On the 2nd of January this year, a brand new company was listed on the Helsinki Stock Exchange – Valmet – a name which interestingly, also has something of a past. In fact anyone who has been in and around the paper industry – even for short while – will be at least aware of the name. Visit any significant mill anywhere in the world and you are bound to come across the Valmet logo somewhere, but usually stamped proudly on the superstructure of some of the larger paper machines. These PMs were probably installed sometime in the 80s or 90s, and obviously before early 2000, when Valmet became Metso.
Fast forward to 2014, and we have something of a rebirth of Valmet including a brand new logo - except with a significant difference – this is a completely new company formed for the modern times we are now in. We are now in a world of challenges all fronts, where the word ‘growth’ is used extremely cautiously in pulp and paper circles. And where the heady days of steep growth the 80s and 90s seem like a century ago.
Pasi Laine is the man in the driving seat of the new company, and he has already had some vast experience on the road in the pulp and paper industry. Laine was president of the demerged Metso Pulp, Paper and Power (which is now the new Valmet), and has served variously as president, vp, managing director and other senior posts in the pulp, paper power and automation sectors within Metso and Valmet.
One of the first questions which must be asked, is why demerge from the Metso Corporation in the first place, surely in these challenging times it makes sense to group together? Laine says: “Well, it was actually a very natural development that made good sense. We had two very big entities, one focussed on mining and construction, the other on pulp, paper and power. Our results in both cases were very good, and our balance sheets were strong. It made perfect sense for the two companies to be listed on the stock exchange.”
“In a nutshell, it was decided that the two companies would be much more focussed and therefore successful if we were two separate companies,” adds Laine.
So, a completely new type of start up has hit the pulp and paper industry. Exciting times? “Yes, certainly exciting times,” responds Laine, “There is a real spirit already within the company which is going to energise us going forward.”
The new company will certainly need that energy, and Laine immediately makes it absolutely clear that this is no time for nostalgia, or harking back to the “good old days” when growth was a given. He says: “As we have made clear on our new logo, the new Valmet is all about looking forward, not just from a company perspective, but from an industry perspective. We want to recognise that yes, there is a significant, and proud history to the name, but this is a new world we are in, and there is no time to dwell on past achievements.”
New company – new strategy
The new strategy for Valmet is certainly right up with the times, with Laine very clear and proud of the new company vision and mission. “We have defined our vision to be the global champion in serving our customers and our mission to be converting renewable resources into sustainable results. What this means is we want to become the leaders in supplying the technology to our customers in the pulp paper and power business, that puts them at the forefront of what they are doing.
“To do this we have to improve our competiveness at the same time as developing and delivering the top technology that will in turn help our customers to be even more competitive,” continues Laine. “Valmet will be the organization that takes this industry forward and because of our existing market position, size, and innovation history we are already in a good position to do exactly that.”
The fact is the strategy fits in pretty much with what pulp and paper producers need right now as certain parts of the industry feel the squeeze, particularly the graphic paper producers. Laine likes to think that Valmet is connected to all of its customers as it faces the challenges, and as one would expect displays an intelligent empathy to his customers’ markets, saying: “Graphic papers of course is a challenging segment, but let’s not write it off just yet, there is decline, but there is also still huge volumes. Of course this means less orders on the capital equipment side for new paper machines, but there is still a lot of work we are doing on developing new technologies, for instance in coating and calendering, and of course there is the service business.
“But again we are in a strong position on the board side where we will see continued growth, particularly in the emerging markets, and even in the developing markets we are seeing growth due to the huge take up of Internet shopping, as well as the fiber based board taking over from plastic.” continues Laine. “What this means is the assets we had employed for the graphic paper market are not redundant, they can be used in the supply of board machines, along with the skills of the existing skilled workforce and we are working hard on developing machines for all regions.”
Valmet is also heavily involved in the tissue area where Laine sees large opportunities, he says: “We are the leaders in the tissue area, and we have seen significant volumes of machines sold. One of our cornerstones in this segment is to deliver machines that vastly cut the use of energy and maximise raw material efficiency.”
The energy and power side of the business seem to be the areas where there is perhaps the most challenges ahead for Valmet, with fundamental issues having to be faced. This is despite the fact that there are a lot of recovery boilers, particularly in Europe, that are coming up for replacement. Laine says: “We are at a frustrating stage when it comes to the power and energy business. The economic troubles are still with us in Europe, and we have the added advent of shale gas which has driven the cost of energy down. What this means is that the emphasis has gone from green energy. We believe that when the recession in Europe is over, we will go back to the realisation that CO₂ emissions need to be curtailed and the focus will be back on the bio strategy. We think things will be much better in this sector in a few years. ”
“It does seem irrational that burning fossil fuels in the shape of coal in Europe is the cheaper option to renewable fuels.” Laine adds.
Valmet is also concentrating on the bio refining area, developing solutions for 2nd generation ethanol as well as gasification on the waste-to-energy front. Laine says that the company will be a key player in offering technologies designed to maximise the value to be obtained from biomass and waste, with for example with its Lignoboost ligning separation and pyrolysis bio oil solutions.
And where does Metso Automation fit in to all of this? Laine comments: “Metso Pulp, Paper and Power and Metso Automation always cooperated with each other, and we have had a lot of success in the past. Yes, we are now different companies, but that cooperation will continue.”
Fast forward to the future
So what sort of company will Valmet become? Will it be out looking for other companies to buy? Will it be acquisitive or concentrate on organic growth? Laine comments: “Well, at the moment our day to day strategy is concentrating on our existing operations, and making sure that customer service excellence is at the forefront of all we do.
“We are also very focused on innovation, not just for new technology, but for easily accessible technology, for instance our OptiConcept M modular paper and board machine which installs easily, starts up quickly and therefore gives a high return on investment - very fast. We are concentrating on energy reduction in all areas, but particularly tissue which will make a huge difference to running costs.
“We at Valmet are also aware that pulp and paper producers are looking for new revenue streams at their mills in the shape of bio energy and refining,” continues Laine. “We will be the leader in supplying that technology, working with existing customers to make sure they are taking advantage of all the opportunities being presented.”
Laine concludes: “The new Valmet has a history of innovation and we are already in a commanding position. We have good services, excellent global and local networks, great customers and good competition – our vision is to be the global champion in serving our customers in all the areas we operate in.