BRUSSELS, March 1, 2015 (PPI Magazine) - Marco Mensink is the incoming Director General of the Confederation of European Paper Industries
PPI: You have now been in the Director General's hot seat at CEPI for the last nine months. Can you tell us what the view of the industry is like from up there?
Mensink: It is, without a doubt, a privilege to have this amazing job. In order to defend our industry in Brussels, one needs a wide scope, a full overview of what is going on in and around the sector. We are asked to be curious, learn, and know all that is going on around our sector. I would like to add however we are not looking "from up there". We are in the middle of the sector and want to be because we always have to work in two directions - explaining to the politicians what our sector needs are and explaining to the sector what the politicians ask from us. Only then solutions can be found. This is the reason you will find the CEPI team outside of Brussels many times during the year to engage with our members and understand what their needs are. We have our feet on the ground in the mills around Europe as much as in the Brussels bubble.
It's no secret that Europe has its problems, but what in your opinion will be the effect on the industry of recent measures taken by the EU, i.e. quantitative easing?
The impacts are diverse. The lower Euro will improve our export position on global markets. At the same time however the lower Euro decreases the benefits of a lower oil price. We will likely see fewer exports from North America to Europe. But market pulp buyers suffer. And the impacts on recycled fibre markets are still unclear. There are more issues around. The Swiss Franc, the value of the Swedish Krona, the much cheaper Ruble, all are impacting. We are looking at a rebalancing of currencies, which impacts relative competitiveness of our sector. The larger question is if this will solve the key issue on the EU table - growth, jobs, investments. Only when the 24 million unemployed start getting back to work, increase spending power, and start purchasing, markets in Europe will grow again. The QE has to come down into the real economy. I am afraid it will not.
If you were to mark the European pulp and paper industry out as different from the rest of the world, what would be its attributes and what would be its disadvantages?
The EU industry leads. It might not have all the speed records or largest machines around the globe anymore, but we are well invested, the most innovative, the best technically skilled, the most efficient and we sell the best quality products. We cooperate together more than elsewhere, the new innovation in the CEPI Two Team Project being a key example. Machine suppliers are in almost all cases European. And EU pulp and paper research institutes are at the forefront of developments. Many interesting product developments take place in Europe. And not to forget - we have overcome the sustainability issues that are still there in other regions of the world. We are under pressure in a stabilising market with a stabilising population. We do have high energy costs. But we lead and we will keep on leading. The EU pulp and paper industry is one to be proud of. One should aim to buy paper from Europe, wherever you are around the globe.
In relation to the European industry's attributes (from the question above) what can and should Europe do promote and take advantage of those? And what can it do about its disadvantages?
European policy makers need to focus on the single key question - how to get investments in Europe. Besides giving support, political or financial, they constantly need to ask if the policies put in place do not harm the EU competitiveness, especially when the same impact is not felt in the rest of the world. How can it be that paper products printed in Asia and imported into the EU do not have to comply with the EU Timber Regulation aiming to prevent illegal logging? That means EU producers have extra costs and people that transfer printing jobs do not. We are focusing EU policy makers on a number of these examples. It is not about focusing on others, it is about the fact that policies impact EU production, but are not put in place on the imports on EU markets.
Does the European Commission, in your opinion, help or hinder the pulp and paper industry as it tries to go about its business?
This European Commission has shifted focus already, and has put the competitiveness of the EU economy at the heart of its policies. CEPI and the wider industry have called for this for years. In a number of cases there are policies directed at our sector. Here we cooperate with the Commission in many ways, trying to find a balance of policy needs and sector impact. In many more cases the European Commission does not help or hinder the industry specifically, it designs headline policies that have an impact on our sector. These are much more difficult to influence. What is important is being heard and understood. This is where the industry needs to speak with one voice - one message to policy makers, brought in a coordinated way and a structured approach. That is what CEPI delivers to the sector.
What does CEPI do to help the industry?
We create opportunities. We help save costs. We limit impacts and regulatory burden. We bring a platform for discussion. We allow time to prepare for developments. We give insight in the future. We bring the sector together. We engage in issues where individual companies do not have the time or capacity to do so. We bring strength to a cause, by creating one voice. We deliver on the causes we engage in. We promote and support innovation. We cannot guarantee that there will never be a policy impact. But we make sure we have maximised the influence of industry in these policy developments.
How innovative is this industry in Europe, and do you think that innovation ultimately will be its saviour?
Two short answers. Very innovative and yes! When we started the 2050 roadmap and Two Team Project we never thought the impact would be as enormous as it has become. Innovations will help us transform with time, from markets in decline to growing markets. They will keep our customers attached to our products, and away from others. They will keep young people interested in the sector, which we urgently need. We constantly need to remind ourselves to see the positive and not only the market challenge of this morning. When one goes around the sector, developments are mind blowing and very promising. I recently visited James Cropper Plc., whose technical fibre unit makes carbon fibre sheets of 2 grams/m2. Amazing to see and feel. They focus on aviation, cars, space, in a mill with a huge history, making coloured bespoke papers next to these future products. Seeing these developments and hearing these innovation stories make my day. By the end of the year we aim to follow the Two Team Project with two next steps. One of these will be a brochure of the 10- 20 most interesting product innovations in our sector. This one will be in for sure.
If you were a young entrepreneur starting out in the pulp and paper industry, what industry areas would you be looking at to make your fortune from?
That is a difficult question. Unfortunately, if making a fortune is your short term motive, you might not end up in industry at all, but in ICT, banking, developing Apps. But if you want to achieve something and make a future for yourself, with an interesting life, and good benefits on the side, I would start to see which interesting projects have been developed by this industry. I would develop a small company, a spin off, focusing on one of these ideas and I would go for it. In the Two Team Project we met a number of these people. Not all will make it, as innovations go, but some will and find the rewards they are owed because of the fact that they have taken the risks others haven't.
Is the industry in Europe in good shape for a fight if competition ramps up from other regions?
I think we are in much better shape than a few years ago. Somehow we also have gotten used to this stage of slow decline and necessary closures. But we move forward; there are Euro 5 Billion ($5.6 billion) of investments around the corner, planned for the next two years. New mills are planned, new machines and rebuilds put in place. There will be more closures and consolidation, but "the industry in Europe" is in good shape. In packaging, companies are doing well. Company results are good. The battle lines will be on our global market share, on trade disputes and trade barriers being put up. But with a lower Euro, we should be ready, if conditions are fair and we compete on markets, not on levels of government protection.
Has the bio economy (outside of pulp and paper) stalled? If so why? And when will we see it be kick started and be a valuable arrow in the industry's quiver that it was hyped to be?
The Bio economy has not stalled. It still has a barrier to overcome, that is clear. But the bio economy is here today. We are producing not only pulp and paper, but bio energy, biofuels, turpentine, viscose, vanilla. The challenge now lies in lack of clarity on EU biofuel policy, at lack of market pull (which public procurement can overcome), and in the fact that for new specialized products, one single converted pulp mill can oversupply a global market today. In the EU we managed to create a Euro 3.6 billion ($4 billion) research and innovation facility for the Bio economy that has just started. If we can get the market pull right, also the now called "new products" will come to markets soon and expand the portfolio of our sectors.
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