlookUpdate & Outlook
Where are We?Where are We?Industry Performance Industry Performance EconomyEconomyGradeGrade--ByBy--Grade DiscussionGrade DiscussionIndustry SpendingIndustry SpendingInvestment Decisions’ DriversInvestment Decisions’ DriversWrapWrap--up and Q&Aup and Q&A
33
Outlook Outlook –– Where Are We?Where Are We?A combination of increased foreign competition, rise of A combination of increased foreign competition, rise of substitutes and economic recession substitutes and economic recession drove down pulp drove down pulp and paper demand between 2000 and 2002and paper demand between 2000 and 2002
However, the North American pulp and paper industry is However, the North American pulp and paper industry is currently enjoying a modest cyclical reboundcurrently enjoying a modest cyclical rebound –– helped helped greatly by: greatly by:
Recent years capital Recent years capital constraintsconstraints & capacity & capacity rationalizations rationalizations tthrough hrough in partin part significant industry capacity closuressignificant industry capacity closuresImproving domestic Improving domestic economic conditionseconomic conditionsA A weakened weakened US dollarUS dollar
As a result As a result ---- supply is relatively in balance with demand supply is relatively in balance with demand and and pricing power shifted back towards paper producerspricing power shifted back towards paper producers
44
Outlook Outlook –– Where Are We?Where Are We?But, this modest rebound is loosing momentum and risk But, this modest rebound is loosing momentum and risk remains fromremains from::
Slowing Slowing domestic demand growthdomestic demand growthRisingRising international competition international competition –– but but some changessome changesevolvingevolvingSubstitutionSubstitution pressure from alternative substrates & mediaspressure from alternative substrates & mediasAgingAging domestic asset base domestic asset base –– requiring investment attentionrequiring investment attentionNagging poor Nagging poor ---- but improving but improving ---- financial performancefinancial performanceLure of pent up expansion plansLure of pent up expansion plans in an improving market in an improving market ––risks of past behavior still overhangingrisks of past behavior still overhangingOne time events One time events ---- such as hurricanes Katrina, Rita & Wilmasuch as hurricanes Katrina, Rita & Wilma
55
Outlook Outlook –– Industry PerformanceIndustry PerformanceCreating shareholder value Creating shareholder value is is thethe goal of the firmgoal of the firmSuccessful companies continuously identify and successfully Successful companies continuously identify and successfully execute investments execute investments with returns greater than cost of capitalwith returns greater than cost of capitalThe industry has not made target returns and, thereforeThe industry has not made target returns and, therefore not not attracted necessary capital investment attracted necessary capital investment –– but this could be but this could be turning . . .turning . . .Performance Performance has traditionally followedhas traditionally followed excess capacity and excess capacity and pricing pricing –– yet yet –– as noted as noted –– we may be entering a new era herewe may be entering a new era hereAnd note that And note that –– total shareholder returns have held up bettertotal shareholder returns have held up betterthan some standard industry benchmarksthan some standard industry benchmarks
Industry performance and shareholder returns are improving but still below the level required by investors to make a fair return at this time . . .
Industry performance and shareholder returns are Industry performance and shareholder returns are improving but still below the level required by improving but still below the level required by investors to make a fair return at this time . . . investors to make a fair return at this time . . .
66
Outlook Outlook –– Industry PerformanceIndustry Performance2005 Returns 2005 Returns
Are Are ImprovingImproving ––But Still 4 Points But Still 4 Points Below Target Below Target ––
Rational Rational Investors Will Investors Will Not AllocateNot AllocateCapital To A Capital To A
Poorly Poorly Performing Performing
Industry Industry –– Key Key Question = Is Question = Is The Industry The Industry
Situation Situation Changing?
0%
5%
10%
15%
20%
1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 Q22005
Return On Total Capital Cost of Capital
ROTC averages 6.7% vs. 11.0% cost of capital
Changing?
77
Outlook Outlook –– IndustryIndustry PerformancePerformanceTotal Shareholders’ Returns Still Trail S&P 500Total Shareholders’ Returns Still Trail S&P 500
100
125
150
175
200
225
250
275
300
325
350
375
400
92 93 94 95 96 97 98 99 00 01 02 03 04 05
Inde
x of
Mon
thly
Tot
al S
hare
hold
er R
etur
ns
S&P Return Index P&FP Company Avg.P&FP Company W. Avg.
S&P 500 TSR = 9.1% Per YearP&FP W. Avg TSR = 6.9% Per YearP&FP Avg. TSR = 6.1% Per YearL.T. Government Bond = 6.2% Per Y
The S&P 500 The S&P 500 Rebound Still Rebound Still Leaves Pulp Leaves Pulp
& Paper & Paper Industry Industry
Shareholders Shareholders Wanting Wanting ––
UnderperformUnderperforming The Index ing The Index By 2By 2--3 Points 3 Points
Per Year Per Year Since 1992Since 1992
88
Outlook Outlook –– IndustryIndustry PerformancePerformanceFinancial PerformanceFinancial Performance
US industry financial performance US industry financial performance has been poor on an has been poor on an absolute basis and absolute basis and persistentlypersistently weak weak from the late 90’s from the late 90’s through todaythrough today –– But as noted But as noted ---- we are seeing improvementswe are seeing improvements
These shortThese short--term performance improvements are a welcome term performance improvements are a welcome relief for the industry relief for the industry but could be transientbut could be transient if industry if industry management is again tempted to significantly increase management is again tempted to significantly increase major major capacity orientedcapacity oriented [instead of performance enhancing][instead of performance enhancing] capital capital investmentsinvestments
Further, Further, ongoing pulp and paper facility closuresongoing pulp and paper facility closures will likely will likely required to achieve improved financial performance.required to achieve improved financial performance.
