Stora Enso Rethink 2010

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  • 1. RethinkStora Enso 2010Saving rainforest Find out how Veracel is helping local biodiversity in Brazil. 18Trees, food and bombs In Laos, business meets corporate social responsibility in a concrete way. 42A CEO’s diary It appears that leading a company like Stora Enso is far from a tidy office job. 66 A talk with a woodpecker Stora Enso’s sustainability expert Carolina Graça shares her insights. 14Insert Stora Enso Facts & Figures 2010 Stora Enso—1
  • 2. The world needs Rethink Stora Enso Rethink 2010 Editor in chief Lauri Peltola Concept & design Miltton Oy Printing Libris Oy Cover photo Jenni-Justiina Niemi, Visuamo Oy Stora Enso Oyj P.O. Box 309, FI-00101 Helsinki, Finlanda new approach Visiting address Kanavaranta 1, tel. +358 2046 131 Stora Enso AB Box 70395, SE-107 24 Stockholm, Sweden Visiting address World Trade Center, Klarabergsviadukten 70, tel. +46 1046 46000, group.communications@storaenso.comto materials. Contents Editorial Why do we and you need to rethink? 4 Phenomenon Plastic floats 6 Column The customer always has a choice! 8Who knows if one day renewable materials and Stora Enso nanotechnology will be used to build emission free R&D Responsible choices 9vehicles? What we do know is that renewable materials have the power to push things forward. That is why Strategy The magic moment 11Stora Enso has redefined itself from a European forest company to a renewable materials company operating in Phenomenon Beekeeping in Uruguay 13growth markets. Find out more about our rethinking: Interview A talk with a woodpecker 14 Plastic fantasies Plastic is everywhere. But what do we really know about it and its competitors? 16 S H u T T E R S T O C k / M i LT T O n PE T R i A R T T u R i A S i k A i n E n M A RC E L O S i n G E R Saving Trees, food Everybody rainforest and bombs along Veracel is improving biodiversity in Brazil whilst In Laos, Stora Enso Stora Enso’s and Arauco’s joint venture in producing over a million tonnes of pulp. 18 is helping local Uruguay benefits locals as well. 54 communities by Business Modern pulp production 60 On business clearing land of bombs for both plan- Strategy Into packaging growth markets 61 Publication Paper tations and locals’ Insert Stora Enso Facts & Figures 2010 Taste for waste 24 food production. 42 Global Responsibility Fine Paper Global, practical, engaged 63 Change on course 29 Straw poll How’s your recycling? 65 Packaging The final shift A new take on packaging 33 Tough decision to Wood Products shut down a paper A CEO’s diary Welcome the era of wood 37 machine. 50 A few days on the heels of Stora Enso CEO as he travels the globe. 66 Phenomenon Tree gardeners 68 Column For the love of wood 70 2—Rethink Stora Enso—3
  • 3. Editorial Rethink will become a movement insideWhy do we and you need to rethink? and outside the company with an accelerating pace of ideas and concrete results. W e in Stora Enso have started a change. A change for the future. Through several challenging years in a roller coaster operating A nother clear change is how we steer our assets in cyclical markets. Old wisdom was specialisation to the extreme both Montes del Plata pulp mill investment decision ten years earlier – and create twice the value with half the cash spent. The Inpac packaging environment we have become a stronger machine by machine but also by doing most company acquisition in China and India follows company. So why do we need to change when everything ourselves, not only in the core exactly the same logic – we won eight to ten we are finally on the right track? Why not just paper and board manufacturing, but also for years of time in the fastest growing consumer keep going? The simple answer is: because the example in mill maintenance. The issue with packaging markets in the world. Now that I world is changing. And we want to be part of this was that in a reduced demand situation would call Rethink. changing the world, part of the change for the we not only had to reduce operating rates ofJEnni-JuST iinA niEMi better. We want to be the pathfinder, not follow the others. Why do we call our change process Rethink? our machines, but also much of our costs were fixed. After rethinking the old way of “minimum cost at any cost” has been replaced with T here are already many other examples of Rethink. From the value proposition to our customers to product innovation, looking Because we want our slogan to be a call to “maximum flexibility at optimum cost” – with at ourselves from a customer and even fromJouko Karvinen action for every person in our company – from more outsourcing to expert partners and clear a consumer angle rather than looking fromCEO of Stora Enso the CEO to the latest young trainee. And a call priority setting where lowest cost assets will the forest out – questioning old ways of doing to action for you personally, too. always run at highest operating rates – and and thinking. What we want is that Rethink maximise our returns. becomes a movement inside and outside of the W e in the company already started in 2010. We have many brilliant examples of our excellent people challenging old traditions T he achievements of the past three years have been tremendous – a total of 500 company with an accelerating pace of ideas, and concrete results of Rethink. of looking at business, driving operations or making investments. No more “we have always done it this way”. Let me share with you a few million euros, or five margin points, less fixed costs in 2010 than in 2007! That is a pretty good kick start for the next part of our journey. W e also want to invite you, the reader of our rethought Annual Report, to join our journey. Be it the stakeholder dialogue with examples of rethinking in action in Stora Enso And we are only in the beginning of this NGOs and local governments on environmental 2010. journey, so we have much more to gain! and social issues, or making a difference to our The traditional wisdom in our industry has Rethink is not only about flexibility and cost planet through replacing plastics with recy- been to benchmark manufacturing assets either. It is also about speed and time. We clable and renewable fibre-based packaging, it based on cost charts, which are based on have for a long time had a plantation project is time for all of us, including myself, to rethink average cost assumptions. We have started to in Uruguay, which would have at consistent and renew. Not only for the good of Stora Enso look at total resource costs, not so much on investment speed given us an opportunity to and our shareholders – but for the good of paper or board machine width and speed only build a full-size pulp mill in about 2020. Then you, every consumer in the world and our joint – and using actual cost data. And that has now came the opportunity to partner with Arauco planet. allowed us to be a lot more selective and to and not only combine their plantations with I hope you will enjoy reading our Rethink invest in, for example, three power plants in the ours but to also purchase a significant piece Report as well as our Global Responsibility worst economic downturn, with a very good of additional plantations from ENCE. What Report. And yes, I hope they will also make financial return. that means is that we were able to make the You – rethink. iS T O C k PH O T O / A n T O n S E L E z n E v4—Rethink Stora Enso—5
  • 4. PhenomenonPlastic floatsA round 100 million tonnes of plastic is produced each year. Approximately 10 percent of it ends up in the sea, where the durable and stable natureof plastic creates a serious problem. The Trash Vortex is a gyre of marine litterin the North Pacific Ocean. In the gyre – esti-mated to be as large as the state of Texas – themass of floating plastic is in parts six timesgreater than the mass of plankton. It has been estimated that over a millionseabirds and 100 000 marine mammals andsea turtles are killed each year by ingestion ofplastics, or entanglement. Some plastics in the gyre will not breakdown even during the lifetime of the grand-children of the people who threw them away.Sources: Ecosystems and Biodiversity in Deep Waters and High Seas (2006),Greenpeace website ( O R b i S / S kOY / G A R Y b E L L6—Rethink Stora Enso—7
  • 5. Column R&D Many of the latest Stora Enso products are made with sustainability and responsibility in mind.The customer always has a choice! Responsible choices i f a customer cannot get what he wants from us, he will always be able to get it from somebody else. This is a sobering statement A s the Board of Directors of Stora Enso, it is important for us to remember we are appointed by and responsible to all our Recyclable board for packaging cold cuts Stora Enso’s new Primeforma board is a sustainable and mostly renewable solution Flexible and personalised packaging The Stora Enso Gallop powered by Xerox is a cutting-edge solution for the digital printing that too many companies tend to ignore. shareholders. Our duty is to represent all developed to meet the needs of thermoformed and die-cutting of packages. The world’s first In a global business environment that shareholders and to try to generate long-term food packaging. Products made of Primeforma sheet-fed integrated digital printing packaging is changing very fast, our customers have shareholder value. Is there a conflict between board can be recycled just like any cardboard line works inline and on demand, shortening to adapt their way of doing business. This caring for your customers and creating share- packages. The board can be used on existing lead times, enabling quick changeovers and naturally includes how they look upon their holder value? Not at all! packaging lines previously used for plastic providing the possibility to print individual, suppliers. “Old” ways of engaging with Understanding our customers, as well as packaging. The revamped range of cold cuts variable data on each package cost-effec- suppliers may be neither efficient nor relevant. developing products and services that support HK Ruokatalo’s cold by HK Ruokatalo, one of Finland’s leading food tively. Gallop also enables item-level product their competitiveness is where it all starts cuts are the first to manufacturers, hit the stores in September identification used for tracking and tracing AJEnni-JuST iinA niEMi t Stora Enso we must rethink how we and ends. By doing this we will create lasting be packaged using 2010. It was the first time board trays were products. The workflow based on the Gallop engage with our customers. We have to shareholder value. board trays. used for packaging sliced meat. production line enables lower minimum orders,Gunnar Brock rethink how we add value to our customers. less waste and less storage. Microsoft choseChairman of theStora Enso Board ofDirectors Is our product development addressing the right issues? Are our processes and services meeting the new and added demands from our T he Stora Enso Board of Directors is giving Group management their full support to drive the Rethink change process. Rethinking, Creative furniture design Stable, strong and good-looking – these are examples of adjectives that can be associated Stora Enso Gallop for packaging its Windows 7 software. customers? As a way to rethink, Stora Enso questioning old ways of doing things and with the Särmä table that Stora Enso and Isku Intelligence for health monitoring has started to make systematic and regular finding new ways and solutions to satisfy have jointly developed. The most interesting Conductive printing combined with an customer surveys in order to better under- customers, shareholders, employees and feature of this table is that it needs no frame embedded microchip was the basis for the stand in what way we should change to better the society at large, is a daunting challenge. under the top, because bending is prevented by development of Stora Enso Pharma DDSi, an respond to the new requirements. We feel that Stora Enso management is fully having a cross lamination-based structure that intelligent pharmaceutical packaging solution. committed and ready to take on this task. makes the table top stronger and more stable. Now the same technology is used for a new T he results from a survey conducted last autumn were generally positive, but far from perfect. Stora Enso differed in a positive There is a Chinese saying: “a long march starts with a first step.” Stora Enso has taken that first step! Stora Enso Gallop Furthermore, the table’s legs can be attached directly to the top. This structural feat results in a lighter-weight table, and saves both time and purpose: in an electronic health journal, the Memori card, which a patient can use to record and report his/her condition or symptoms. The way from its competitors in such areas as provides packaging money in manufacturing. The beautiful appear- solution is a time-saver both for health profes- ● company reputation for Microsoft’s ance of the table top is achieved by making the sionals and the outpatient, as fewer visits to the ● environmental performance Windows 7 software. surface layer out of Stora Enso Effex. medical centre are needed. ● quality of products ● quality of service ● quality of sales personnel. H owever, Stora Enso also received criti- cism. The customers said the company feels cold and distant and is not flexible and innovative enough. According to one particular comment: “This is a moment of change and you have to be reactive and caring – not so much hard-shell.” I think this statement carries two impor- tant messages for us. One is that we must be reactive, and even anticipate, the changing demands from our customers. The other is that Pharma DDSi helps iSk u we must care about them. Not to take them for save both doctors’ granted, not to stop to support them, but to try and patients’ time. to understand their particular challenges where our products are involved. The elegant Särmä table, by Stora Enso and Isku.8—Rethink Stora Enso—9
  • 6. The most important Strategy The magic momentthings grow betweenthe trees.During the Vietnam war over two million tonnes of bombs were dropped on Laos. That is why building aStora Enso eucalyptus plantation always starts with bomb clearing. What is left between the trees is workablefarmland, safe for local farmers to grow food and commercial plants. This is not charity, but beneficial to bothsides. Find out more about our eucalyptus plantations: W e knew that sooner or later it would come out. Now that I think about it, I am sure that many of the people at Stora Enso knew it animation, Jouko’s attention was undivided. He sat silent, doing his utmost not to reveal his enthusiasm. too – some perhaps unconsciously. After a few Sometimes, with certain events and projects, turbulent years, something new was happening you can pinpoint the “magic moment”, the time at Stora Enso. There was something fresh in when everything comes together. Here was the the air, a buzz you could feel but not quite put magic moment discovering Rethink. This was into words. what Stora Enso was, and would be, all about! Stora Enso was evolving. The world around We had wanted to talk about the change us was changing, and we were moving on with within Stora Enso and drive that change it. I could see it all around me: we were thinking forward. We had wanted to tell our stakeholders TOM AS W HiT EHOuSE about our business in new ways, and the spirit we were a different company than before. Now of seeing things afresh had become something we had the concept to make it happen. Lauri Peltola of a daily routine. Head of Group Communications and Global Respon- And then – on that one morning in March 2010 – it just happened. I was thinking that it would be just another meeting with an external S o, what is it in Rethink that makes all the difference? What exactly does the concept capture? To put it in a nutshell: the world around sibility at Stora Enso consultant trying to sell their high-flying ideas. us is going through a profound change. People After meeting tens of consultants you tend to around the world are rethinking – our stake- get a bit sceptical as you realise that many a holders are rethinking. Whether it is the way time they do not know the company, under- the world has to be saved from financial crises, stand the business, or realise how serious how companies have to pay serious attention to companies are about their identity. On this responsibility issues everywhere they operate, particular day, however, everything became or consumers asking for a paper bag instead of crystal clear. In a small meeting room, me and plastic at the grocery store, we are all rethinking my team, our CEO Jouko Karvinen, and the – reassessing the way we live our lives and treat external consultants captured all that was this planet, our shared home. happening in the company, and encapsulated it We at Stora Enso have been rethinking in one concept. more than any company within this industry, That concept is Rethink. but it is not until now that we are ready to tell about it to the outside world. An external O ur CEO is not especially known for his patience. During presentations too long and boring he tends to start multitasking. But view on Stora Enso still reflects the company we were five or ten years ago, but from the inside, things are looking very different. We now, he suddenly was not reading emails from are constantly questioning old ways of doing his mobile anymore. Instead, as the agency things, and not only that – we are also coming people were presenting their Rethink slides and up with new solutions. 10—Rethink Stora Enso—11
