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Propapier - A brave new world

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Propapier - A brave new world

September 12, 2010 - 16:00

BRUSSELS, Sept. 13, 2010 (RISI) -In Part I of a two part series,Mark Rushtonfinds out that the recent global recession has gone some way to alter the landscape of the pulp and paper industry, especially in Europe, and making large investment decisions are now even more crucial than ever. In fact, it is only the very experienced, very brave and extremely astute senior management that could embark upon major expansion at such a critical time. Part II of this story can be readhere

Fortunately, the German Progroup management team seem to have all those attributes in droves. Headed by CEO Jürgen Heindl, the company earlier this year completed the building of a brand new containerboard mill for Propapier, the paper making part of the group. It then started up what is one of the most technologically advanced paper machines the industry has seen - and all in the most uncertain and turbulent times we have experienced for decades.

So why so bold at such a crucial time? And why didn't the recession hold up the plans? Heindl explains: "We believe that the packaging market in Europe is still growing on average 2.5 to 3% a year, and at the Progroup we are experiencing exceptional growth - around 43% (volume) for the first half of this year, which is incredible. The corrugated industry in Germany is also showing a growth of 9.6%. The recession of course had an impact on sales, but it also had a positive impact in the taking out of 2 million tonnes of capacity. This in fact is the perfect environment for expansion."

The Euro 425 million project comprises a purpose built facility located at Eisenhüttenstadt, close to Berlin in the State of Brandenburg, which houses a complete new line incorporating PM 2, a 10.85 m wide OptiConcept paper machine from Metso, which is already on its way to shattering speed and production records. In July this year the machine exceeded its design capacity of 2,090 tonnes/day and is producing just short of 2,100 tonnes/day of corrugated medium and testliner at an average basis weight of 109 g/m². Around 75% of the new mill output serves the Progroup's own seven corrugated sheeting plants.

Startup crew: the machine started up two days early

Nothing beats experience

But this exceptional performance so early on is not a surprise; it is simply part of the Progroup plan. In fact the motto of the project team was "progress exactly according to plan", and CEO Heindl's "plan" has always been to improve performance all the way and maximize and optimize everything that is under Progroup's roof.

Heindl set up the company 18 years ago after gaining some experience in the larger groups supplying packaging. He says: "It was clear to me that larger companies didn't have the flexibility to concentrate on the smaller orders with short lead times. They tended to use older technology and were not very good at dealing with private companies. I decided that what was needed was a company that could be flexible and serve the smaller customers at the same time as getting costs down using the very latest technology. It was also my plan to become the cost leader in this sector of the industry."

The group started out in the sheeting area, installing three plants serving what it called the "center of Europe" namely the region that encompasses the UK, Poland, and Denmark, down to Southern France. It was soon realized that the major cost in the whole operation was the purchase of containerboard, so why not make it themselves? "After we had installed the three sheeting plants we decided to start integrating backwards" says Heindl. "I really wanted to become independent of the big groups who could dictate prices. The fact is, this is a commodity business, and a 2% higher price could mean a struggle for survival."

In 2001, the company embarked into its first foray into making paper with the installation of PM 1 at its site in Burg, Germany, also supplied by Metso. The machine is 6.3 m wide, and was designed to fit into the workflow needed for the corrugators, as well as the transportation parameters. It was during this time that due to the experiences of width, sizes, speeds and performance that a technical learning bond was forged between Metso and Propapier, as they encountered the challenges that working and supplying into a commodities market area demanded. Optimization across the board is of a necessity.

In the meantime the company grew organically and soon had a total of seven sheeting plants, all hungry for the containerboard that fed them. Due to the success of PM 1, and perhaps more importantly due to the learning curve of the virtually unique experience of backward integration in the corrugated sector, the decision was taken to truly maximize the opportunities: a 10.85-m-wide machine that would solve a lot of the bottlenecks that were being encountered. It would also create a theoretical balance between a million tonne container board capacity and a million tonne corrugated board capacity. Added to this was the perfect timing to follow the trend for more lightweight products, and install the very latest in technology. Heindl says: "Of course we had to follow the trend, PM 1 was designed for 90 - 180 g/m², but in the meantime, advances had been made in lightweight technology so we decided to push forward for that."

CEO of Propapier and the Progroup, Jürgen Heindl, flanked by Eisenhüttenstadt mill manager Götz Herold (left) and production manager for the company’s two paper mills, Peter Resvanis