99
Outlook Outlook ---- The EconomyThe Economy
Overall Overall Economic Economic
Growth Growth Projections Projections Do Favor Do Favor
Continued Continued Demand Demand
GrowthGrowth In The In The IndustryIndustry
3.6%3.6%4.6%4.6%1.8%1.8%--0.1%0.1%Latin AmericaLatin America4.8%4.8%5.1%5.1%6.0%6.0%4.3%4.3%Middle EastMiddle East6.9%6.9%7.6%7.6%7.7%7.7%6.6%6.6%Developing AsiaDeveloping Asia
6.6%6.6%8.0%8.0%7.8%7.8%5.4%5.4%Commonwealth of Commonwealth of
Independent StatesIndependent States
4.8%4.8%5.5%5.5%4.5%4.5%4.4%4.4%Central and Eastern EuropeCentral and Eastern Europe5.4%5.4%4.5%4.5%4.3%4.3%3.5%3.5%AfricaAfrica5.9%5.9%6.6%6.6%6.1%6.1%4.8%4.8%Other Emerging MarketsOther Emerging Markets
4.0%4.0%5.5%5.5%3.0%3.0%5.0%5.0%Newly Industrialized Asian Newly Industrialized Asian
EconomiesEconomies
3.5%3.5%4.3%4.3%2.4%2.4%3.6%3.6%Other Advanced EconomiesOther Advanced Economies3.1%3.1%2.9%2.9%2.0%2.0%3.4%3.4%CanadaCanada2.5%2.5%3.4%3.4%2.2%2.2%1.8%1.8%UKUK2.3%2.3%4.4%4.4%2.5%2.5%--0.3%0.3%JapanJapan2.2%2.2%2.2%2.2%0.5%0.5%0.8%0.8%Euro AreaEuro Area3.4%3.4%4.4%4.4%3.0%3.0%1.9%1.9%USUS
Advanced EconomiesAdvanced Economies20052005200420042003200320022002Real GDP Growth By RegionReal GDP Growth By Region
1010
Outlook Outlook ---- The EconomyThe EconomyNA Sectors That Directly Drive Pulp & Paper Demand Are NA Sectors That Directly Drive Pulp & Paper Demand Are
Projected To Be Weaker Than Overall GDP Projected To Be Weaker Than Overall GDP –– But Remain PositiveBut Remain Positive
--2.0%2.0%1.0%1.0%5.5%5.5%2.9%2.9%2.5%2.5%Tissue, Building Tissue, Building ProductsProductsHousing StartsHousing Starts
1.0%1.0%1.0%1.0%0.2%0.2%1.1%1.1%1.2%1.2%Tissue, Building Tissue, Building ProductsProductsUS HouseholdsUS Households
2.7%2.7%3.4%3.4%--0.4%0.4%5.3%5.3%3.4%3.4%P&W Papers, P&W Papers, TissueTissue
Professional Employment & Professional Employment & Business ServicesBusiness Services
4.6%4.6%15.0%15.0%2.0%2.0%5.2%5.2%21.6%21.6%P&W PapersP&W PapersComputer & Peripheral SalesComputer & Peripheral Sales
2.9%2.9%7.4%7.4%6.3%6.3%5.5%5.5%4.8%4.8%TissueTissueFood services and drinking placesFood services and drinking places
3.1%3.1%5.0%5.0%3.6%3.6%3.2%3.2%1.9%1.9%BoxboardBoxboardFood & Beverage SalesFood & Beverage Sales5.3%5.3%5.7%5.7%0.7%0.7%9.5%9.5%4.9%4.9%PackagingPackagingIndust. Prod. Indust. Prod. -- DurablesDurables0.9%0.9%2.2%2.2%--0.6%0.6%1.3%1.3%1.8%1.8%ContainerboardContainerboardIndust. Prod. Indust. Prod. -- NonNon--DurablesDurables2.5%2.5%3.7%3.7%0.1%0.1%6.0%6.0%3.5%3.5%AllAllIndustrial ProductionIndustrial Production
2.8%2.8%3.1%3.1%3.2%3.2%4.4%4.4%2.6%2.6%AllAllPersonal Consumption Personal Consumption ExpendituresExpenditures
2.2%2.2%3.6%3.6%1.9%1.9%1.6%1.6%2.4%2.4%AllAllImplicit Price DeflatorImplicit Price Deflator3.0%3.0%3.4%3.4%2.5%2.5%4.1%4.1%2.5%2.5%AllAllReal GDPReal GDP
20062006--201020102005200520002000--
2004200419951995--20002000
19901990--19951995
Industry Segment Industry Segment ImpactedImpactedEconomic IndicatorEconomic Indicator
1111
Outlook Outlook ---- The EconomyThe Economy
The Katrina The Katrina –– Rita Rita –– Wilma Economy EffectWilma Economy EffectReduce 2006 GDPReduce 2006 GDP from 0.6 to 2.0 ptsfrom 0.6 to 2.0 pts
Sustain Sustain high or increasehigh or increase energy pricesenergy prices
Increase Increase risk of recessionrisk of recession
Likely Likely to drive down volume and pricesto drive down volume and prices in paper, in paper, packaging and market pulp grades in 2005 / 2006packaging and market pulp grades in 2005 / 2006
Will offset falling pulpwood demand with enhanced Will offset falling pulpwood demand with enhanced demand for structural timber and engineered wood demand for structural timber and engineered wood productsproducts..
1212
Outlook Outlook ---- GradeGrade--byby--Grade DiscussionGrade DiscussionNorth American MarketNorth American MarketNA BoxboardNA BoxboardNA ContainerboardNA ContainerboardNA NewsprintNA NewsprintNA Printing & Writing PapersNA Printing & Writing PapersNA Market PulpNA Market PulpNA TissueNA TissueNA Recovered Fiber & EnergyNA Recovered Fiber & Energy
1313
Outlook Outlook ---- NA Market OverviewNA Market Overview
The North American Pulp and Paper industry is The North American Pulp and Paper industry is a mature a mature web of businessesweb of businesses generally characterized by:generally characterized by:
Highest per capita consumption in world across all gradesHighest per capita consumption in world across all gradesSlower growth than real GDPSlower growth than real GDPHigh capital intensityHigh capital intensityCost and price based competition Cost and price based competition Below cost of capital returns Below cost of capital returns An aging asset baseAn aging asset baseCyclical pricing and profitability. . . . .Cyclical pricing and profitability. . . . .
Historically, the North American industry expanded after each cyclical peak. Excess capacity was then been pushed onto
international markets – This pattern has finally changed.
Historically, the North American industry expanded after each Historically, the North American industry expanded after each cyclical peak. Excess capacity was then been pushed onto cyclical peak. Excess capacity was then been pushed onto
international markets international markets –– This pattern has finally changed.This pattern has finally changed.