  • 7. To me the beauty of our Rethink is that it is ● Our values: Phenomenonmore than a mere slogan. Rethink is a change • Create: Creativity is the engine that drivesprocess, and at the same time a dynamic crys- us to reinvent ourselves and achieve busi-tallisation of our corporate philosophy. Rethink ness success.challenges not only us at Stora Enso but also • Renew: Every day we build our future in athe world around us at any given time – also in sustainable way.the future. • Trust: We recognise the talents of our people with the opportunity to learn and theT his is what we promise our stakeholders: Stora Enso is the global rethinker of responsibility to succeed.the packaging, paper and wood productsindustry. We always rethink the old andexpand to the new to offer our customers A s we wanted to signal the change also visually, we decided to go for a new symbol and logo. Also visually we wanted to Visual identityinnovative solutions based on renewable achieve something real, something true to our The new logomaterials. business and thinking. The designer of our new symbolises Stora The exciting thing about this is that it is real. logo, Creative Director Brian Kaszonyi from Enso’s commitmentIt is not a publicity gimmick, but happening N2, dove into our business and got familiar to creating a sustain-throughout the Stora Enso organisation, in with our raw materials, production processes, able future for ourthe different businesses, all over the world. end products, as well as sustainability cycles. planet by developingIt is an unstoppable change process, which, He came across the cycle shape in different innovative solutionsin the end, will carve a totally new identity for forms, again and again. Finally he had a closer based on renewablethe company. At the same time, all this ties in look at how pulp was made and found his materials.perfectly with our vision, mission and values – inspiration in the eucalyptus tree and its flower. The design ofthings that we are dead serious about. Looking at our new visual identity, you the logo reflects the realise it is not made up or artificial. It is truly shapes related to● Our vision: Today we as a company, people about us and who we are, and it has a story Stora Enso’s busi-and planet face new challenges never before behind it. We are quite excited about it. ness and products,seen. The world needs a new approach to And this is what catches the magic of Rethink. the unending cyclesmaterials. We at Stora Enso are excited about pretty of nature and, most● Our mission: We will win with solutions much everything that is happening here right importantly, thebased on renewable materials. now. eucalyptus flower. The unusual, petal- less eucalyptus Beekeeping flower symbolises a sustainable raw material, the in Uruguay eucalyptus tree, L which has a growing ocal honey-producers have rented suit- importance in Stora able land from Montes del Plata, a joint Enso’s global pulp venture of Stora Enso and Arauco in production. Uruguay. Utilising surrounding euca- lyptus plantations as a protective “storage” for beehives is one form of co-operation between agriculture and forest industry in the country. In addition to the piloting beekeeping project, major co-operation projects on company land take place with local beef and milk producers.SHu T T ERSTOCk G A b R i E L PE R E i R A12—Rethink Stora Enso—13
  • 8. Interview Brazilian Carolina Graça, is something similar to yours here in Scan- dinavia. There are Brazilians who go in the 33, is one of the sustainability natural forests to collect fruit and seeds, for A talk with experts at Stora Enso. We example. More typically people go for leisure activities in forest parks, if there is one near thea woodpecker invited her for an interview in city. However, I have to say that unfortunately in a damp Nordic forest during the past many Brazilians did not know how to utilise forests in a sustainable manner. Luckily, her work trip to Finland last know-how and attitudes have improved a lot. autumn. Also, when it comes to the Brazilians’ relation- ship with the fast-growing tree plantations, it’s Text Joni Mäkitalo good to remember that they cover less than Photo Jenni-Justiina Niemi, Visuamo Oy one percent of the national territory. W hen Carolina Graça In your opinion, what makes a sustainable studied Agriculture company? Engineering at the The most sustainable company is not neces- University of São sarily the one with the largest sustainability Paulo, the students department. In an ideal situation, the whole used to refer to company “breathes” sustainability. However, Forestry Engineering it can’t be just a feeling, either. You need tools students as “woodpeckers”. and techniques to manage all of your proj- “Nowadays, I’m much closer to a ‘wood- ects, and to create new ideas for and ways of pecker’ than many of them,” she says, smiling. continuous improvement. I think Stora Enso’s The forestry sustainability professional success in international indexes measuring and mother of Nicolas, soon four years old, sustainability performance shows that we do a joined Stora Enso Latin America last June. Her lot of things right. There is naturally a lot to do work days, either at the São Paulo office or in and many aspects where we can improve, but the field, revolve around Stora Enso’s global I believe there is the right sustainability attitude responsibility issues in Brazil and Uruguay. in the company. This is a good foundation to build on. How do you yourself maintain a sustainable lifestyle? What led you to come over to Scandinavia? Believe it or not, I try to adopt industry best This trip is part of our top-talent training practices also in my daily life outside of work. programme in Latin America in which I am For instance, I recycle, and live in a way participating. The programme includes that consumes energy wisely. I also discuss working periods at the headquarters and in sustainable living habits with my family. different business units. The idea behind the programme is for local professionals to gain What do you think about the Nordic forests? knowledge on Stora Enso’s corporate culture, In addition to the Brazilian forests, I have way of doing business, challenges faced, and been to forests in France, Germany, Canada Group strategy. and USA, but this is my first visit to forest in Scandinavia. What especially caught my atten- What new elements has Stora Enso’s tion is the scale: in Central Europe, the forests Scandinavian background brought to are more fragmented than here in Scandinavia. sustainability work in South America? I was travelling by train from Helsinki city to One of the main benefits of being an inter-Sharing knowledge Imatra city, and the forest in between felt national company is that you can learn from“In an ideal situ- endless, as rows of trees kept rolling past on organisations in other countries, as bestation, the whole both sides. practices can be shared globally throughoutcompany ‘breathes’ the Group. Stora Enso brings the latestsustainability,” says In addition to the native forests, South European sustainability trends and practicesCarolina Graça, America has fast-growing tree plantations to South America, while also learning fromSustainability, Stora on former pasture land. How would you South America. It’s a vice versa transaction.Enso Latin America. describe the people’s relationship with the For example, Stora Enso’s Arapoti Paper Mill in forests? Brazil is frequently visited by people from other That depends a lot on the region. In the regions units due to Arapoti’s exemplary employee where you have native forests, the relationship safety performance.14—Rethink Stora Enso—15
  • 9. A t home, taking out the everyday of environmental awareness among youngsters A cupful of garbage of an average Finnish is already high. It’s easy, however, to introduce innovation household, I realise that much these ideas in other geographical areas, as Stora Enso has of what I am carrying will once well,” notes Kuusipalo. recently expanded again end up at the landfill. This According to the professor, people usually its selection of is mostly because of the high amount of plastic choose a particular type of package based biopolymer-coated among the trash, as there are few possibilities on its price. Thus far, consumers have had to packaging boards for recycling the material in my neighbourhood. pay slightly more for packaging made from in order to meet Hence, just like the two before, also the renewable materials compared to their plastic growing demand. third plastic bag of the week gets thrown into alternatives. Kuusipalo believes pricing is As a result the largest of the waste containers, the one for mostly a question of volume: as the demand for of many years mixed waste. renewable and sustainable packaging grows, of research and If recycling plastic is complicated, expensive, prices will fall. development work, Plastic or, as in many countries, simply not organised biodegradable at all, is the only way to reduce the amount of coating options are plastic waste to stop using plastic altogether? A compostable plastic now available for This is exactly what the British-Finnish movie However, giving up plastic completely sounds a number of Stora fantasies director John Webster and his family did. somewhat utopian. In some ways, plastic is Enso board grades The Websters went to the extreme, and still unbeatable as a material. For example, a used in cups, plates, tried to live without oil for a year. As oil is paperboard package containing liquids or food trays and cartons. used in its production, plastic was also on the has to be coated with a thin layer of plastic One of the family’s list of banned materials. Many of the to protect the contents against damage from company’s innova- moments Webster captures on film turn into light, oxygen, humidity, grease or heat. But, tions is a paperboard tragicomedy as the family desperately seeks as it turns out, plastic can also be made from cup that has more We are surrounded by a material alternatives to plastic packaging for the most something else besides petroleum. to it than first meets called plastic. But what do we really mundane of items such as fish or toilet paper. “Biopolymer is compostable and biode- the eye. The family actually ended up making their own gradable and it is used, for example, to coat know about it? toothpaste. paper cups or packaging for frozen foods. Text Jussi Palmén Biopolymer can also be manufactured from renewable materials. When combining this with Why not wood? paperboard, you have a product made entirely We have come to regard plastic as the stan- of renewable materials,” Kuusipalo explains. dard material used in a multitude of things Accoding to Kuusipalo, traditional plastic around us. Is there really no alternative? Let’s still has a slightly better water and water ask someone who knows. vapour transmission than biopolymer. However, We spoke to Jurkka Kuusipalo, professor biopolymer can already surpass traditional of paper converting and packaging technology plastic in some critical properties, such as the at the Tampere University of Technology, ability to withstand greasy substances. For all Finland. The institute is known for strong capa- its current uses the properties of biopolymer bilities in studying plastics. are outstanding. And through technological ● 100% “If we look at data on the materials used advancement, these can still be improved biodegradable in the manufacture of consumer packaging upon, the professor believes. ● Breaks down natu- over the last couple of years, a visible trend “Biopolymer-coated products can already rally to humus and of increasing use of renewable raw materials be produced using the same machinery as carbon dioxide when emerges,” says Kuusipalo. products coated with traditional plastic. There recycled properly This means that packages for CD cases is no big difference regarding production. In ● Renewable wood or ready-made food are more and more the packaging industry, interest in biomaterials fibre as primary raw commonly made of paperboard and other has been growing of late, and I believe it will material wood-based materials. This is not revolutionary continue to do so.” ● Coated with or unheard of as such, but what could be, is When it comes to recycling, bioplastics biopolymer the way the share of renewable materials in have one significant advantage over traditional ● Provides enduring packaging might grow in the future. ones: thanks to being compostable and biode- shelter for the liquid “Particularly the young are well aware of gradable, bioplastics can be recycled together inside the many different aspects of responsible with food waste. ● Used for serving consumption. There are signs indicating that beverages at the in the future the demand for sustainable and Finnish pavilion at recyclable packaging will grow, especially in the 2010 World Expo Europe and the United States where the level in ShanghaiS H u T T E R S T O C k / M i LT T O n16—Rethink Stora Enso—17
  • 10. Saving T rekking along a path in the rain- forest, we push aside a leafy branch, and one of the oldestrainforest trees in the region comes into view. A chorus of birds chirps rather cautiously in the surrounding humid forest. “It takes ten people standing hand in hand to cover this tree’s circumference,” notesVeracel is helping local biodiversity in Brazil Gildevânio Pinheiro, our guide, leaning against the leafy giant.while producing over a million tonnes of pulp We are at the Veracel Station, a rainforestfrom plantation trees each year. At Veracel, we conservation area of more than 6 000 hectares in the state of Bahia, Brazil. The Veracel Pulpsee how environmental, economic and social Mill, a joint venture between Stora Enso andbenefits can all come together in modern pulp Fibria, owns and maintains the reserve as part of the joint venture’s rainforest protection andproduction. regeneration programme.Text Joni Mäkitalo Photos Eduardo Moody Pinheiro, together with his team of seven, is in charge of supervising the area, which still faces many environmental challenges, such as poaching of endangered species. “What is really important is that we talk and spread information about the environment in Bahia, Brazil The location of Stora Enso’s and Fibria’s joint rain- forest initiative. Rainforest Veracel Pulp Mill conservation Favourable climate Guided tour at conditions help to Veracel Station intro- make this mill the duces to the region’s best pulp mill in the biodiversity. world.18—Rethink Stora Enso—19
