Södra is Sweden’s largest forest-owner association, with more than 50,000 forest owners as its members. Södra is also an international forest industry Group, with operations based on processing its members’ forest products
Marcus Hellberg, Head of marketing and business development at Södra Cell, gave an exclusive interview to CW Group's IPPWeek.com to discuss topics such as the main economic challenges, new markets, new plants and also to explain the sustainability practices that the company develops.
Q: Södra is Sweden's largest forest-owner association and also an international forest industry group. At present, how do you describe Södra's role in the market, both as an association and as a company?
A: Södra was created 79 years ago when a cluster of small forest owners in southern Sweden decided they could be stronger in the market if they acted together. Today Södra has 50,000 members in southern Sweden. It is the largest forest-owner association in Sweden and is regarded as a highly-influential presence across the Swedish forest industry. The role of the company has remained the same since its foundation in 1938: To enhance the value of its members’ assets, for the benefit of members, the company and its customers.
Helping to ensure that the small forest owner does not just survive but thrives in a climate of pan-European legislation is perhaps more important today than ever. Södra’s wide range of services for its members centres around balancing sustainability with economics, ensuring Södra’s forests are managed to the highest standards so that members can pass them on through the generations, and ensuring they are put to best use once harvested via Södra’s processing divisions, whether that be for pulp, sawn timber or green energy.
As a company, Södra has acquired a reputation for being a pioneer in the forest industry, from the introduction of totally chlorine-free bleaching of pulp to FSC certification for its landowners and fossil-fuel free technology in its mills. Significant investments in recent years mean that Södra is currently the largest softwood pulp supplier in the world.
Q: What role does Södra plays among industrial companies in Sweden?
A: Sweden is the third largest exporter of forest products in the world after Canada and the U.S. The sector accounts for more than 10% of Sweden’s total exports with forest products by far the largest sector in terms of net exports. Within forest products, pulp and paper exports dominate, followed by sawn timber. As a leading supplier of pulp, sawn timber and green energy, Södra plays a significant role in this important part of the Swedish economy, both economically and environmentally.
As the world seeks to reduce its dependence on finite fossil fuels, industries based on renewable materials have an increasingly important role to play in a more sustainable future. Södra views this role as an opportunity and a responsibility, which is why it continues to invest heavily in R&D.
Q: How would you define the current state of the paper industry in Europe?
A: As Mark Twain might have said, reports of the death of Europe’s pulp and paper industry have been greatly exaggerated. There have been undeniable challenges. Digital disruption has reduced demand for graphic papers, for example. But while those markets will not return to their peak, the paperless office never did materialise and there are healthy pockets of growth, both by grade, such as packaging and tissue, and by region, such as Eastern Europe. With global pulp demand up 3.5% last year, the outlook remains bright for European pulp suppliers.
Q: In the Pulp and Paper market, the dissolving pulp is becoming more and more used. What is the strategic importance of dissolving pulp for Södra?
A: Södra is relatively new to dissolving pulp production having been in the market just five years, but it is already considered a major player. Demand for dissolving pulp is growing fast as the world seeks more sustainable alternatives to feed the booming textile industry, so this is a promising sector to develop in parallel with and to complement Södra’s paper pulp range. The growing middle class in China and India is the principal driver of textile demand, but textile producers are completing fiercely for raw materials and with land and water resources limited, there is again an opportunity for more sustainable alternatives. Dissolving pulp fits well with Södra’s strategy to develop new products for a more sustainable future.
Q: To what extent does the tissue market fit into Södra's business?
A: Tissue is the fastest-growing segment within the paper industry and therefore a key driver of market pulp demand, all the more important given the decline in demand for graphic papers in recent years. Södra was the first pulp producer to place a strategic focus on tissue, spotting early on that the market was about to increase in importance. Only a decade ago, tissue was not considered a core sector by the pulp industry and it did not represent a substantial share of the market for Södra. Today tissue accounts for almost 50% of all Södra’s pulp sales and the company has worked hard to establish good long-term relationships with all the major tissue suppliers in Europe. The tissue industry has continued to develop and broaden its product base. Consumer demands are increasingly sophisticated for everything from wet wipes and feminine care to diapers and away-from-home products. By turning its attention to tissue customers and their specific needs, Södra has been able to grow together with its customer base and invest in the latest technology to keep up with their requirements.
Q: Over the past 50 years, the paper industry has become much more environmentally aware. How does Södra manage its operations taking sustainability into account?
A: Sustainability is part of Södra’s DNA. From seedling to finished product, sustainability is at the heart of all Södra’s operations, with the company acting as the link between small-scale forest owners and a global business. Most of its members’ forests have been passed down within the same family for generations, and the company-wide mission is clear: To ensure the forests are managed to the highest possible standards so the tradition continues for generations to come. Balancing sustainability with economics is the whole raison d’etre of the business.
Q: Improving forest growth and forestry management is a major concern in the forest industry. In what way does Södra as an association and as a company invest in this growth and at the same time in the improvement of this industry?
A: Sustainable forestry is built into Södra’s business model: The forest estates must be financially viable for members or they will cease to own them. But the forest cannot just provide or it will expire. Every member aspires to passing on his/her forest at least in as good a state, but preferably even better, than when they were its custodians. So for every tree harvested, Södra plants three more. The company invests heavily in R&D and best practice, in every aspect of forest management, from seedling cultivation and yield to forest certification and digital mapping and harvesting plans.
Q: Since 1995, Södra owns the Södra Foundation. What is the main role of it and how does it act?
A: The mission of the Södra Foundation for Research, Development and Education is to promote research and development in forestry and forest industry operations in Southern Sweden. Since its establishment in 1995, the Foundation has received SEK 250 million (USD 28.5 million) in contributions and awarded SEK 175 million in grants. These grants have resulted in successful projects in a number of fields related to the bioeconomy, including new opportunities for fossil-free products.
Stable funding for long-term research in the forest industry paves the way not only for future forestry but also for new, climate-smart products, sustainable production and employment opportunities, which is why the Foundation provides approximately SEK 10 million in grants to various projects each year. An initiative entitled ‘Future forest management in southern Sweden,’ for example, is a research programme to develop techniques for more varied forest management and to increase the use of digital data sources in southern Sweden. The project – a partnership between the Swedish University of Agricultural Sciences, Linnaeus University and the Forestry Research Institute of Sweden – has been granted SEK 4 million ($460,000). Other projects to receive funding span a broad range of forest industry-related areas, from multi-storey wood-frame buildings to various forest management and monitoring techniques.
Q: What are your expectations for the year 2017 regarding the trends in the industry?
A: This current year is one of focus for Södra following extensive investment in 2015-2016. All pulp mills are concentrating on realising the full potential of Södra’s investments in capacity and quality. In terms of industry-wide trends, Södra continues to focus on sustainability and sees itself firmly at the forefront of new industry initiatives. The importance of environmental progress is illustrated by the fact that three sustainability targets were recently given equal importance to financial targets, reinforcing the vision that sustainability and economics remain inseparable for Södra.