1414
Outlook Outlook ---- NA Market OverviewNA Market OverviewToday the NA Industry business environment Today the NA Industry business environment has has stabilized due to a combination of factors:stabilized due to a combination of factors:
A weakening US dollarA weakening US dollarRebounding domestic demandRebounding domestic demandImproving returnsImproving returnsWeakening competitiveness of European producersWeakening competitiveness of European producersModerating industry growth in developing regionsModerating industry growth in developing regionsBetter understanding by industry leaders of the role of Better understanding by industry leaders of the role of capacity and spending managementcapacity and spending management
This representsThis represents a substantive change from the recent a substantive change from the recent yearsyears of persistent weakening overall market place of persistent weakening overall market place conditions and demand as well as industry performanceconditions and demand as well as industry performance
1515
Outlook Outlook ---- NA Market OverviewNA Market Overview
Consequently Consequently ––As noted the As noted the demand weakness and oversupplydemand weakness and oversupply of the of the past years have begun to reverse, andpast years have begun to reverse, and
Producers have been Producers have been generally successful implementing generally successful implementing price increases price increases ---- so far so far ---- in this environmentin this environment
The net result is a cyclical upturn in the US pulp and paper industry that could reverse circa 2006 / 2007
The net result is a cyclical upturn in the US pulp and The net result is a cyclical upturn in the US pulp and paper industry that could reverse circa 2006 / 2007paper industry that could reverse circa 2006 / 2007
1616
Outlook Outlook ---- NA Market OverviewNA Market Overview
75,000
85,000
95,000
105,000
115,000
125,000
135,000
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
Nor
th A
mer
ican
Pap
er &
Boa
rd (S
T 00
0s)
Domestic Consumption Domestic Shipments Capacity
Total NA Total NA Paper & Paper & Board Board
Consumption Consumption Has Resumed Has Resumed
Growth Growth ––While Overall While Overall Capacity Capacity Is Is
Now Now Relatively Relatively
FlatFlat
1717
Outlook Outlook ---- NA Market OverviewNA Market OverviewThis has generated This has generated a much needed breath of a much needed breath of
fresh airfresh air for the NA Industry to take stock, and for the NA Industry to take stock, and determine its path forward under more stable determine its path forward under more stable
and positive circumstances . . .and positive circumstances . . .
Accordingly -- the North American industry does have a window of opportunity to further restructure and innovate
to better compete in the changing global market looking out – but the business environment for such enhancement
moves is transient – and time is likely essential.
Accordingly Accordingly ---- the North American industry the North American industry does have a does have a window of opportunity to further restructure and innovatewindow of opportunity to further restructure and innovate
to better compete in the changing global market looking out to better compete in the changing global market looking out –– but the business environment for such enhancement but the business environment for such enhancement
moves is transient moves is transient –– and time is likely essential.and time is likely essential.
1818
Outlook Outlook –– NA Market OverviewIndustry Industry
Surveys And Surveys And Projections Projections
Both Indicate Both Indicate That That Capacity Capacity Could Begin Could Begin
To Grow AgainTo Grow AgainBetween 2005 Between 2005
And 2010 And 2010 –– But But At A Much At A Much
Lower Than Lower Than Historic RateHistoric RateAnd From A And From A
Reduced BaseReduced Base
NA Market Overview
0.5%1.5%532-352NA Market Pulp
0.2%2.1%131800NA Tissue
0.0%1.7%-51-1,221NA Printing & Writing
-2.9%-0.5%-2,328-2,057NA Newsprint
0.8%1.7%1,516-1,292U.S. Containerboard
1.0%1.4%609-74NA Boxboard
2005-2010
1990-2004
2005-2010
2000-2004Grade Segment
Compound Annual Growth Rate
Change in Capacity (Tons/Tonnes)
1919
Outlook Outlook –– NA BoxboardNA BoxboardBoxboard is Boxboard is a weak but stabilizing NA segment a weak but stabilizing NA segment ----
Slow growth in industries that consume boxboardSlow growth in industries that consume boxboard, increased , increased competition from overseas producers and competition from overseas producers and widespread widespread substitutionsubstitution by plastics and alternative packaging materials by plastics and alternative packaging materials have hurt producershave hurt producers
Profitability/returns Profitability/returns are better than industry averageare better than industry average despite despite these poor fundamentals due to a relatively concentrated these poor fundamentals due to a relatively concentrated supply base supply base
Facility closures have brought Facility closures have brought supply and demand in linesupply and demand in line
Implications: Slow capacity growth projected but relatively high risk of falling demand and additional facility closures.
ImplicationsImplications:: Slow capacity growth projected but relatively Slow capacity growth projected but relatively high risk of falling demand and additional facility closures.high risk of falling demand and additional facility closures.