  • 11. local communities,” says Pinheiro, who has the growth of cities, industries and agriculture. tracts of native forest in southern Bahia had “Unemployment became a severe problem.lived in the region for more than twenty years. For the most part, however, rainforests in been clear-cut, as had happened in so many To many, the arrival of Veracel was a sign of “Younger generations better understand the the region remained intact up until the 1950s other parts of coastal Brazil before. renewed hope for the local economy. And theimportance of protecting biodiversity, and are when saw mill companies started to show up. Originally, the Atlantic rainforest biome people living here have indeed benefitted inable to teach their elders about it. People are all The region’s economy was born around this reached all the way to northern Argentina and many ways.”the time becoming more and more aware of the industry, and an additional economic boost eastern Paraguay, forming a wide stretch ofneed to protect the environment.” came with the completion of a new highway, rainforest along the Brazilian coast. Today, only constructed through the region’s rainforests in seven percent of Brazil’s Atlantic rainforests Pastoral eucalyptus the 1970s. The new road improved logistics and remain. These tracts are conserved by public Landowners in the region converted theirForests that once were made it easier for people to move in the area in and private initiatives. deforested land properties to other uses,The Veracel Mill is located in the southern search of work opportunities. After so much of the rainforest had been especially cattle ranching. To this day, pasturepart of Bahia, in the cities of Eunápolis and “At that time, the region lived solely from clear-cut, the region’s economic situation remains a dominant land use form in southernBelmonte, 50 kilometres inland from the wood,” says Gelton F. de Freitas Jr., Secretary became dire. Bahia.Atlantic shore. Eucalyptus plantations for the of the Environment for the city of Eunápolis. “Cocoa plantations used to be an important Eucalyptus planting began here at the Secretary ofmill spread across ten municipalities. This is From seeds to “In the past, environmental preoccupations employer, but they were hit by a plague which end of the 1980s, supported by governmental the Environmentwhere the raw material for the annual produc- dense forest were not a high priority.” nearly destroyed the region’s whole economy,” incentives. Sergio Murillo workstion of over a million tonnes of pulp is grown. The forest’s oldest Large-scale saw mill industry in the region says Sergio Murillo, Secretary of the Environ- Veracel started to buy pasture land and for the city of Itagi- In the past century, the coast of Brazil has trees are of bewil- started to decline when the rainforests began ment for Itagimirim, a city where Veracel now experiment with planting trees on it in 1991. mirim, where Veracelwitnessed a loss of rainforest to accommodate dering proportions. to run out. By the end of the 1980s, almost all grows eucalyptus. Results from the experiments soon indicated grows eucalyptus. Rainforest regeneration at veracel takes place at a rate of 400 hectares planted per year.20—Rethink Stora Enso—21
  • 12. that the area possesses exceptional qualities expand their living habitat and increase overall can be seen as a large biological shield. Themaking it ideal for wood production. biodiversity. forest works as a buffer zone keeping fires and According to Otávio Pontes, Vice President, “The best method of forest restoration is plant diseases away from plantations. ForestsStora Enso Latin America, steady rainfall is natural regeneration: you put up fences around also reduce the need for pesticides, becauseone of the reasons for high plantation produc- an identified area and simply allow the rain- eucalyptus pests’ natural enemies live in thetivity in the region. Most agricultural crops forest to return,” says Eliane Anjos, Sustain- rainforest and thus help thwart the problem.require a regular dry season for high yields, but ability Manager at Veracel. The existing Atlantic rainforests play aeucalyptus trees flourish thanks to the steady The method is effective as long as existing significant role also in maintaining the hydrolog-rainfall. rainforest and seed nests can be found suffi- ical balance of coastal Brazil by, for example, “The fact that it rains here all around the ciently close for the seeds to be carried by wind protecting springs.year fits perfectly to tree farming. Another and animals to the area being revived.important factor is the temperature, which also “However, this is often not the case, andremains stable throughout the year.” then the only remaining option is to plant the Sustainable income The construction of the mill started in 2003, rainforest,” notes Anjos. Steady rainfall Fruit juice made from local produce at thewith pulp production beginning two years later Veracel replants rainforests with 80 different “The fact that it rains Veracel Station’s visitor centre is a heavenlyin 2005. tree species per hectare. Before the actual all year round here source of refreshment after trekking in the rain- Stora Enso considers the Veracel Mill planting, seeds must be collected and nursed, fits tree farming forest, which in itself acts as a buffer againstcurrently the best pulp mill in the world. This is and the seedlings transported to the area. In all, perfectly,” says the day’s large part thanks to the climate conditions the ongoing process of transforming pastures Otávio Pontes, The station is frequently visited by groupswhich make the area especially well suited to to rainforests employs 60 people. Vice President at from local schools and communities thatgrowing eucalyptus. “As in all our operations, we support local Stora Enso participate in varied rainforest activities with The environmental laws of Brazil set strict companies in rainforest regeneration, and thus Latin America. an educational twist. “We are trying to make itrequirements for landowners in the state of stimulate the local economy,” says Anjos. possible for local people to rebuild their rela-Bahia; one-fifth of every land property must By the end of 2010, the company had School visits tionship with the rainforest,” states reserved for conservation. The Veracel already planted 4 000 hectares of rainforest, help to spread The station also supports academic work.Mill, however, conserves more than half of its with the annual rate of replanting being 400 the message of In addition to directly financing research, theland for environmental, social and agricultural hectares. conservation in the station offers guide and logistics services forreasons. When construction on the mill began, Anjos says that, from one perspective, community. research purposes in the rainforests.the company noticed that the hilly landscape the company’s work for the rainforests and Veracel is also involved in an ongoingand regional climate conditions allow conserva- biodiversity is a way of ensuring public approval Taking a stroll camera trap survey of the region’s medium-tion exceeding legal requirements. for the pulp mill. Additionally, rainforests bring Sustainability sized and large mammals, such as pumas and “Veracel decided to plant eucalyptus only on direct benefits to eucalyptus plantations. They manager Eliane jaguars. Other projects for increasing biodiver-plateaus, where planting and harvesting can be balance out the ecosystem and provide other Anjos tries to help sity include an attempt to revitalise the region’sdone most efficiently,” Pontes says. environmental services, as well. local people to harpy eagle population, which has almost All valleys, riversides, slopes and other Otávio Pontes from Stora Enso says that, benefit from forest vanished in the region.especially contoured areas are conserved. solely from a farming point of view, a rainforest conservation. In addition to environmental benefits, Vera-The decision to do so has resulted in a mosaic cel’s rainforest restoration efforts try to meetlandscape on the company lands, with the area cultural and social needs.of environmental reserves exceeding that of “When local people are able to benefit fromeucalyptus plantations. forest conservation, they are also better able to give practical value to biodiversity, and even turn it into a business opportunity for them-Biodiversity reinforcement “The best method of forest selves,” Anjos notes.Life on the company’s 105 000 hectares As an example, she mentions a localof conservation area is varied. Most of the restoration is natural community that has built a sustainable craftsprotected areas are rainforests that are business based on a rediscovered traditionalrecovering from logging activity in the region’s regeneration: you put up material, piaçava.past. Intact, primary forests can also be found, “Historically, the thinking in the region wasespecially in the area’s deep valleys. fences around an identified guided by the notion that you cannot combine A part of the company’s protected land is economic development with environmentalformer pasture. In these areas the company is area and simply allow the protection. Veracel has shown that you can andattempting to restore the former rainforest. that, in fact, it is the only way.” Veracel takes part in a governmental rainforest to return.”effort in Brazil that aims to connect coastal Please visit -Eliane Anjosforest remnants with rainforest corridors. to view a short film on the subject.By connecting tracts of rainforest, the aimis to help flora and fauna move from oneforest remnant to another, and thereby both22—Rethink Stora Enso—23
  • 13. Do you see sustainability in business ON BUSINESS Publication Paper as just the latest passing fad? T Take a trip to Langerbrugge Mill, he waste paper mountains loom where recycling of local paper waste grey and violet in the back of a mill and using bioenergy have seen shed. Their silhouette imitates the Pyrenees so well that you could the business through difficult times. imagine being on a French ski holiday. Walking closer, the headlines become Text Eeva Taimisto Photos Teemu Kuusimurto visible: Weather forecast for Belgium: cold. Footballer’s secret girlfriend apologises. The mountains are stored at Stora Enso’s Langerbrugge Mill in Belgium, on the outskirts of the city of Ghent. The mill produces news- print and uncoated magazine paper by using solely recycled paper as raw material. This strategy, along with the mill’s other sustain- ability efforts, has been a recipe for success even in the most difficult of times. And times, they have been hard. Over- supply, escalation of costs with shrinking prices and declining customer demand have Taste for waste taken their toll on the whole publication paper industry. Layoffs and mill closures in Europe have become frequent news, and the future remains uncertain. Mills thriving in this kind of an environment attract curiosity. At Langerbrugge, profitable business has been built on sustainability, recycling community waste, and producing bioenergy. For sceptics who find eco-friend- liness to be a mere marketing strategy for companies enjoying good times, Langerbrugge Mill presents a tough call. The perfect spot Great business, however, did not come without change. Back in 1997 when the mill still used wood as raw material, things did not look promising. It was only after rethinking the whole idea of the mill that it became truly profitable. In Langerbrugge, change started from raw materials. Looking at the sheer size of the waste paper piles, it makes perfect sense the mill decided to stop using wood. The waste paper smells slightly, a truck has just dropped it in the ware- house. A magazine is lying on the floor, with dryOne man’s garbage ketchup stains on the cover as if to remind thatis another’s raw only a few weeks ago it belonged to somebody.material, as the That somebody lives nearby. Within 300Langerbrugge Mill kilometres from the mill gates reside about 80demonstrates. million people and 70% of the purchase power of Europe. Inside this same radius are the big cities of Europe: Paris, London, Amsterdam and Brussels, along with the Ruhr area in Germany24—Rethink Stora Enso—25
  • 14. and the whole of Holland. For Langerbrugge use gas or coal, we use waste,” explains De newspapers and magazines and also picks you may be reading the same newspaper again Langerbrugge Mill Mill, this is more than convenient. As long as Hollander. out plastics and other non-fibre materials. in a couple of weeks.” Ghent, Belgium people in Europe read newspapers, there will be The mill has invested in a bioenergy plant Newspapers and magazines then enter the raw material just around the corner. that started running in June 2010. The power first step of the production process where Products The future is in your hands ● For Langerbrugge’s business, location plant comes with a highly efficient multi-fuel other impurities are separated out of the paper. Standard newsprint, makes all the difference. Using a cost-efficient boiler that is capable of using all kinds of This carefully sorted paper then enters the As the future of publication papers remains Uncoated magazine material that does not require long-haul industrial waste for bioenergy production. Such de-inking process, where the ink is washed uncertain, Langerbrugge may have to keep on paper transportation has been critical for the mill’s waste includes demolished waste wood from out of it. After the fibres have been thoroughly reinventing itself for years to come. ● Raw material sustained competitiveness. Transporting logs construction sites, along with other waste from washed, the pulp enters the paper machine. One important trend for the future is 700 000 tonnes from forests of northern Europe or the euca- the community that would otherwise end up in New paper appears from the machine in just a sustainability. Consumers are increasingly recycled paper lyptus plantations of South America would a landfill. few seconds. interested in their ecological impact and aware ● Power Plant come with a noticeable price tag. In turbulent Yet it is clear that the benefits of bioenergy “This paper is wound up, cut to customer- of the choices they make. Compared to digital 55 MWth Biomass times, keeping costs down has been a winning go beyond sustainability. Both power plants sized reels, wrapped and ready to be shipped media, newspapers still hold their place as the CHP plant (BFB)Urban forestry strategy. provide 100% of the steam and 50–70% of all to the customer,” concludes Paulsen. “Nothing ecological option, if recycled and produced with 125 MWth Multifuel“We get the fibre we And then there is the environment to electricity used at Langerbrugge Mill. With is wasted and almost no waste leaves the a high share of bioenergy. Recycling rates in CHP plant (CFB)need by collecting consider. Recycling waste paper close to the rising energy costs, this is a great asset for mill. If you think about the environment, this is Europe are on the rise, with a gentle push from ● Paper machinesold household paper. community where it comes from is the ecolog- the mill. De Hollander is content about this something quite unique.” the European Union. PM 3: width 6 m,There is no need to ical thing to do. For Langerbrugge, responsible and does not hesitate to show it. “The paper When asked about how easy the process And even in the age of growing digital media, maximum speeduse wood,” says use of resources is not just a catchword. The industry with its heavy energy costs?” he asks, really is, he puts on a friendly smile and then newspapers and magazines have not gone 1 200 m/minChris De Hollander, whole concept of the mill is based on recycling grinning, “Not at Langerbrugge.” thinks for a while. “Technically speaking, it is anywhere. But mill manager Chris De Hollander PM 4: width 10.4 m,manager of Langer- local waste. a very complex process,” he says, “It requires is not willing to speculate the future. “Being maximum speedbrugge Mill. a robust team with the right knowledge base profitable is and will be our number one target,” 2 000 m/min From trash to quality product and right equipment to make it happen, and he says firmly, and adds, “But if the community Personnel Energy from waste ● Making products and energy out of trash may we have it. We are quite proud of it, too, I must around us keeps reading papers, and as long as 400 employees The manager of Langerbrugge Mill, Chris De sound easy, but it is hard to imagine how a pile say”. we keep developing the mill, we are safe.” Hollander, sits in his office, facing a green field of trash is transformed into brand new paper The end products, shiny white paper rolls Langerbrugge certainly has all the right of grass that grows in the middle of the mill site. rolls of premium quality. in different sizes tower in the mill’s warehouse, ingredients for future success. “The way we From waste He leans forward in his chair and says: “We Ulrik Paulsen, the manager of mill opera- ready to be shipped to customers. They include make newspaper is the most cost-efficient way to fresh news call it an urban forest. We get the fibre we need tions at Langerbrugge, knows the process by famous European newspapers such as The to produce newsprint for our main markets,” De Langerbrugge by collecting old paper from the households. heart. He explains that waste paper is collected Daily Mirror, Het Laatste Nieuws and Le Figaro. Hollander says, holding a copy of Le Figaro in supplies paper stock There is no need to use wood.” directly from people’s homes and has to be The paper is set to travel back to the reader. his hand. “I actually pity the competitor.” for newspapers like But paper is not the only material the mill sorted first. For this purpose Langerbrugge “What most consumers don’t know is that The Daily Mirror, Het recycles. It produces significant amounts of Mill has set up a sorting plant; an automatic our process is fast,” says Mr Paulsen, “If you Please visit to Laatste Nieuws and energy out of industrial waste. “We do not operation that separates cardboard from put your newspaper in a recycling bin today, view a short film on the subject. Le Figaro. R i i T TA S u PPE R i26—Rethink Stora Enso—27