2020
Outlook Outlook –– NA BoxboardNA Boxboard
NA NA Boxboard Boxboard Demand Demand
Growth Now Growth Now Significantly Significantly Lags GDPLags GDP ––
Bleached Bleached Board Board
Growth Growth Slightly Slightly
Outpaces Outpaces Recycled
0.5
0.75
1
1.25
1.5
1.75
2
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
Rel
ativ
e G
row
th In
dex
(199
0 =
1)
Real GDP NA SBS Total Boxboard Recycled
2121
Outlook Outlook –– NA BoxboardNA Boxboard
3,000
5,500
8,000
10,500
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
NA
Box
boar
d Vo
lum
e Vo
lum
e (S
hort
Ton
s M
illio
ns)
NA Demand NA Capacity Total Shipments
x
Both Both Demand Demand
And Supply And Supply Have Have
Resumed Resumed GrowthGrowth But But Will Take Will Take Several Several
Years To Years To Reach Reach
Historic Historic LevelsLevels
2222
Outlook Outlook –– NA BoxboardNA BoxboardNA Boxboard NA Boxboard
Has Has Consolidated Consolidated
& Reduced & Reduced Excess Excess
Capacity Capacity –– But But Will Be Will Be
Tempted To Tempted To Add CapacityAdd CapacityIn The OutIn The Out--
years If years If Demand Demand
Continues To Continues To Grow
8%9% 9%
6%5%
3%
8%7%
5%4% 5% 5%
6% 6%5%
6% 6%
9%8%
9%
7%
0
100
200
300
400
500
600
700
800
900
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
NA
Box
boar
d - E
xces
s C
apac
ity (S
hort
Ton
s 00
0s)
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
Box
- %
Exc
ess
Cap
acity
Excess Capacity % Excess Capacity Grow
2323
Outlook Outlook –– NA BoxboardNA Boxboard
$400
$500
$600
$700
$800
$900
$1,000
$1,100
$1,200
1990 1992 1994 1996 1998 2000 2002 2004
SBS
15 p
oint
Pric
e ($
Sho
rt T
on)
Real Price ($2004) Nominal Price Linear (Real Price ($2004))
The Recent The Recent Rebound In Rebound In NA Prices Is NA Prices Is FalteringFaltering ––LongLong--term term
Prices Prices Continue To Continue To
Trend Trend DownwardsDownwards
2424
This NA Containerboard segment has undergone one of the most This NA Containerboard segment has undergone one of the most extensive restructurings within the industry extensive restructurings within the industry ----
Concentration of top producers Concentration of top producers has gone from one of the has gone from one of the lowest to highest in the industrylowest to highest in the industry –– improved capacity improved capacity utilization and expansion discipline has followedutilization and expansion discipline has followedFurther acquisitions by large players Further acquisitions by large players will be difficultwill be difficultHowever, However, NA producers have lost export marketNA producers have lost export market to new to new overseas capacity, especially in China and Germanyoverseas capacity, especially in China and GermanyProfitability and returns are Profitability and returns are lower than industry averagelower than industry averageSlack capacity Slack capacity absorbed quicklyabsorbed quickly with improved economy
Outlook Outlook –– NA ContainerboardNA Containerboard
with improved economy
Implications: Producers are expected to grow capacity slowly with demand – risks of further closures persist from
loss of volume in export markets and to substitutes.
Implications:Implications: Producers are expected to grow capacity Producers are expected to grow capacity slowly with demand slowly with demand –– risks of further closures persist from risks of further closures persist from
loss of volume in export markets and to substitutes.loss of volume in export markets and to substitutes.
2525
Outlook Outlook –– NA ContainerboardNA Containerboard
NA ContainerNA Container--board Demand board Demand Continues To Continues To
GrowGrow At A Rate At A Rate Closely Tied To Closely Tied To Domestic Domestic NonNon--Durables and Durables and
DurablesDurablesProduction
0.5
0.75
1
1.25
1.5
1.75
2
2.25
2.5
2.75
3
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
Rel
ativ
e G
row
th In
dex
(199
0 =
1)
US Linerboard US MediumUS Durable Production US Non-Durable ProductionReal GDP
Production
2626
Outlook Outlook –– NA ContainerboardNA Containerboard
15,000
20,000
25,000
30,000
35,000
40,000
45,000
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
U.S
. Con
tain
erbo
ard
Volu
me
(Sho
rt T
ons
Mill
ions
)
Demand Capacity Total Shipments
NA Capacity NA Capacity Is ExpectedIs ExpectedTo Be Well To Be Well Controlled Controlled Relative To Relative To
DemandDemand
2727
Outlook Outlook –– NA ContainerboardNA Containerboard
6% 5%4% 5%
3%
6% 6%
9%
4%
6% 6%5% 5% 5% 5%
10%
14%
9%9%
5%
7%
-
1,000
2,000
3,000
4,000
5,000
6,000
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
U.S
. Con
tain
erbo
ard
- Exc
ess
Cap
acity
(Sho
rt T
ons
000s
)
0%
5%
10%
15%
20%
25%
U.S
. Con
tain
erbo
ard
- % E
xces
s C
apac
ity
Excess Capacity % Excess Capacity
NA NA ContainerContainer--
board’s board’s Excess Excess
Capacity Is Capacity Is Now Now
Relatively In Relatively In BalanceBalance
2828
Outlook Outlook –– NA ContainerboardNA Containerboard
NA Capacity NA Capacity Reductions Reductions
Helped Helped Containerboard Containerboard
Producers Producers Maintain & Maintain &
Prices Prices –– But But Normal Profits Normal Profits
Are Not Yet Are Not Yet Being Being
Generated$200
$300
$400
$500
$600
$700
1990 1992 1994 1996 1998 2000 2002 2004
Kra
ft Li
nerb
oard
42l
b. P
rice
($ S
hort
Ton
)
Real Price ($2004) Nominal Price Linear (Real Price ($2004))Generated
2929
Outlook Outlook –– NA NewsprintNA NewsprintNewsprint is the Newsprint is the weakest overall industry NA segment weakest overall industry NA segment ----
ShortShort--term publishing and printing declines have been term publishing and printing declines have been exacerbated exacerbated by substitution to alternative mediaby substitution to alternative media
National and local papers continue to National and local papers continue to reduce page sizereduce page size
Newsprint Newsprint is in declineis in decline in the longin the long--termterm
Opportunities for further consolidation exist and Opportunities for further consolidation exist and significant significant capacity reductions and grade conversions will continue . . .capacity reductions and grade conversions will continue . . .
Implications: Rational players will spend a minimum of capital and seek value added grade conversions. No new NA
Newsprint mills are likely to be built -- at least by rational sector players . . .
Implications:Implications: Rational players will spend a minimum of capital Rational players will spend a minimum of capital and seek value added grade conversions. and seek value added grade conversions. No new NA No new NA
Newsprint mills are likely to be builtNewsprint mills are likely to be built ---- at least by rational at least by rational sector players . . .sector players . . .