  • 15. ON BUSINESS Publication Paper ON BUSINESS Fine PaperSteady on Change on course T Is it the rebounding market alone that has M he concepts of cost efficiency and active is shipped overseas every year. The situation ay 2009. The world had fallen into the steering of customer relationships and is nearly impossible to fully comprehend – and deepest global recession since World the business sum up well the year 2010 in the not just because it poses a challenge to raw helped improve business results since the War II. Demand for almost all indus- Publication Paper Business Area. As we have material availability for us, but also from an financial crisis? For Stora Enso Fine Paper, trial products had fallen in a way no one could stressed in many contexts in recent years, we environmental sustainability point of view, as have foreseen only a year before. Demand continue to focus on matters we can influence raw material is being transported to the other the answer is no. Fine Paper has shown that collapsed also for office paper in all its end ourselves, and are not relying on outside help. side of the world. The matter requires serious their own actions are mostly responsible for uses. Stora Enso Fine Paper was facing the In 2010 alone, we permanently closed down discussion locally, regionally and on the Euro- most serious of challenges. nearly 500 000 tonnes of newsprint capacity in pean level, and I hope the reality of the situa- improved results. “We were deep in the red and our uncoated Europe, i.e. a total of three paper machines – tion will open the eyes of as many Europeans fine paper business was in critical shape. The concrete proof of our commitment to improving as possible – and soon. Text Päivi Kauhanen Photos Ernst Tobisch message from the CEO was clear: ‘you mustJEnni-JuST iinA niEMi our cost structure and profitability.Juha VanhainenHead of Stora Enso i n our main market area in Europe, paper consumption started to decline in 2008, and A good example of our capability to renew ourselves and find new game tactics is Stora Enso’s Langerbrugge Mill in Belgium.Publication Paper there is no indication that it will pick up in the Just over ten years ago the mill used only future, either. Digital media are taking a bigger pulpwood as its raw material. Securing the and bigger role as news channel, and chal- availability of cost-efficient pulpwood was a lenging paper’s role in advertising in our home critical factor in determining the mill’s future. market, Europe. However, global consumption From the raw material supply point of view, growth as a whole is next to zero; in practice the Langerbrugge Mill’s location was anything this means Europe’s loss is the rest of the but optimal. Today the mill lives from waste, world’s gain, thanks to emerging markets such and its location could not be better. Langer- as India and China. brugge procures its raw material from within a 300-kilometre radius, in an area containing T he situation is challenging, but manage- able. Many businesses in the world have made, and continue to make, money 70 percent of the purchasing power in Europe, and also generates all the energy it requires from waste. And most importantly, the mill’s in a similar situation. It is just that the rules operations are profitable. of the game in today’s world are completely different. In shrinking markets, companies cannot survive following the same rules that apply to growing markets. Cost efficiency and i fully admit that year 2010 was challenging, but we got through it well. I would like to thank our excellent people who were ready productivity matter. We cannot raise our stock to do all the hard work needed, and had the levels in anticipation of good times, running patience to develop our operations still further, our machines non-stop in the belief that when every day. Working hard every day, every week, things pick up, stocks will empty again. Nowa- we will succeed also in the future. It won’t be days, the pace is set by price, not volume. easy, and many challenges lie ahead. Hard work is needed in the near future, as well. But, i n terms of availability of raw material for newsprint and magazine paper, recovered paper plays a key role. For us Europeans, it is as I already pointed out, guided by our new way of thinking of our business operations, we will create our own success. The name of the not enough that the markets are shrinking but game is responsible business operations and on top of that paper raw material, critical for continued cost efficiency, rather than growth. our future operations, is being shipped from Europe to China. A major share of China’s paper and board machines’ production is based on recovered paper imported from Europe and America. Nearly 10 million tonnes of paper and board collected from households28—Rethink Stora Enso—29
  • 16. stop the “bleeding” and, in the long run, rebuild Rethought the need of curtailment to as few assets as much more a reflection of our current customerbusiness value’,” says Head of Stora Enso Fine business concept possible,” says Alalauri. structure and the new way of running the mills.”Paper Hannu Alalauri, looking back. To adapt capacity Easy or not, the fact is that Fine Paper has to demand and not lost a single customer due to this change. move from product- Pulling through How come?The need for new concept specific office paper By the first quarter of 2010 all the necessary “I would give three main reasons for ourBack to May 2009. Fine Paper was facing two machines to multi- product swaps had been made. Since then, success in customer retention: a feasible planmajor challenges. First, the ”bleeding” had to purpose ones was a the mind-set at the mills and in sales has been and its communication, long-term customerbe stopped. Second, it was necessary to find brave decision. clear: let’s focus on issues we can impact and relationships, and professional projectways to rebuild business value. A new busi- not wait for others to solve our problems. management by dedicated people,” Piiparinenness plan had to be ready by the end of August Office paper Two of the mills, Nymölla and Veitsiluoto, are summarises. Mik A k ASA nEn2009. Resurgent demand now running with a flexible mix of sheets and The plan and the needed change was “How did we get so deep in the red? The and favourable reels, while Varkaus is running a reel mix. One communicated, explained and justified to ourrecession and the sharp decline in demand currency rates have Commitment paper machine, Imatra PM 8, with an annual own people, and to customers, at all the neces-were the biggest reasons, of course. And reduced costs and “We were able to capacity of 210 000, was closed on 4 March sary touchpoints.then we had the weak U.S. dollar, as well as improved profits. convince everybody 2010. “They understood that we cannot keepthe expensive wood of which we had bought that this is the way “It was a tough decision, especially on going on as we had. We were able to convincetoo much, as we were not able to foresee the to rebuild our cost those people who lost their jobs, but we had to everybody that this is the way to rebuild ourdrastic decline in the market early enough,” competitiveness, face reality. We simply had too much capacity cost competitiveness, without risking our levelsays Alalauri, listing some of the factors behind without risking to meet future demand,” Alalauri stresses. of customer service.the economic situation. customer service,” And what is best – the big change worked. “And we should not forget that our joint The dilemma was that out of its six says Pasi Piiparinen, “We have had a huge improvement in history with many key customers involved goesuncoated fine paper machines Stora Enso was SVP, sales and profit in our Office Paper business. Of course back decades. While some were sceptical atable to run only two at full capacity while four of marketing. we have got some help from the rebounding the beginning, they trusted us to go forward –the paper machines and two of the three pulp demand and more favourable currency rates, even if this was the second time their productsmills had to take heavy curtailments. Why so? but the mix of improvement in profit and were moved within three years,” Piiparinen “We had rebuilt the paper machines and reduction in costs is our own achievement. continues.dedicated them to run specific end products. Furthermore, the total efficiencies of the paperUnfortunately, the collapse in demand hit all of machines have improved as a result of thethe end uses. Therefore only Nymölla, which product swaps. This would not have been Dedicated peoplewas our most competitive mill and capable possible without the decisiveness of our good Last, but definitely not least, comes profes-of serving several end uses, was used to people!” says Alalauri, a lot of pride audible in sional project management by dedicatedcapacity.” his voice. people. It was time to rethink the business concept. “This kind of production concept changeThe decision to adapt capacity to demand really requires a lot of hard work. Ourand move from product-specific office paper Customer voices customers had seen us do this exercise before.machines to multipurpose ones was well- Sounds like a real success story. Machines are They had been shown that we could managefounded. It was a brave decision as well, as running almost at full capacity and profitability to control the many variables – three millsit meant relocating the production of several is getting better and better. But how about involved, four main products, 100 customersproducts which had been subject to relocation those who normally have the final word in busi- to keep informed in Europe alone, trials at theonly a few years earlier. ness – what did the customers think? Was Fine mills and on customers’ premises, system Paper able to get the customers on board with updates and production planning changes, to the change? How did they like the idea of the – name but a few. The dedication and profes-A tough call once again – changing production concept? sionalism of the people working on this projectTough decisions were needed, as in many “The customers’ initial response showed was nothing short of amazing – withoutother Stora Enso businesses during the past some surprise, and some questions were good team work all this would not have beenfew years. In light of the demand forecast for raised. Some said: Your current quality and possible,” Alalauri confirms, before moving onuncoated wood free paper, it became evident service set-up is working well, why change?” to the moral of the story:that there was an overcapacity of at least Pasi Piiparinen, SVP, sales and marketing, “We do not believe our business is perfect,one paper machine – even if demand were to describes the feedback. nor that it will become perfect if we lay backrebound. Plans were therefore devised to shut It was not the easiest starting point for Fine and relax. We have to keep ourselves fit for theone machine down permanently. Paper sales people. future and rethink our processes and opera- “We also realised that we cannot operate “To increase the challenge further, the whole tions continuously. We have to keep our focusour assets in the longer run by having specialist Fine Paper sales network was rebuilt at the on the things we can control ourselves. It hasn’tmachines serving focused end uses. Instead same time. The traditional country-based sales been an easy route and it will not be easy in thewe need to build in flexibility so that, in case of office network was developed into area-based future, either, but we can make it.”demand decline, we can run the vast majority Customer Service Centres. This was not doneof our assets at full capacity and thereby limit solely in the name of reducing costs, but was30—Rethink Stora Enso—31
  • 17. ON BUSINESS Fine Paper ON BUSINESS PackagingStatement of vision Clever packaging solutions can add far more value than they cost. But how do bright ideas turn into actual consumer packages? A new take on packaging Text Jonas Nordlund W hat a tough, yet rewarding, year 2010 was for our Business Area. The plan we made in late 2009 was fully implemented, with things complicated – on the contrary. However, to achieve sustainable improvement and be “wanted” by customers, our own employees, excellent results. This is thanks to the changes owners, suppliers and other stakeholders at we made – especially in Office Paper – and to the same time is not easy. In the short term, demand rebounding from the deep recession. there are conflicting interests, and we have to What next? Can we lay back and relax now? accept that often there are no easy solutions. Absolutely not! Nevertheless, we really need to change old In the Fine Paper Business Area, we have practices and processes to gain improve- started to shift our view to 2015 and beyond. ments. There are no shortcuts to sustainable We all know that major changes are taking success.JEnni-JuST iinA niEMi place in the world of media. But possible This means that we will keep ourselves fit avenues are many, and it is hard to forecast for the future and we will work together with ourHannu Alalauri their impact on different end uses, and hence, customers to build rewarding relationships onHead of Stora Enso on paper demand. paper. We have a new route to go and we are toFine Paper We will do our best to analyse the markets redesign our offering. It is most important that and we will be prepared for the changes, while we together with our customers and suppliers at the same time keeping our focus on control- keep print media cost-efficient and attractive, lable actions. Those actions we ourselves can and that together we build and improve its impact, fast. reputation. i n 2010 we worked out a short vision state- ment for 2015: We are wanted – for our own merits. Not because we are “easy” – but O ur starting fundamentals are on a solid basis. According to our mission statement we win with sustainable and renewable paper because we can. solutions for print media and office use. What do we mean by this? First of all, we At the end of the day, our success depends want to build rewarding relationships with our on all the good people working for us. Devel- customers who want to work with us on a long- oping our people and their individual excel- term basis. We are ready to make changes, lence towards team excellence is high on our and we will not wait for the positive economic agenda. The world is not ready and we are not cycle to save and reward us. Our own merits ready. That is why we as the Fine Paper team refer to our initiative and active contribution are open to new ideas and committed to rede- to solve challenges and win together with our sign our business and future success. customers. S o, what do we mean by saying we are not “easy”? First of all, we do not want to make nOk i A32—Rethink Stora Enso—33
  • 18. A lot has changed in the last The sales packages of all new devices are boxes to be packed all the way to the edges, decade. Consumers are well smaller than earlier equivalents, and these thus enabling a reduction in package size.” informed, news as well as reductions are to continue. Mats Nordlander takes an even broader rumours spread fast around “Smaller and lighter packaging has also view. He is a big fan of fibre-based packaging the world, and consumers are reduced transportation loads. All these factors and is convinced that Stora Enso and thebecoming increasingly demanding by the day add up to environmental benefits as well as big renewable materials industry have an important– and those same demands travel through the cost savings,” reminds Uimonen. role to play on the planet.entire supply chain. Mats Nordlander, Head Sustainability is integrated into all of Nokia’s “We need a new approach to materials,”of Stora Enso Packaging, is well aware of the operations, and sustainability-related oppor- he says. And by “we” he means the wholetrend and warmly welcomes it. tunities are systematically analysed. Environ- world. Nordlander sees that packaging as an “Our customers are demanding and they mental work at Nokia is based on life cycle industry has huge potential, and that fibre- nOk i Aexpect innovations, which is good news to us. thinking. based packaging will gain market share due toNow more than ever, we must learn to develop “This means that we aim to minimise the sustainability trends.innovations also jointly with customers. Well wrapped environmental impact of our products at every “There is room to give our customers moreInnovation for us is a source of competitive “We continue to stage of our operations, beginning with the value if we truly understand their needs. Atadvantage – a way to add value. In order to improve our pack- extraction of raw materials and ending with Stora Enso, we are convinced that we will winadd value, we have to have the right products aging, and to be recycling. We achieve this by better product by giving customers and consumers a supe-that fit into our strategy. And in order to have successful we need design, close control of the production rior product experience. We want to be thethe products, we also have to have the right to work closely with processes, and greater reuse and recycling of premium brand in our industry. By rethinkingsupply chain and competencies to enable such our suppliers, such materials,” says Uimonen. our processes in accordance with our strategya strategy.” as Stora Enso,” says – ‘The Packaging Way’ – we can deliver value Stora Enso promotes creative thinking and Ulla Uimonen, to our customers. In the end, this is what grantsinnovation as an engine to drive the business Head of packaging A shared objective us our licence to operate,” concludes Nord-forward and achieve success. The Packaging design at Nokia. In an ideal world, mobile phones would not lander.Business Area’s operations in research and need a package at all. However, they need todevelopment and packaging design capabili- be protected for storage and transportation. Read more on packaging R&D innovationsties are world-class. Future growth depends With proper design and material choices the on page 9 and Packaging strategy on page 61on being able to develop innovative packaging environmental impact of packaging can be of this publication.materials and solutions to meet customer reduced significantly. At the same time, it isneeds. possible to promote the product effectively Please visit to since packaging is an integral part of brand view a short film on the subject. building. There are several players, settingSustainable packaging various requirements and participating inSo, what are then the customer needs? To package design. Designers, product managers,spend time with customers to fully understand package automation, sourcing and logistics astheir needs is really a key issue. For one of well as package suppliers all set requirementsStora Enso’s customers, Nokia, a leading for packaging.provider of mobile solutions, a mobile phone’s “However, I see no contradiction betweenpackaging should send customers a clear beautiful design and environmental issues,”message about product image. Also, it should says Uimonen. “The general goal for designcomplete the product’s user experience. is simplicity, which can be achieved also for “The package is important not only for Needs first instance through compact packaging duringprotecting the product but also for supporting “There is room to transportation and storage. Furthermore,and building the brand,” says Ulla Uimonen, give our customers simplicity usually means eco-efficiency as well.Head of packaging design at Nokia. Her job is more value if we Environmentally sound materials are also beau-to make sure Nokia has an optimal packaging truly understand tiful and have a pleasing feel to them.”portfolio to suit the entire product range. their needs,” says Stora Enso’s Mika Sjöqvist, responsible for “Nokia produces hundreds of millions of Mats Nordlander, the Nokia account at Stora Enso, is nodding; hephones delivered in consumer packaging. For Head of Stora Enso obviously shares Uimonen’s it is important to minimise the packaging’s Packaging. “Clever packaging solutions can be a littleenvironmental impact. We continue to improve bit more expensive, but they save far moreour packaging, and to be successful we need Boxing clever than they cost – both in money and in carbonto work closely with our suppliers, such as Nokia has increased footprint. The ideal way is for us to come in asStora Enso,” she says. the use of renew- early as possible and influence the packaging A lot has already been done. Nokia has able, paper-based solutions, e.g. materials and constructionsincreased the use of renewable, paper-based materials in its chosen. During the past years, we have jointlymaterials in its packaging to over 95 percent, packaging to over 95 been working on packaging solutions in whichand all packaging is 100 percent recyclable. percent. the draft angles are eliminated allowing for the L ASSE A Rv idSOn nOk i A34—Rethink Stora Enso—35
  • 19. ON BUSINESS Packaging ON BUSINESS Wood Products2010 – Competent, strong and different! Cross-laminated timber has enormous potential in urban construction. From 140-metre wind turbine towers to high-rise residential buildings, it is indeed raw material for the future. i n 2010, the effects of the early actions we improved whiteness, brightness, smoothness Welcome have taken started to show in our operational and unique printability. We also launched some result. We also started on the journey towards new packaging solutions such as Stora Enso building an even more focussed and stronger DeLight. Our packaging designers have won Packaging Business Area with proof points the Nordic Scanstar packaging award for a the era of wood such as the acquisition of Inpac International, clever packaging solution, made of corrugated the divestment of Laminating Papers and board, to protect a toilet seat’s porcelain investments in key assets. cistern during transportation. We also inau- As our Nokia customer story shows there gurated our process of recycling plastics and is a growing need for sustainable and efficient aluminium from used beverage cartons in our packaging solutions, especially in a society Barcelona Mill. This is profitable recycling: weJEnni-JuST iinA niEMi Text Heli Pessala where renewable materials and environmental get oil and gas for further use in the mill, we concerns play an ever increasing role. But we can sell the aluminium, and less waste endsMats Nordlander also know that a great majority of the future up at the landfill and at the same time weHead of Stora Enso growth of fibre-based packaging will come get more recycled fibre for making recycledPackaging from growth markets. The acquisition of Inpac cartonboard. will enable us to expand our presence in two such markets, China and India. The strategy of Packaging is focussed on growth in Consumer Board and Corrugated i ndustry Leading Supply Chain: We made some important decisions already back in 2008 and 2009 that helped improve efficiency Packaging and built around three operational in the supply chain in 2010. The closing of the cornerstones: Customer Focus, Innovation and Baienfurt Mill and Varkaus core board machine, an Industry Leading Supply Chain. and the development plans for Imatra and Ostrołeka were the most important steps. The ¸ C ustomer Focus: We are continuously working on improving our customer loyalty and fostering mutually valuable relationships new power plant in Ostrołeka will use clearly ¸ more than 50% biofuels and significantly reduce the mill’s energy costs in 2011. Also in by analysing customer feedback and future January 2011, we announced that we plan to trends, as well as the needs of all parties in build a new containerboard machine at the the value chain. During 2010 we implemented Ostrołeka Mill. The investment, together with ¸ Net Promoter Score, a customer-driven the new power plant, will make Ostrołeka the ¸ quality system. Derived insights will drive a European cost leader in containerboard supply. continuous improvement of our offering, better In addition, we have reviewed all processes pricing quality and a more focussed innovation and fixed-cost elements in order to improve process. In order to get closer to customers efficiency. Today, our sales are back on as well as to clarify roles, responsibilities and the 2007 level with fewer assets and less improve efficiencies, we have reorganised our employees, resulting in improved efficiency sales organisation in Consumer Board and and margins. Industrial Packaging. The changes allow us to I would say that Stora Enso Packaging increase focus on customer segment-specific is well on its way to rethinking the business The sky’s the limit needs. to become more competent, stronger and The eight-storey increasingly different. These characteristics are residential building i nnovation and Customer Experience: I think we as a company have a great opportunity to differentiate through innovation. To achieve useful as building a profitable and sustainable future for Stora Enso. Bridport House is under construction in the heart of London. this, we launched a new platform for research and development (R&D) within our Business Area. During 2010 we launched several product improvements, such as the new Ensocoat board with a new recipe that provides k A R A k u S E v i C C A R S O n A RC H i T E C T S / PAu L k A R A k u S E v i C36—Rethink Stora Enso—37
  • 20. T he sight is fascinating yet familiar, bridges. Until now, wind turbine towers couldn’t Assembly on site and getting ever more common: have been shipped to new markets abroad A single-family house enormous steel towers standing either,” explains Giebel. can be put together next to each other with their three- The first 140-metre wind turbine tower in just one day blade rotors spinning and humming, made from Stora Enso CLT is planned to from prepared CLTgenerating wind energy to meet consumers’ be constructed in Petzen, southern Austria. elements.ever-growing needs. And, the sight gets even Construction should take place in 2011, aftermore fascinating when constructing the wind a building licence has been granted by theturbine towers out of wood. Wooden windmills authorities.are not just sympathetic reminders of countryliving in past centuries but complex and highlyengineered innovations, making a strong PE T R i A R T T u R i A S i k A i n E n Eight storeys on thirty truckscomeback. German company TimberTower has CLT is a newcomer to the field of woodbeen designing and producing wooden towers Sustainable construction. Stora Enso began CLT produc-for modern wind energy turbines since 2006. “By avoiding the use tion at Bad St. Leonhard in Austria in 2008. A “Before entering the industry, I didn’t of concrete, you are second CLT unit will begin operating at theexpect that you could use wood in so many also reducing your Ybbs Sawmill at the end of 2012. The first CLTways – it was truly amazing to realise just what carbon footprint,” solutions were used in the construction ofyou can do with it. Personally, I think wood explains Gernot single-family houses. Now, the use of CLT is CLT Factsshares all the beneficial characteristics of Weiss, Stora Enso moving increasingly towards urban construc- ● Kiln-dried, planedconcrete as a raw material in construction,” CLT Sales Director. tion – high-rise buildings, towers, bridges. lamellas formed outexplains Holger Giebel, Managing Director of CLT’s properties make it highly suitable for of 3, 5, 7 or moreTimberTower. Safe as houses such uses. CLT elements’ vacuum characteris- cross-layers A wind turbine tower requires extreme CLT is a particularly tics lead to a stable and durable end product; no ● Elements avail-material strength bearing the load of an up good choice for swelling or shrinkage occurs during its entire life able in large formatsto 300-tonne turbine. And the weight of the buildings located in cycle. This makes CLT an especially safe choice up to 2.95m x 16mturbine is not the only crucial factor to be earthquake zones. for building in earthquake zones. In addition, x 0.40m, customconsidered. Turbine material has to endure the the prefabricated elements minimise the time structures availablehighly dynamic and static powers it is exposed needed for assembly at the site; the elements on requestto as well as the rotation of the motor, not to of a single-family house, for example, fit on one ● Easy and fastforget the ever-changing and increasingly truck, and the house can be erected in a day. assemblydemanding weather conditions. The first step into this new direction of ● Raw material To meet the high criteria for tower construc- urban CLT construction has been taken in the spruce (pine or larchtion, TimberTower has settled on using heart of London, where an 8-storey, 41-unit on request)cross-laminated timber (CLT) in its tower residential building, Bridport House, was ● Airtight andsolutions. Due to its highly engineered produc- assembled early 2011, and the building is windprooftion process, CLT has – in addition to being expected to be ready late this year. ● Highly suitable fora sustainable and renewable raw material – use in earthquakeseveral technical and logistical advantages as zoneswell in the CO²-intensive construction business. ● Formaldehyde-free “CLT boards are produced by bonding adhesivesand glueing single boards together as lamellas ● Manufacturedwhich are then pressed and glued together at the Bad St.crosswise to achieve a structure that is as Leonhard Sawmillairtight and strong as possible,” explains in Austria sinceGernot Weiss, Stora Enso CLT Sales Director. 2008, with theThe outcome of the process is impressive: annual capacity ofenormous wooden boards – up to 3 per 16 60 000 m³metres in area and 40 centimetres thick – in ● Stora Enso’sready-cut forms according to customer second CLT produc-requests. tion unit, with the Logistics for the enormous wind turbine annual capacity oftowers has been a major concern for the 63 500 m³ of cross-industry. Now, with the easy-to-transport laminated timber, isCLT elements the problem of transport has scheduled to beginbeen solved. “High steel towers cannot be operating at thetransported very easily, as in Central Europe Ybbs Sawmill at thefour metres is the maximum load to go under end of 2012 STOR A EnSO H A n S kO i S T i n E n38—Rethink Stora Enso—39
  • 21. “However, eight storeys is by no means the The biggest hurdle is fire regulation which ON BUSINESS Wood Productslimit. According to research done at the Univer- is decided upon on a local level in mostsity of Vienna, CLT houses can be built as highas twenty storeys, or more,” says Weiss. The CLT elements needed for Bridport cases, and often prevents the construction of wooden high-rises. In Finland, for instance, wooden buildings can only be built up to four A reorganised outlookHouse were delivered to the construction site storeys high. However, public discussion onon the back of 30 trucks, and the building was alleviating the strict legislation is presentlyassembled in an impressive ten weeks. With its going on in the country.1 100 CLT element pieces, Bridport House actsas an enormous carbon sink by accumulatingsome 1 150 tonnes of carbon dioxide from the “The fact that wood burns is a big psychological hurdle for people when it comes to wood construction. It’s sometimes d uring 2010, after an especially tough two years, we finally enjoyed better market conditions, and clearly improving financial based multi-storey solutions. Investment into a second CLT unit in Ybbs, Austria, is a logical expansion of the successful starting up of ourair – roughly the same amount of CO² emis- also difficult to realise the fact that in a fire, results. We were able to utilise our global reach CLT business, where bulky sawn goods aresions as when a person takes 850 flights back concrete loses its strength faster than wood. and redirect our business to overseas markets converted into high-value CLT elements.and forth between London and New York. Stora Enso has to act in these matters, and to a greater extent, while at the same time “And it is not only about storing the carbonin the finished building. Manufacturingconcrete generates enormous CO² emissions. educate local planners, designers and even fire brigades to understand the suitability of wood for construction,” Mikkola says. reducing our exposure to some Western Euro- pean markets. Despite the improving market conditions, however, we are still clearly below A big thanks for the improved outlook belongs to our customers for their support during the difficult times. It has been great toBy avoiding the use of concrete, you are also Joint actions are also taken on a European the pre-crisis demand levels, as recovery has witness how well most of our customers havereducing your carbon footprint,” explains level in communicating the properties and proven to be a slow process. Still, we should