3030
Outlook Outlook –– NA NewsprintNA Newsprint
0.5
0.75
1
1.25
1.5
1.75
2
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
Rel
ativ
e G
row
th In
dex
(199
0 =
1)
Real GDP NA Newsprint Demand
NA NA Newsprint Is Newsprint Is A Declining A Declining SegmentSegment In In
LongLong--Term Term ––A ShortA Short-- to to MidMid-- Term Term
Improvement Improvement May OccurMay OccurBut Is Not But Is Not ProjectedProjected
3131
Outlook Outlook –– NA NewsprintNA Newsprint
7,000
9,000
11,000
13,000
15,000
17,000
19,000
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
New
sprin
t Vol
ume
(Met
ric T
ons
000s
)
NA Demand NA Capacity Total Shipments
Demand, Demand, Capacity, Capacity, Exports, & Exports, & Shipments Shipments
Are All Are All Sliding Sliding
DownwardDownwardAt A At A
Relatively Relatively Quick RateQuick Rate
3232
Outlook Outlook –– NA NewsprintNA Newsprint
4%
11%
6%5%
4% 3%5%
10%
6%
10%
8%8%
10%8%
6%
4%
10%
12%
8%
7%9%
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
NA
New
sprin
t - E
xces
s C
apac
ity (M
etric
Ton
s 00
0s)
0%
5%
10%
15%
20%
25%
NA
New
sprin
t - %
Exc
ess
Cap
acity
Excess Capacity % Excess Capacity
The Supply The Supply And And
Demand Demand Situation Situation
Has Has ImprovedImproved
But Excess But Excess Capacity Capacity RemainsRemains
3333
Outlook Outlook –– NA NewsprintNA Newsprint
$300
$400
$500
$600
$700
$800
$900
1990 1992 1994 1996 1998 2000 2002 2004
New
sprin
t Pric
e ($
Per
Met
ric T
on)
Real Price ($2004) Nominal Price Linear (Real Price ($2004))
Capacity Capacity Reductions Reductions
Have Have Helped Helped Boost Boost
Prices Prices ----But A But A Strong Strong
Downward Downward Trend Trend
Persists Persists
3434
Outlook Outlook –– NA P&W PapersNA P&W PapersRecent Recent economic slowdown & alternative media economic slowdown & alternative media substitutionsubstitution have impacted P&W demand negatively have impacted P&W demand negatively ----
Uncompetitive Uncompetitive capacity being closedcapacity being closed & modest demand & modest demand increases will tend to reign in excess capacityincreases will tend to reign in excess capacity
CF, CGW, UCF & GW Grades CF, CGW, UCF & GW Grades have seemingly collapsedhave seemingly collapsed into into one relatively interone relatively inter--changeable/somewhat flexible grade changeable/somewhat flexible grade structure structure from consumers’ perspectivesfrom consumers’ perspectives
In this context In this context ---- CF quickly became commoditized CF quickly became commoditized ----displaced by improved CGW grades displaced by improved CGW grades –– changes still expectedchanges still expected
Implications: Significant repositioning / redeployment of assets – continued M&A & financial constraints.
Implications:Implications: Significant repositioning / redeployment of Significant repositioning / redeployment of assets assets –– continued M&A & financial constraints.continued M&A & financial constraints.
3535
Outlook Outlook –– NA P&W Papers NA P&W Papers (cont.)(cont.)
In addition In addition ---- high end uses high end uses ---- auto brochures/annual auto brochures/annual reports reports ---- are being replaced by website versionsare being replaced by website versions
High volume UCF under pressure from overseas High volume UCF under pressure from overseas competitors, and Newsprint producers competitors, and Newsprint producers are converting are converting capacity to UC and CGW grades capacity to UC and CGW grades creating serious creating serious downstream pressures for UCF across timedownstream pressures for UCF across time
Financial returns & growth prospects Financial returns & growth prospects are similar to are similar to industry averageindustry average & room exists & room exists for continued M&A activityfor continued M&A activity
Implications: Certain segments will suffer net capacity reductions and the grade turmoil will continue to create an
unstable overall grade-to-grade business environment.
Implications:Implications: Certain segments will suffer net capacity Certain segments will suffer net capacity reductions and the grade turmoil will continue to create an reductions and the grade turmoil will continue to create an
unstable overall gradeunstable overall grade--toto--grade business environment.grade business environment.
3636
Outlook Outlook –– NA P&W PapersNA P&W Papers
P&W Paper P&W Paper Demand Demand
FundamentalsFundamentalsBegan To Began To
Change In The Change In The MidMid--1990s 1990s ––Minimal And Minimal And Risky Growth Risky Growth Is Expected Is Expected
Going Going Forward
0.5
0.75
1
1.25
1.5
1.75
2
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
Rel
ativ
e G
row
th In
dex
(199
0 =
1)
Real GDP NA UCFS Demand Employment - WC ProffessionalsForward
3737
Outlook Outlook –– NA P&W PapersNA P&W Papers
20,000
25,000
30,000
35,000
40,000
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
NA
P&
Writ
ing
Pape
rs
Volu
me
(Sho
rt T
ons
000s
)
Demand Capacity Shipments
Rising Imports Rising Imports Have Have Slowed Slowed ShipmentsShipmentsRelative To Relative To Domestic Domestic
Demand And Demand And Further Further
Capacity Capacity RationalizationRationalization
Is LikelyIs Likely
3838
Outlook Outlook –– NA P&W PapersNA P&W Papers
Significant Significant NA P&W NA P&W
OverOver--Capacity Capacity
Persists Persists ––Sustaining A Sustaining A
Difficult Difficult Market Market
ConditionCondition
8%
13%
10%
8%
4%
8%
7%
8%
7%
15%15%14%
12%12%
10%
9%
14%
11%13%
12%11%
0
1,000
2,000
3,000
4,000
5,000
6,000
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
NA
P&
W P
aper
s - E
xces
s C
apac
ity (S
hort
Ton
s 00
0s)
0%
5%
10%
15%
20%
25%
NA
P&
W -
% E
xces
s C
apac
ity
Excess Capacity % Excess Capacity
3939
Outlook Outlook –– NA P&W PapersNA P&W Papers
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
1990 1992 1994 1996 1998 2000 2002 2004
Rea
l Pric
e ($
2004
Sho
rt T
on)
CFS No. 3 60lb. UCGW AverageUCFS No. 4 Xerocopy CGW No. 4 50lb.
Collapsed Collapsed Real Price Real Price
Trends Trends Continue Continue
DownwardDownwardAnd Recent And Recent
Pricing Pricing Improvements Improvements
Have Been Have Been DisappointingDisappointing
4040
Outlook Outlook –– NA Market PulpNA Market PulpMarket Pulp is an intermediate good in the production of the Market Pulp is an intermediate good in the production of the other paper and paperboard grades other paper and paperboard grades ----
Pulp Investment returns Pulp Investment returns –– among the poorestamong the poorest in the industry in the industry ––which in some circles is baffling . . .which in some circles is baffling . . .