been able to navigate the storm and come out JEnni-JuST iinA niEMiWeiss. possibilities of wood construction in urban be able to see a normalising of operating rates even stronger. I would also like to thank our But what about the fire resistance of wood environments to politicians, legislators and also this year, both in our customers’ and our own employees for their hard work and flex-constructions? consumers. Hannu Kasurinen own operations. ibility during these volatile times of curtailments “The fire resistance of a wooden tower is “The 20th century was definitely the era Head of Stora Enso and downsizings. Even though very unfortunateactually much higher than that of a steel tower,”reminds Holger Giebel. “Steel quickly losescapacity when heated. A wooden tower would of concrete and steel,” ponders Gernot Weiss. “As people are getting more and more familiar with the principles of sustainable Wood Products W e have set a target to clearly improve our profitability from current levels. This target we will reach by increased focus for the affected employees, these measures have been all-important in getting us through these tough times. Increasing flexibility toburn on the surface but the structures would construction, I’m absolutely convinced that on those businesses where we have clear convert fixed costs into variable ones wheneverremain intact.” Layer upon layer the 21st century will be the era of renewable competitive advantages and possibilities to needed will become a key competitive advan- Also Gernot Weiss is convinced: “Yes, we Planed lamellas materials. And when we speak of renewable differentiate ourselves from the competition, tage for us in the future.know wood burns, but also that it burns two are pressed and materials, it is definitely cross-laminated and by making consequent choices in ourcentimetres in 30 minutes. Knowledge of therate of burning makes it easy to calculate howto build in a safe way.” glued crosswise into massive airtight construction timber that first comes to my mind.” Please visit to business and asset portfolios. We derive our decisions from what we believe are the key drivers in our end-use industries and from the G lobal sustainability trends and their very positive impact on wood as a building material are known to us all. However, it is up to elements. view a short film on the subject. way that our customers’ needs are developing. each company to be able to develop concepts We will then adjust our assets and raw mate- that will be competitive both financially andLiving in the concrete jungle rial supply accordingly, and not vice versa, as technically; our strong sustainability creden-As a raw material, wood seems to have all the has by and large been the industry practice tials will come as an additional benefit. Usedqualities a constructor could dream of. But as in the past. Reaching customer satisfaction both in building and as raw material in decora-you take a look around at modern urban archi- and end-use excellence is a long process that tive products, wood has wonderful possibili-tecture, we appear to be mainly surrounded by we will pursue with patience. This is one proof ties, and the opportunity to win an increasedsteel and concrete rather than wood solutions. point of how we are rethinking our traditional share of the future market from competingWhy so? saw milling business. materials. “The main reason is the long tradition ofusing concrete and steel in urban construc-tion. The concrete industry has been devel-oping the multi-storey building system and A s one part of our strategic refocussing, we have distinguished three businesses, Solid Biofuels, Building Solutions and Indus-standards since the early 1960s. Simulta- trial Components, and turned them into moreneously, the steel industry has been devel- independent and accountable business units.oping the system for high-rise buildings,” These businesses require new and business-explains Matti Mikkola, Head of Building specific competencies that only partly exist inSolutions and Solid Biofuels, Stora Enso our company today. We were able to expandWood Products. our Solid Biofuels portfolio by starting to build “Now for the first time, the wood working a new pellet mill in Imavere, Estonia in lateindustry is jointly presenting the fact-based 2010. The Building Solutions business took twocase for using wood in urban construction. major steps forward in turn of the year 2010:Furthermore, the industry is developing new the acquisition of Eridomic Oy in Finland offersstandards and systems for industrialised us direct access to the construction industrywood construction.” value chain, and a platform to expand into CLT- STOR A EnSO40—Rethink Stora Enso—41
  • 22. In the peaceful landscape of the Ta Oy district in Southern Laos, Stora Enso has found a model of cooperation with the locals that truly benefits both. The company is clearing the land of unexploded bombs to plant eucalyptus, while also reserving some of the safe land for the locals’ rice fields. In Ta Oy, business sense meets social responsibility in a concrete way. Text Eeva Taimisto Photos Petri Artturi Asikainen Trees, T ravelling to the district of Ta Oy in Southern Laos is not for the weak of heart. The dirt roads that lead to the area are food and muddy all through the rainy season, making the roads treacherous and the ride bumpy. Few cars even try to make it. bombs When you finally arrive in Ta Oy village, exhausted and covered in mud, you realise getting there was well worth the trouble. Ta Oy district is located in one of the most pictur- esque parts of the country, between mountains and waterfalls and close to the Vietnamese border. And right here, in what feels like the middle of tropical nowhere, stands Stora Enso’s plan- tation laboratory. It is a trial plantation project; a venture established in 2006 to test growing eucalyptus and acacia trees in the Saravane and Savannakhet provinces of Laos. Peter Fogde, the Chief Operating Officer of Stora Enso Laos, has mud in his hair. He unloads a dirty truck next to Stora Enso’s small office in Ta Oy, looking more like a jungle guerrilla than a senior business executive. He has spent the day at the plantations and he is excited. “Today was a great day,” he declares, “the trees are growing fast and with the new truck, we only got stuck three times!” It is no wonder that the trees flourish. Laos has the ideal climate for growing eucalyptus:Content villagers Savannakhet and humid and warm. Stora Enso’s trial project isClearing unexploded Saravane provinces small in size – about 400 hectares – but thebombs provides safe The site of Stora Group is planning to expand to 2 000 for the locals Enso’s plantation The project is not producing trees yet, but itto produce food. laboratory in Laos. definitely seems like an interesting test ground.42—Rethink Stora Enso—43
  • 23. Great opportunities seldom come without In many ways, Laos offers an attractive environment for setting up plantations. Therechallenges. in Southern Laos, the challenges is plenty of degraded land suitable for planting trees and the Laos Government has a strategyare like nowhere else. to increase the surface area of plantations to 500 000 hectares before the year 2020. And for companies, having 300 million consumers within reach outside the national borders of Laos, is an added incentive to be interested in the country. A challenging scene Great opportunities seldom come without chal- lenges. In Southern Laos, the challenges are like nowhere else. Ta Oy, along with the other districts where Stora Enso operates, is located in the heart of the Ho Chi Minh Trail – an area with a long history of warfare and hardship. Local communities are still suffering from the aftereffects of the Vietnam War. “During the war, more than two million tonnes of bombs were dropped over Laos. A big part of those bombs fell over the area where we are sitting right now, and where we are working,” Fogde says. Many of those bombs never exploded. As a result, the area is dangerous up to this day. Bombs and cluster bombs from the war still explode around Laos each year, killing and injuring local villagers. But bombs are not just a safety hazard – they also cause malnutrition. Local farmers practice shifting cultivation to grow rice and other food crops, but this method is dangerous, and does not provide enough rice to feed the villages. In places, digging for roots Learning process Extreme Engaging the local challenges community takes A history of warfare time, but is ultimately is still present in the rewarding. landscape.44—Rethink Stora Enso—45
  • 24. and cutting bamboo in the forest is the only clearing away bombs, making space for food next to a plantation site in Ta Oy and watchesway to find sustenance for most of the year. production and employing and training the local the Lao clearance company SBH set up their The areas where Stora Enso plants trees are villagers. In Laos, this model is totally unique.” equipment.among the poorest in Laos. According to the “We have two reasons for clearing awayUnited Nations Development Program (UNDP), the bombs,” he says. “The first is to keep ourpoverty in the provinces where Stora Enso Safety first workers safe, and the second is to create aoperates is higher than the national poverty Stora Enso’s responsibility model in Laos is safe place for the villagers to plant their rice.”rate. The majority of households in these areas built from the ground up. Before planting any McInnes pulls a scanner out of his car. “Letearn less than 36 dollars per year. The World trees, the Group clears all unexploded bombs Making it safe me walk you through this,” he says.Food Program (WFP) describes the districts as from the plantation area. As other plantation Battle Area Clearance “We start by marking and mapping thehighly vulnerable to food security. companies in Laos are not yet doing this, Stora specialists Doug areas within the site that should not be cleared. In this kind of environment, conducting Enso is a real pioneer in establishing safe McInnes and Songka Those include local spirit forests which areresponsible business requires more than sweet territories. Latpho discuss the not be touched, and watercourses that mighttalk. Stora Enso has come up with a unique Doug McInnes, Stora Enso’s Battle Area boundary of the area become eroded,” he explains. “Then we cutmodel which promotes community develop- Clearance Officer, has an impressive title and that will be cleared of down the bush in close cooperation with thement while enabling business. a job to match. His job is to supervise the unexploded muni- villagers who have good knowledge of the “We set up plantations that produce both clearing of the soil, to make sure that areas tions. Another team area, and know if there still are bombs on thetrees and food,” says Fogde. “We do this by where the Group plants are safe. He stands member listens. ground. After that, we lay roped boxes over “We have two reasons Close cooperation Driving on the muddy the areas to be cleared so that we can search effectively and without missing patches. If we for clearing away the roads, you some- times need a little find unexploded ordnance, we destroy it.” McInnes starts scanning the ground with bombs. The first is to help to keep going. his magnetometer, which instantly starts to beep. “It might just be scrap metal,” he says, keep our workers safe, Local expertise “we can investigate that later.” He appears calm and the second is to Planning eucalyptus plantations starts despite the fact that there can actually be an unexploded bomb only some centimetres in the create a safe place for by mapping areas which should not be ground under his feet. “That is the reality around here,” he explains. “It could be anything.” the villagers to plant touched together with local villagers. Growing food their rice.” When the soil has been cleared from bombs -Doug McInnes and it is safe to use the land again, trees can be planted. At Stora Enso’s plantations in Laos, the tree rows are planted a relatively long distance from each other. “We use wide spacing between the trees,” Peter Fogde explains, and walks closer to the eucalyptus. “The space between tree rows is nine metres while the space between trees in the row is less than one meter. This system allows the villagers to grow rice at the same time as we grow our trees.” For the local villagers, the plantations offer the possibility to grow food safely. But it has other benefits, too. Compared to the traditional shifting cultivation, the rice yields are better. And there is also nature to consider – if the locals have a safe place to grow food, they do no longer have to burn native forest, and thereby harm local biodiversity. UNDP Laos has also noticed the positive impacts on crop production among the families in the area. According to UNDP, some villagers46—Rethink Stora Enso—47
  • 25. have noted that they even find planting rice Choycheek, as well as most of the families “The good thing is that since the company camethrough Stora Enso’s model easier than their working on the plantations, are residents of here, life has changed. Now we don’t have to gotraditional shifting cultivation. the nearby Lapeung village. It is one of the first to the forest and dig for roots anymore.“ “Look how well it is growing,” Fogde says, villages that Stora Enso approached back in But according to Amveun, the Group couldpointing at the rice. The rice crops that grow 2006 when planning to set up the first planta- still do more. “The thing I would still ask frombetween the trees are high; you can barely see tions in the area. Since then, the villagers and Stora Enso is that it would clear more soil for usthe foreheads of the local villagers harvesting the Group have been in continuous contact. to grow food.”in the rice field. Each rice field between two Besides growing food crops, many of therows of trees belongs to one family, and the villagers are salaried employees of Stora Ensofamilies look busy working, laughing and talking. – some permanently, others occasionally. People as assets Mr. Choycheek, a serious man with a sharp Mr. Amveun, the head of the Lapeung Peter Fogde appreciates this kind of feedback.gaze wants to have a chat with Fogde. He village, knows Stora Enso and the benefits the “We always take suggestions from the localworks as a watchman for Stora Enso, making cooperation has brought. people seriously,” he says. “We cannot fulfilsure that no wood or rice is stolen. His family “Before, we made a living by going to the every need, but listening to the villagers isalso plants rice in the plantations. “Compared forest to collect bamboo shoots and vegetables, crucial as it is the only way to understand whatto shifting cultivation, planting here gives more and search for food. During the times when we their needs are.”rice,” he says. “We do not have to depend on had no rice we had to go to the forest to dig But communications are not always asthe rain like before.” roots which we had to eat for days,” he says. straightforward as this. When going to a new village, the locals do not always understand Stora Enso’s ideas. Group staff have been explaining the plantation model in many villages many times, but convincing locals Continuous investment in the private sector to be a vehicle about new ideas is not always easy. “You need discussion for development in Laos over the next few to talk about it with the farmers over and over Mr. Amveun, head years. Investments that come with job creation, again,” Fogde says. “When you explain it for of the Lapeung technology diffusion and knowledge transfer the first time, they just don’t buy it. And I under- village, appreciates boost development in a fast and efficient way. stand them. I would not sign up for something the benefits Stora But it is also a question of standing the test that I have not seen proof of, either.” Enso has brought of time. As Stora Enso’s plantation project is Fogde and his team, however, do not give to his community, still a trial, one may wonder what will happen up easily. “What we do when we go to a new and would like to see in the villages if the company one day decides area is organise farmer-to-farmer excursions more soil cleared for to discontinue the project. However, the Group where the new villagers learn from those who food production. has already made a lasting impression on the already participate in our model. What usually area by cultivating skills, sharing know-how happens is that once they see with their own and clearing agricultural land of explosives. eyes, and hear from fellow villagers, how great None of this can be taken away. the rice harvest is, they want to join us.” “Building trust takes time. And it goes both Please visit to ways. When we meet new villagers, both need view a short film on the subject. to learn from each other. It takes patience but it works,” he says. It is not self-evident that a business should want to invest time and resources in work like this. Many international companies talk about stakeholder engagement, but making the effort to actually understand and be understood in foreign communities with foreign habits requires hard work. And for many the question still remains: Does it make business sense? “I have been thinking about it a lot,” Peter Fogde says. “For us, the business case is that “We set up plantations that produce both trees we see people as assets rather than liabilities. By that I mean both the villagers and our staff,” and food. in Laos, this model is totally unique.” he says. “When you see people as assets, anything becomes possible. Anything.” Local benefits For the local -Peter Fogde According to UNDP, Stora Enso’s trans- villagers, the parent efforts to social development could be plantations offer the a best practice of foreign direct investment possibility to grow in Laos. UNDP regards domestic and foreign food safely.48—Rethink Stora Enso—49
  • 26. The final shift E ar plugs are hardly enough to block Heinola and Uimaharju. The employer also set out the sound of the paper machine up various support measures, such as assis- echoing through the massive hall. tance for those interested in moving away from A reel of more than 80 kilometres of the area, training and self-employment. paper is being rolled up at the end Jari Mujunen, who worked the fourth shift of the machine, which itself measures tens of on PM 4, has worked at the paper mill for 25The last newsprint machine at Varkaus stopped running at the end of metres in length. It will soon be time to change years – his entire adult life. He began lookingSeptember 2010. The personnel at the mill had a hard time understanding the reel. for a new workplace as soon as he heard about With a few minutes remaining in his shift, the layoffs, and, after filing an internal applica-why. Throughout the autumn and winter, however, most of the paper papermaker Jari Tarkiainen sits behind the tion, found one at Stora Enso’s Heinola Mill.workers found new opportunities through new jobs, retirement or training. glass wall of the control room. The next shift’s “You have to do what you can to get the bills team begins to arrive, and Tarkiainen gives paid,” Mujunen says. “I didn’t want to just waitText Jarno Forssell Photos Petri Juntunen Varkaus, Finland them a rundown of the situation. around for a replacement job to be offered. The bulletin boards in the control room are I want to continue working in the industry that covered with notices and newspaper clippings. I was trained for, even if it means working in The headline of the most recent bulletin reads: another district.” “Checklist for laid-off employees – matters you Development Engineer Pertti Kiesiläinen should take care of now.” Next to that are a few says many of his colleagues started applying articles from the local newspaper Warkauden for jobs in September, and some were lehti which mention Stora Enso’s CEO, Jouko successful. Kiesiläinen found a new workplace Karvinen. Hand-written comments complete nearby, at the Varkaus Pulp Mill. He admits the board. that looking for work at the age of 47 was a It is September 2010. Paper machine four, daunting experience, even in terms of filling in PM 4, is in its last days of operation. The other all the required documents. newsprint machine at Varkaus was already “Stora Enso really focussed on keeping curtailed in the spring. That is where Tarkiainen us informed and on giving us job application worked before switching to PM 4. training. In that respect, the company did the “In the summer I felt sure that PM 4 would right thing. I don’t know what they could have remain in production. It was a sad day when I done better,” he says. was handed my notice of termination in July. Most of us believed we would work here until retirement,” says Tarkiainen, who has worked “We didn’t skim from the top” at the mill for 31 years. A disappointed woman sits in the office The 50-year-old Tarkiainen has several building next to the paper machine hall. Nina years to go before retirement, but how Reijonen, who holds a Master’s Degree in and where he will spend those years is still Engineering, has worked at the mill for nine completely up in the air. years as R&D Manager, in charge of the mill’s “I have no idea. In a couple of weeks I’ll be technical customer service. heading to the employment office to see what’s “This was such a big shock that I still have available,” he says. not been able to think about the future or finding new work. I never would have believed this could happen,” she says. New jobs found nearby Reijonen, who is working until the end of 175 employees were handed termination January at the Wäläkky new enterprise centre, notices in the summer. Reino Panula, General does not want to leave Varkaus, as this is Manager of the Varkaus Mill and himself also where her home, spouse, extended family, now retiree, estimates that by the time the friends and hobbies are. It would take a lot for machine was shut down, a positive solution her to leave the district. – a new job, retirement, self-employment or The decision to cease the production training – was found for half of those who were of newsprint came as a shock to Reijonen, laid off. In spring 2011 situation is ever rosier. because initially Varkaus claimed fine paper, Almost 70 percent have found a new direction. not newsprint, had low profitability. “This active group of people all deserve to “We thought that even if things got so bad find a good workplace as soon as possible. that fine paper production at Varkaus was to be They have the right attitude,” praises Panula. discontinued, we would do just fine with news- According to him, Stora Enso offered print. As far as I know, at no point did we skim replacement positions at the fine paper from the top. We produced speciality products machine at Varkaus, and at mills in Imatra, Oulu, tailored to our customers’ specifications. Stora50—Rethink Stora Enso—51
  • 27. Enso can no longer produce such products, so Panula has been in a conflict situation ever should learn to read the paper using an elec- they are highly competent,” says Voutilainen.the customers will switch to our competitors,” since Stora Enso announced it was considering tronic device, like Karvinen does,” he says. Chief Shop Steward Kai Pärnänen estimatessneers Reijonen. shutting down all of Varkaus. In addition to that around a third of those laid off will handle At one end of the paper machine hall, Chief representing management to the employees, the loss well, a third will have mixed emotions,Shop Steward Kai Pärnänen and OHS dele- he also represented the district to Helsinki. As “The right attitude” and a third will get depressed. It is that lastgate Jukka Voutilainen can not figure out why General Manager of the mill, Panula says he In the control room, Mujunen pours himself group that concerns him is not profitable to produce paper at Varkaus, fought his own emotional battle and tried to a cup of coffee and recalls the day back in “Support and other services are available,”even though it fulfils all the conditions for a influence Stora Enso management for as long August 2009 when Stora Enso management Pärnänen says, “but some people will shutgood paper mill location: good transportation as it was possible. But once the decision was announced that the company was considering everyone out. I hope people will support oneroutes, forests and competent people. made, he had no choice but to live with it. shutting down the Varkaus mills altogether. The another and seek help – including for those “Something about this simply does not add “Reino’s entire team is behind him,” says paper worker, born and raised “at the roots of close to them, if necessary.”up. Since Karvinen started, Finland has been Reijonen. “I believe he feels just as bad as the smokestack”, confesses the news was like Pärnänen encourages everyone who haspushed to the sidelines. Is the goal to kill the everyone else here.” Readjustment Looking on a knife through the heart. not yet found a solution to actively follow up onpaper industry here and move production to Panula admits the decision to close down It would take a lot “This active group of Another difficult day for Mujunen came available jobs and take part in the employmentSweden?” asks Voutilainen. the paper machine was a hard pill for him to to convince Nina people all deserve last summer, when the notices of termination activities offered. They feel they have not received proper swallow too. Corporate management, however, Reijonen, R&D to find a good work- were handed out. Some of the employees had “The worst thing,” he says, “would be toanswers from Stora Enso management about saw things differently and reacted to the devel- manager, to leave place as soon as a complete nervous breakdown and never become passive.”why a profitable paper mill is being shut down. opment of the market situation. this area, where her possible. They have showed up for work again. The paper machineThey question talk of releasing overcapacity, “It seems that the importance of news- extended family, the right attitude,” was shut down for a week, but since thensince shutting down Varkaus is not the solution print is declining. It’s just a matter of how friends, and everyday says Reino Panula, production continued until September without Getting by with lessto that problem. quickly consumption will drop; I believe we life are located. General Manager of stops. The roof of the power plant offers an impressive will be surprised at how fast it happens. We the Varkaus Mill. “Some people even interrupted their view over Stora Enso’s mill area and the town are becoming increasingly impatient with the Moving forward summer holidays to start up the machine. You of Varkaus. Sunlight reflects off the water in the“We just have to live with it” news,” says Panula. Chief Shop Steward have to admire the backbone of that bunch of bay behind the paper machine hall. Taking in“Sometimes things are not as they appear. In Paper worker Jari Mujunen has come to his Kai Pärnänen and people,” says Nina Reijonen. the view from up here, it becomes clear how thesituations like this, people try to find meaning own conclusion as a consumer. After being OHS delegate Jukka According to OHS delegate Jukka Vouti- entire town has grown around the every word, spoken or unspoken, and they given notice, he cancelled all of his newspaper Voutilainen encourage lainen, the professional pride of paper workers But there is less smoke emanating from themight understand things differently than subscriptions. everyone to follow up is so intense that they will carry out their work mill now. Fine paper machine PM 3, a pulp mill,how they were intended,” ponders Reino “If paper is no longer being made in Finland, on available jobs and to the bitter end. Being permanently laid off, sawmill and biodiesel pilot plant still remain.Panula. there’s no point using it anymore. I guess we be active. however, hits hard. Panula believes they stand a good chance of “When the decision was announced, the succeeding with those in the future, even though workers came to me and said, with a lump in the integrated mill is now smaller. their throat, that it doesn’t matter. But it does matter. The average age of paper machine In spring 2011 almost 70 percent have found a personnel is slightly over 50. They are not yet new direction. Nina Reijonen has already found eligible for retirement, but are no longer valued a new job. Jari Tarkiainen is still looking for new on the labour market – despite the fact that challenges. very clear example in what geographical disadvantage putable: the profitability The world is has happened in the US: of being far away from of Varkaus machines was getting digital digital media is increas- the big Central European poor,” Vanhainen recaps the ingly pushing traditional publishing houses. background of the decision. E uropean newsprint paper media aside, both “None of us wants Finland is a nation of five demand took a in communications and to close down paper million people producing dramatic hit during advertising,” says Juha machines, but when there paper and cartonboard for 2009 and has yet to Vanhainen, Head of Stora are five reels of paper almost 100 million people. recover. Many people think Enso Publication Paper. coming out of production Therefore the global market the market will never again The most cost-efficient and there is a buyer for trends hit Finland hard, be as it used to be. paper mills close to the only four, we do not really and it is crucial that the “We predict that the customers and raw mate- have a choice. The least operational environment for long-term demand trend rial sources will survive the efficient production unit mills is kept at least on an on the European market battle, but Varkaus – and has to go, and in our case even level with competing is declining. We have a Finland in general – has the the numbers were indis- countries.52—Rethink Stora Enso—53
  • 28. ATree plantations in the Uruguayan countryside s we drive along a meandering country road through the pictur-present new possibilities for seeking synergy esque scenery of rural Uruguay,between the forest industry and local businesses. our destination – a family farm- house – stands out all the moreText Joni Mäkitalo clearly from the pastoral landscape. When we Montes del Plata, arrive, Claudia Perez, who owns the house and Uruguay the surrounding five hectares of land together with her husband Juan Alberto Ferreira,Everybody steps out to the yard to welcome her visitors. The family’s children, Cecilia, Federico and Agustín, have already returned from school Home on the range and accompany us.along Most of Uruguay’s The family is one of the stakeholders native landscape is in Montes del Plata, a joint venture set up flat grassland, typi- in Uruguay by Stora Enso and the Chile- cally used for pasture. based forest company Arauco. The family produces milk for a nearby dairy while leasing additional pasture land for their cattle from Montes del Plata.S T O R A E n S O / M O n T E S d E L PL ATA54—Rethink Stora Enso—55
  • 29. “Earlier it was very complicated for us to the two companies had previously owned in Integration In spring 2011 she has moved on to a newfind land,” Ferreira says. Uruguay. In addition, Stora Enso and Arauco “Our aim is to position in Stora Enso’s Technology & Strategy Around ten years ago, back when times jointly acquired the Uruguayan assets of the actively maintain organisation.were tough, they began their milk produc- Spanish company Ence. good relationships The forest industry is relatively new totion with a few cows. Back then, the children Montes del Plata will build a new state-of- with our neighbours the country, and local people do have theirwere too young for school, and travelled with the-art 1.3 million tonnes per year pulp mill. The in areas where questions and concerns about it. In discus-their mother to sell milk from door to door in new mill is expected to be operational by the we operate,” says sions with them, job and other opportunitiesDurazno, a nearby town. end of the first quarter of 2013. Sustainability for co-operation also play a role. “All in all, the Today the family owns 30 cows, and their Ever since starting its plantation project in Manager Kaisa public opinion towards the forest industry isdaily milk production has risen to 150 litres. Uruguay in 2005, Stora Enso has continuously Tarna-Mani. positive and supportive,” Tarna-Mani says. “We bought a milking machine already some emphasised corporate social responsibility in Land use in Uruguay is based on a nation-time ago,” Perez says and passes the mate tea – its daily operations in the country. Dairy living wide soil type classification system wherea tradition, both drink and ritual, in the country. “Our aim is to actively maintain good The Perez-Ferreira soil is put into categories according to type- relationships with our neighbours in areas family managed to specific characteristics. Of special importance where we operate. Integration of tree planting multiply their milk is the soil’s suitability for cattle ranching, whichThe business of trees with other rural activities has been the most production thanks to is both the most important source of livelihoodStora Enso and Arauco formed Montes del important form of co-operation within the the new initiative. and a fundamental facet of local culture.Plata at the end of 2009. The joint venture community,” explains Kaisa Tarna-Mani, By classifying the soil in this way, thebrought together the lands and tree plantations Sustainability Manager, Montes del Plata. government both regulates production priori- M A RC E L O S i n G E R Family affair Agustín, the youngest of the family, helps his parents at the farm after his school duties.Caption Headis lorem ipsum Assim solorum dolup-tiurMagniatur si tem The forest industry is relatively new tovit, officid el eiumvendis the country, and local people do have their questions and concerns about it.M A RC E L O S i n G E R M A RC E L O S i n G E R56—Rethink Stora Enso—57