Environmental restrictions Environmental restrictions –– new capacity additions difficultnew capacity additions difficultInternational producers International producers –– continue tocontinue to import pulp competitively import pulp competitively to USto USDIP pulps presently DIP pulps presently relatively more financially attractiverelatively more financially attractive than than virgin pulpsvirgin pulps
Implications: Some capital to be spent on integrated DIP facilities. Capacity will creep up with incremental improvement
projects – Wild card here is China’s fiber demand . . .
Implications:Implications: Some capital to be spent on integrated DIP Some capital to be spent on integrated DIP facilities. Capacity will creep up with incremental improvementfacilities. Capacity will creep up with incremental improvement
projects projects –– Wild card here is China’s fiber demand . . .Wild card here is China’s fiber demand . . .
4141
Outlook Outlook –– NA PulpNA Pulp
0.5
0.75
1
1.25
1.5
1.75
2
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
Mar
ket P
ulp
vs. P
aper
Gro
wth
Inde
x
NA P&W Papers + Tissue Total NA Market PulpNA BSKP NA BHKP
Demand Demand For Market For Market
Pulp Pulp Follows Follows Other Other
Grades Grades ––But WatchBut Watch
China’s China’s Needs and Needs and Demands Demands Looking Looking
OutOut
4242
Outlook Outlook –– NA PulpNA PulpSupply And Supply And Demand For Demand For
Chemical Chemical Market Pulp Market Pulp Is Expected Is Expected
To Be To Be Relatively Relatively FlatFlat –– But But Again Again ––Watch Watch
China’s China’s Needs Needs
Evolve . . .
-
2,500
5,000
7,500
10,000
12,500
15,000
1983 1986 1989 1992 1995 1998 2001 2004 2007 2010
NA
Mar
ket P
ulp
Volu
me
(Met
ric T
ons
000s
)
BSKP Shipments BHKP ShipmentsBSKP Capacity BHKP Capacity Evolve . . .
4343
Outlook Outlook –– NA BHKPNA BHKP
6%
12%11%11%
10%
3%
9%
6%5%
7%8%
3%
1%
2% 3%
12%
10%
4%
10%
6%5%
(200)
(100)
-
100
200
300
400
500
600
1983 1986 1989 1992 1995 1998 2001 2004 2007 2010
BH
KP
- Exc
ess
Cap
acity
(Sho
rt T
ons
000s
)
0%
5%
10%
15%
20%
25%
30%
BH
KP
- % E
xces
s C
apac
ity
Metric Tons % of Capacity
NA NA BHKP BHKP Capacity Is Capacity Is
In CheckIn Check But But Is Expected Is Expected To Creep Up To Creep Up Over Time Over Time ––Increasing Increasing The Risk Of The Risk Of
Capacity Capacity ClosuresClosures
4444
Outlook Outlook –– NA BSKPNA BSKP
9%
12% 12%14%
3%
9%
7% 7% 7% 6%
14%
1%
0%
4%7%
12% 11%
4%
11%
8%
5%
(500)
-
500
1,000
1,500
1983 1986 1989 1992 1995 1998 2001 2004 2007 2010
BSK
P - E
xces
s C
apac
ity (S
hort
Ton
s 00
0s)
-5%
0%
5%
10%
15%
20%
25%
30%
BSK
P - %
Exc
ess
Cap
acity
Metric Tons % of Capacity
NA NA BSKP Is BSKP Is Carrying Carrying Relatively Relatively
MoreMoreCapacity Capacity
Than BHKP Than BHKP –– Making It Making It
More More Sensitive To Sensitive To
SwingsSwings In In DemandDemand
4545
Outlook Outlook –– NA Market PulpNA Market Pulp
Market Pulp Market Pulp Prices HavePrices HaveOnce Again Once Again Flattened & Flattened & LongLong--term term
Fundamentals Fundamentals Still Not Still Not
StrongStrong Going Going Forward
$300
$400
$500
$600
$700
$800
$900
$1,000
$1,100
$1,200
1990 1992 1994 1996 1998 2000 2002 2004
Rea
l Pul
p Pr
ice
Per M
etric
Ton
($20
04)
NBSKP Deliv. To US NBHKP Deliv. To USForward
4646
Outlook Outlook –– NA TissueNA TissueTissue is Tissue is strongest overall segmentstrongest overall segment in North America in North America ----
EndEnd--product demand is mature product demand is mature –– Americans highest perAmericans highest per--capita consumers in world & capita consumers in world & incremental demand is slowincremental demand is slowDemand growth is slowing Demand growth is slowing –– but still expanding per capitabut still expanding per capitaHowever However –– overall company financial returns overall company financial returns less sensitive to less sensitive to supply / demand dynamicssupply / demand dynamics at mill level than other gradesat mill level than other gradesRegulatory considerations Regulatory considerations will limit large M&A activitywill limit large M&A activityBoth technology changes and Both technology changes and new entrepreneurial entrantsnew entrepreneurial entrantswill drive spendingwill drive spendingExcess capacity is building Excess capacity is building –– but likely to be absorbedbut likely to be absorbed
Implications: Segment may be losing some luster – is a day of reckoning coming or will historical market
dynamics win out?
Implications:Implications: Segment may be losing some luster Segment may be losing some luster –– is a is a day of reckoning coming or will historical market day of reckoning coming or will historical market
dynamics win out?dynamics win out?
4747
Outlook Outlook –– NA TissueNA Tissue
0.5
0.75
1
1.25
1.5
1.75
2
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
Rel
ativ
e G
row
th In
dex
(199
0 =
1)
Real GDP NA Tissue U.S. Households
NA Tissue NA Tissue Has Has
Innovated Innovated To Keep To Keep Demand Demand Ahead Of Ahead Of
Household Household FormationFormation
4848
Outlook Outlook –– NA TissueNA Tissue
Constraint Constraint Is Needed Is Needed
As As Capacity Capacity
Growth Has Growth Has Recently Recently
Outpacing Outpacing DemandDemand ––But Some But Some Structural Structural
Protections Protections Remain
5,000
6,000
7,000
8,000
9,000
10,000
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
NA
Tis
sue
Volu
me
(Sho
rt T
ons
000s
)
Demand Capacity Shipments Remain
4949
Outlook Outlook –– NA TissueNA Tissue
Excess Excess Tissue Tissue
Capacity Capacity Is Is Building Building But Will But Will
ModerateModerateAs The As The Rate Of Rate Of
Capacity Capacity Additions Additions
Slow
4%
10%11%
8% 8%
6%7%
5%4%
13%12%
11%10%9% 9%
7%
9%9%
12%
12%
7%
0
200
400
600
800
1,000
1,200
1,400
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
NA
Tis
sue
- Exc
ess
Cap
acity
(Sho
rt T
ons
000s
)
0%
5%
10%
15%
20%
25%
NA
Tis
sue
- % E
xces
s C
apac
ity
Excess Capacity % Excess Capacity
Slow
5050
Outlook Outlook –– NA TissueNA Tissue
70
80
90
100
110
120
130
140
150
160
1993 1995 1997 1999 2001 2003 2005
Hou
seho
ld P
aper
Pro
duct
sPr
ice
Inde
x
Real Price ($2004) Nominal PriceLinear (Real Price ($2004))
Consumer Consumer Products Products Pricing Pricing Is Is Trending Trending Upward Upward ––The AwayThe Away--from Home from Home
Market Market Trends Trends Are Are
Less Less FavorableFavorable
5151
Outlook Outlook –– Recovered FiberRecovered Fiber
$44
$35
$62 $62$67
$54
$62
$78$80
$81$83
$46
$0
$25
$50
$75
$100
2000 2001 2002 2003 2004 2005
Rea
l Rec
over
ed F
iber
Pric
e - U
.S. M
idw
est
($20
04 P
er S
hort
Ton
)
OCC#11 ONP#8
Recovered Recovered Fiber Is Fiber Is Creating Creating
Upward Cost Upward Cost PressuresPressures
Across Across Grades Grades –– & &
With China’s With China’s Needs Needs ––Pressure Pressure
Expected to Expected to SustainSustain
5252
Outlook Outlook –– Energy Energy –– Oil and Natural GasOil and Natural Gas
$60+ Bbl Oil $60+ Bbl Oil & $7/Mcf & $7/Mcf
Natural Gas Natural Gas Will Create Will Create
GDP & GDP & Industry Industry
InstabilityInstability ––But Also But Also
Raise Value Raise Value Opportunity Opportunity For Wood To For Wood To
Fuel . . .
$-
$10
$20
$30
$40
$50
$60
$70
1/84 1/87 1/90 1/93 1/96 1/99 1/02 1/05
Nom
inal
Dol
lars
Per
Bar
rel
$-
$1
$2
$3
$4
$5
$6
$7
$8
$9
$10
$ Pe
r Tho
usan
d C
ubic
Ft.
Oil Price Industrial Gas Price Fuel . . .
5353
US Industry SpendingUS Industry Spending
History History –– Issues Issues –– DirectionsDirectionsCapital Spending Capital Spending –– Overview & OutlookOverview & OutlookProfitability & Capital TurnoverProfitability & Capital TurnoverROTC Versus Cost of CapitalROTC Versus Cost of CapitalDebt LevelsDebt LevelsProduction Capacity ExpectationsProduction Capacity ExpectationsCapital Spending/DepreciationCapital Spending/DepreciationCapital Spending LevelCapital Spending Level
5454
US Industry US Industry –– Capital SpendingCapital SpendingUS US capital expenditures will continue to be depressedcapital expenditures will continue to be depressed by poor by poor financial performance & slowing of capacity growth financial performance & slowing of capacity growth ----
M&A crowded out CAPEX on PPE last 5 years M&A crowded out CAPEX on PPE last 5 years –– Should ease Should ease within largest firmswithin largest firms –– antitrust constraintsantitrust constraintsHowever, asset swaps & However, asset swaps & businessbusiness--line spinline spin--offs likely to offs likely to accelerateaccelerate + second+ second--tier players consolidationtier players consolidationThere is risk that unexpected international acquisitions There is risk that unexpected international acquisitions activity activity will interrupt capital spending patternswill interrupt capital spending patterns
Overall, net M&A impact should be better (less impacting) for CAPEX than the last 5 years – but not enough to offset weak
investment fundamentals yet.
Overall, net M&A impact should be better (less impacting) for Overall, net M&A impact should be better (less impacting) for CAPEX than the last 5 years CAPEX than the last 5 years –– but not enough to offset weak but not enough to offset weak
investment fundamentals yet.investment fundamentals yet.
5555
US Industry US Industry –– Capital SpendingCapital Spending
Combination of economic, pulp and paper market, and Combination of economic, pulp and paper market, and financial / investment realities drove US capital financial / investment realities drove US capital expenditures down expenditures down from $8+ billion in 2000 to $6+ billionfrom $8+ billion in 2000 to $6+ billionby 2001 by 2001 ----
2005 capital expenditures 2005 capital expenditures will fall againwill fall again to $6 billion to $6 billion and then likely cycle between $6.0 billion and $8.5 and then likely cycle between $6.0 billion and $8.5 billion through 2006billion through 2006The following table and graphs summarize these The following table and graphs summarize these historical trends and projectionshistorical trends and projections
5656
US Industry US Industry –– Capital SpendingCapital Spending
2,500
4,500
6,500
8,500
10,500
12,500
14,500
1975 1979 1983 1987 1991 1995 1999 2003
U.S
. Rea
l Cap
ital E
xpen
ditu
res
($20
04 -
Mill
ions
)
Capital Capital Expenditures Expenditures (CAPEX) (CAPEX) On On Pulp & Paper Pulp & Paper
Property, Property, Plant & Plant &
EquipmentEquipment(Nominal $ (Nominal $ Millions)Millions)
5757
US Industry US Industry –– ProfitabilityProfitability
0%1%2%3%4%5%6%7%8%9%
10%
1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 Q2'05
MTD
Net
Ope
ratin
g Pr
ofit
Mar
gin
Afte
r-Ta
x
Profitability Profitability Has Improved, Has Improved, But But Continues Continues
To Trend To Trend Downward Downward ––
And Is And Is Expected To Expected To WeakenWeaken For For
the Remainder the Remainder of 2005of 2005
5858
US Industry US Industry –– Capital TurnoverCapital Turnover
80%
100%
120%
140%
160%
180%
200%
1975 1979 1983 1987 1991 1995 1999 2003
Sale
s / T
otal
Inve
sted
Cap
ital
Capital Capital Turnover Is Turnover Is
TrendingTrendingDownward Downward Yet Also Yet Also
Has Has Rebounded Rebounded
& Trend& TrendMay Be May Be
FlatteningFlattening
5959
US Industry US Industry –– Debt LevelsDebt Levels
Improved Improved Debt Levels Debt Levels
Are Still Are Still ConstrainingConstraining
Needed Needed Business Business
Investments Investments –– Yet Debt is Yet Debt is Now Now Much Much Lower Cost Lower Cost Than Equity
20%25%30%35%40%45%50%55%60%65%70%
1975 1979 1983 1987 1991 1995 1999 2003
Deb
t To
Cap
ital R
atio
Debt % of Invested Capital Than Equity
6060
US Industry US Industry –– Production Capacity ExpectationsProduction Capacity Expectations
75,000
85,000
95,000
105,000
115,000
125,000
135,000
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
Nor
th A
mer
ican
Pap
er &
Boa
rd (S
T 00
0s)
Domestic Consumption Domestic Shipments Capacity
Total US Total US Paper & Paper & Board Board
Consumption Consumption Is Resuming Is Resuming
Growth Growth ––While Overall While Overall Capacity Capacity Is Is Relatively Relatively
FlatFlat
6161
US Industry US Industry –– Capital Spending/DepreciationCapital Spending/Depreciation
US Capital US Capital Expenditures Expenditures
Remain Remain Significantly Significantly
Below Below Depreciation Depreciation LevelsLevels –– But But
Seem To Seem To Have Have
Stabilized0%
25%50%75%
100%125%150%175%200%225%250%275%300%
1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 Q2'05
MTD
PP&
E C
apita
l Exp
end
% o
f Dep
rec.
Stabilized
6262
US Industry US Industry –– Investment Decisions’ DriversInvestment Decisions’ DriversAttractive Opportunities =Attractive Opportunities = More Likely To InvestMore Likely To Invest
Strong ROTCStrong ROTC == Proven capability to identify/execute Proven capability to identify/execute value creating projects value creating projects –– more likely to attract & invest more likely to attract & invest capital capital than poor performersthan poor performersGood Outlook Product MixGood Outlook Product Mix == More likely to invest (i.e. More likely to invest (i.e. tissue, selected P&W) tissue, selected P&W) than poorly performing segmentsthan poorly performing segments(i.e. boxboard, newsprint, UCF, market pulp)(i.e. boxboard, newsprint, UCF, market pulp)Geographic MixGeographic Mix == Firms in Higher growth geographic Firms in Higher growth geographic markets (i.e. Asia & Latin America) more likely to invest markets (i.e. Asia & Latin America) more likely to invest than US and Canadian than US and Canadian (and now some European)(and now some European)focused playersfocused players
6363
US Industry US Industry –– Investment Decisions’ DriversInvestment Decisions’ Drivers
Greater Capital Availability =Greater Capital Availability = More Likely To InvestMore Likely To InvestDebtDebt--ToTo--Capital RatioCapital Ratio == High debt % High debt % –– the more likely to the more likely to divert cash to lower debt instead for capital expendituresdivert cash to lower debt instead for capital expendituresDebt CapacityDebt Capacity == Low debt % Low debt % –– creates real opportunities creates real opportunities to use to use new low cost debtnew low cost debt for innovative investment for innovative investment movesmovesCash Flow Available For ReinvestmentCash Flow Available For Reinvestment == More cash More cash generated by operations, the more funds generated by operations, the more funds typically typically invested in the businessinvested in the business & to stimulate investors& to stimulate investors
6464
Recap & Final ThoughtsRecap & Final ThoughtsU.S. Pulp and paper industry U.S. Pulp and paper industry demand peaked circa demand peaked circa 20002000 –– closures will continue at a slower rate closures will continue at a slower rate but but best facilities will remain strongbest facilities will remain strongWill Will take years to reach 2000 levels again take years to reach 2000 levels again –– if everif everPulp and paper Pulp and paper NOT likely to be a source of growth NOT likely to be a source of growth for wood demandfor wood demand with current productswith current productsHowever, However, complete replacement by offshore complete replacement by offshore producers unlikelyproducers unlikely due to U.S. wood resources and due to U.S. wood resources and large absolute marketlarge absolute marketConstruction Construction boom won’t lastboom won’t last forever…forever…
Forestry industry needs to innovate alone or in conjunction with pulp and paper to develop new products
and markets (i.e. bio-refining).
Forestry industry needs to innovate alone or in Forestry industry needs to innovate alone or in conjunction with pulp and paper to develop new products conjunction with pulp and paper to develop new products
and markets (i.e. bioand markets (i.e. bio--refining).refining).
6565
Recap & Final ThoughtsRecap & Final ThoughtsThe essential focus we should have at The essential focus we should have at this place in our industry’s path forward this place in our industry’s path forward is that is that the future is ours to create the future is ours to create ––timidity will undermine our efforts . . .timidity will undermine our efforts . . .
And . . . In this context And . . . In this context –– our challenge is our challenge is reallyreally to seize the opportunities instead of to seize the opportunities instead of simply enjoying our respitesimply enjoying our respite –– to innovate to innovate and restructure in new and novel ways . . .and restructure in new and novel ways . . .
6666
And Remember . . . . And Remember . . . . Even though the Current Industry State of Even though the Current Industry State of Affairs is Still Unstable & Many Systemic Affairs is Still Unstable & Many Systemic Problems Remain Problems Remain ---- As that Famous Arm As that Famous Arm Chair Philosopher Ziggy Once Said . . . .Chair Philosopher Ziggy Once Said . . . .
““You can Complain Because You can Complain Because Roses have Thorns, or you can Roses have Thorns, or you can Rejoice Because Thorns have Rejoice Because Thorns have
Roses”Roses”
6767
Recap & Final ThoughtsRecap & Final Thoughts
Thank You! -- Copies Available At
www.valueresolution.com -- And -- [email protected]
Contact Information
Dan CenatempoPresident -- Value Resolution Group, Inc.770-522-8972 -- [email protected]
Jim McNuttExecutive Director – Center for Paper Business & Industry Studies404-894-5733 – [email protected]