  • 30. ties for land as well as points out where the surrounding society does well,” says Professor local-level authorities, as well as involved in Uruguay, where by far most of the nativeproductive potential for each type of land lies. Oscar D. Licandro from the Catholic University associations and Montes del Plata. landscape is flat grassland, converted intoIt is common for one administrative property to in Montevideo. He heads a corporate social “When the social aspects of the approach pastures. The Uruguayans have traditionallycomprise several soil types – and thus produc- responsibility research project including a are taken into account, tree plantations offer utilised eucalyptus as material in constructingtive priorities. study of the milk producer families in the family farmers new ways of earning a liveli- fences, and to make their cattle more In addition to tree plantations – covering Durazno department. Some of the families hood,” professor Licandro notes. comfortable.138 000 hectares altogether – the lands owned have quadrupled their milk production thanks The main business of Montes del Plata is Trees provide shelter for the cows on windy,by Montes del Plata are used for cattle grazing to the new support, restructuring and pasture growing trees and producing short-fibre pulp cold winter days, as well as shade for coolingby local farmers. Today, more than 100 000 access. in the future mill, but corporate social responsi- down during the scorching hot summer. Thishectares of company land is used for this Montes del Plata makes land available on bility is in fact also a cornerstone of strategy. added comfort results in healthier and morepurpose. an accessible market price basis, and limits “Promoting socially sustainable develop- productive cattle. The trees also benefit, as the M A RC E L O S i n G E R Montes del Plata rents out land suitable the area rented to a single producer. Instead of ment through responsible policies for renting cows eat competing vegetation.for grazing to local meat and milk producers, maximising rent revenues, the company aims land helps us to be a well-accepted and In addition to the surrounding pastures, itlike the Perez–Ferreira family. In all, contracts to promote equitable sharing of opportunities Employment boost integrated partner in Uruguayan society,” notes is also possible for cattle to graze on the treelike these have been made with around 200 in the local community. “When the social Tarna-Mani. plantations, after the trees have reached theproducers. This approach involves public–private aspects are taken age of two. On average in Uruguay, eucalyptus “The sustainability work carried out by partnerships. Projects have been planned and into account, tree trees grown for pulp production are harvestedMontes del Plata is pioneering. The company carried out together with local institutions. plantations offer Soil defines ten years after planting.truly understands that it will do well when the Project meetings bring together national and family farmers new In addition to pasture renting, another impor- “Besides our large grazing and wood ways of earning a tant form of co-operation between Montes del production co-operation programmes, we are livelihood,” says Plata and the local communities is outsourcing now piloting honey-producing beekeeping proj- Oscar D. Licandro, wood production. With the arrival of the forest ects in suitable areas,” says Alfredo Fossali, Professor at industry, growing trees has become an addi- Forest Business Assistant Manager, Montes Catholic University tional source of income and a complementary del Plata. in Montevideo. use of their land for Uruguayan landowners. Especially sandy or rocky areas, not well suited to cattle ranching, are used for planting trees. On local terms The traditional South American cattle The cows graze with a calm pace suited to ranching method requires vast stretches of their languid nature. Claudia Perez speaks in land. Daniel García Otero is a rancher and a low voice to one of them while walking it to a farmer cultivating an area of 3 000 hectares. He nearby building to be milked by the machine. is taking us on a tour of his property by car. Perez and Ferreira both have full-time jobs “I am somewhere between a large and a very outside the farm. Claudia Perez works at the large producer in Uruguay,” García Otero notes. dairy and Juan Ferreira at a wool factory, also In Uruguay, landowners with less than 500 hect- nearby. They employ a friend to help out at the ares of land are defined as family producers. farm while they themselves work elsewhere. In addition to his own pastures, García Perez and Ferreira belong to an association Otero rents grazing land for his cattle from of small-scale milk producers. In addition to Montes del Plata. Pastures differ on qualities, pasture access, association members receive and animals are transported from one pasture support from the authorities and Montes del to another during their lifetime to optimise the Plata in the form of sanitation, veterinarian and use of the land. technical services, and training. In addition to renting pasture land from However, all improvements ultimately stem Montes del Plata, García Otero also cultivates from the producers’ own will. eucalyptus for the forest company, on land “I won’t go back to selling milk in the streets where the soil is suitable. anymore,” Perez says. “We find the best possible use for each soil “If one wants, one can, and you make things Trees provide shelter for the cows type,” he explains. Two-way co-operation is common practice well,” she believes. While we speak, Agustín, the youngest of on windy, cold winter days. As the between local producers and Montes del Plata. There is also governmental support behind it. the family, tries to grab our attention by riding a pony in the yard, showing off his budding cows eat competing vegetation, At pasture Everyone wins, including the national output, when soil is put to the most suitable use. cowboy skills. also the trees benefit. Renting for various farming purposes In addition to the complementary euca- lyptus cultivation, García Otero also farms soya Read more on Stora Enso’s Montes del Plata joint venture on the next page. helps get the best beans and animal feed. possible yield from The pulp industry has introduced large- different land types. scale tree plantations but not tree plantingG A b R i E L PE R E i R A58—Rethink Stora Enso—59
  • 31. Business StrategyModern pulp production Into packaging growth markets M C ontes del Plata, a joint venture set del Plata’s own plantations. The company hina and India. The two most up in Uruguay by Stora Enso and currently owns 254 000 hectares of forestland populous countries in the world, Latin American Arauco, announced in Uruguay, of which 138 000 hectares are altogether about 2.5 billion people. an upcoming pulp mill investment planted, about 100 000 hectares are protected These immense countries are also in January 2011. The capacity of the new mill and a further 16 000 hectares are suitable for the world’s fastest growing consumer pack- will be 1.3 million tonnes of eucalyptus pulp planting. aging markets. The potential is huge: in 2015 per year, of which Stora Enso’s share will be 50 The new state-of-the-art mill will be the consumer packaging market of the entire percent. The mill is expected to be operational constructed in Punta Pereira, a district in Asia Pacific region is expected to total 121Montes del Plata by the end of the first quarter of 2013. Once in Conchillas village in the department of Colonia. billion US dollars. Timing is a critical factorA view of the operation, it will be the biggest one-line pulp Altogether 121 000 people live in the Colonia when entering these strategic growth markets.forthcoming mill, to mill in the world. department, approximately four percent ofbecome operational In addition to the mill, the project includes Uruguay’s population of 3.5 million. Despitein 2013. a deepwater port and a power generation unit being a single investment, the mill makes Significant step which uses renewable resources. The new a significant contribution to the national Europe In October 2010, Stora Enso took a significant mill will be the largest-ever privately executed economy. The mill is forecast to contribute USD 153 step in China and India by signing an agree- billion investment in Uruguay. The total investment is to Uruguay’s GDP by 0.8 percent during the ment to acquire 51 percent of a Chinese estimated to be approximately USD 1.9 billion construction period and by 2 percent when in packaging company Inpac International. Stora (EUR 1.4 billion). operation. During the construction period, the Enso and Hebei Inpac will be the only two For the most part, the eucalyptus pulp- mill will employ a maximum 6 000 people, and shareholders of the new company. wood for the mill will be sourced from Montes around 500 once operational. Inpac is employing approximately 3 100 Asia-Pac ific people. The company has production opera- USD 121 tions in China and India, and service operations billion North Am erica in Korea. Inpac specialises in the production USD 115 of consumer packaging – especially for global billion manufacturers of mobile phones and other consumer goods. In addition to corrugated consumer packaging, Inpac’s other main prod- ucts include corrugated transport packaging, folding cartons, labels and printed manuals. Gaining a majority hold on Inpac is strate- gically significant to Stora Enso, despite the acquisition’s fairly modest size. It supports Africa & Middle Ea s USD 30 b t illion Latin Am eri USD 22 b ca M i LT T O n illion Australas ia USD 8 bill ion Consumption in 2015* The growth of consumer packaging *forecast, constant 2009 prices and constant exchange rates at 30 June 2009. is fastest in Asia Pacific. Source: The Future of Packaging – Long-term Scenarios to 2020. Published by Pira International.S T O R A E n S O / M O n T E S d E L PL ATA60—Rethink Stora Enso—61
  • 32. Stora Enso’s strategy of producing fibre-based Most importantly now we can supply pack- Global Responsibilitypackaging in key growth markets, as well as aging directly to them both in Europe and in thedemonstrates the company’s commitment toimplementing its Packaging growth strategyand to engaging in active key customer service. Asia Pacific region,” says Mats Nordlander, Stora Enso Executive Vice President, Pack- aging and Asia Pacific. Global, practical, engagedIn addition, acquiring an already establishedcompany rather than building operations fromscratch gives Stora Enso a major advantage. Ambitious growth targets TThe time saved by acquisition may come to Stora Enso and Hebei Inpac have started Stora Enso has taken he responsibility work of forest Enso’s website on the topic (www.storaenso.mean a lot in the rapidly growing markets of the planning joint integration and the acquisition a new approach to industry companies has traditionally com/globalresponsibility) won the prestigiousAsia Pacific region. is expected to be closed during the first half corporate respon- focussed on the environmental activi- European Excellence Award. The site features of 2011. The target is to build an even stronger sibility. Learning to ties of mills and sustainable forestry, discussions on global responsibility issuesStronger position and future together, on a solid platform and by understand all stake- areas in which many European companies are with, among others, CEO Jouko Karvinen. finding synergies in customer service. The holders and having industry forerunners. In the 2000s, the debatesynergies future joint venture is named as Stora Enso an open dialogue on global climate change boosted corporateOne of the key elements of Packaging strategy Inpac Packaging and it will continue to strive for with them play a responsibility work. A global goalis to build a stronger position in fast-growing very ambitious growth and profitability targets pivotal role here. Globalisation has brought about more and “Global responsibility means doing things themarkets. The future joint venture gives Stora based on a wider customer and segment base. Text Heidi Puusa more public debate on human rights and land right way. When entering new and unfamiliarEnso access to the world’s two fastest growing “By bringing together strengths and capabilities ownership issues. operating areas, an even more open and boldconsumer packaging markets, China and India. of the two companies, Stora Enso Inpac Pack- “All of this has naturally resulted in compa- approach to responsibility issues must be“The agreement also supports our effort to aging can further improve upon their customer nies taking a new approach to responsibility taken. However, this does not mean that webecome a market and consumer need-driven service and operational efficiency, as well as activities,” says Terhi Koipijärvi, Head of Global should try to solve all of the world’s problems.renewable materials company,” says Stora develop an offering of innovative products,” Responsibility, established in October 2010. Rather that we approach matters from aEnso CEO Jouko Karvinen. Nordlander summarises. Stora Enso sets high goals for itself local perspective in the areas where we are What customers demand is fast, flexible regarding responsibility. The company does present – together with the local people, alwaysand reliable service from packaging suppliers About Inpac International not simply carry out solid sustainability work, with respect for different cultures,” explainslocated near to them. Good personal contacts ● Produces both corrugated consumer and but rather speaks of global responsibility. Stora Koipijärvi.are also important. Consequently, Stora Enso transport packaging, with a focus on servingexpects the joint venture to enable finding the global manufacturers of mobile phonesstrong synergies with its existing consumer and other consumer goodspackaging businesses in Europe. ● Established in 1998 “We can strengthen our existing rela- ● 3 100 employeestionships with international and European ● Main production plants are locatedcustomers and brand owners as they are at Qian’an in northern China, Dongguanestablishing their operations in China and India. in southern China and Chennai in IndiaInpac locationsAcquiring a majorityshare of Inpacwill support StoraEnso’s strategy of North Chinaproducing fibre- 2 400 employeesbased packaging in Qian’an, Hebeikey growth markets. Beijing Production Distribution center South China 300 employees Gaobu, Dongguan Liaobu, Dongguan India 470 employees Chennai, Tamil Nadu S H u T T E R S T O C k / M i LT T O n62—Rethink Stora Enso—63
  • 33. Acting locally does not simply mean ‘when In terms of what will be done in China, Straw poll Take a tour around the globe, and hear what six different people have to say about their recycling Rome do as the Romans do’. Stora Enso admits that the company is still in a “That may be a good general guideline tofollow, but it cannot be the starting point forthe responsibility efforts of a global company. learning phase. “China, with its unique cultural background and operating models, represents an operating How’s your recycling?Stora Enso only has one set of values and one environment very different from what we areCode of Conduct that are applied wherever we accustomed to here in Europe. From us, thisoperate.” requires humility and a willingness to learn together with the local people,” says Koipijärvi. “I recycle paper, plastic “Actually, I do not and glass. Recycling is recycle. The street where IGiving people a voice made easy in Belgium; the live we don’t have a systemAlongside the company’s new approach to PE T R i A R T T u R i A S i k A i n E n Challenges at home market garbage bags in front of for it. However, I know aresponsibility, a new kind of operating model As a result of the challenging market situation houses are colour-coded woman who collects trashfor sustainability activities is also actively Hands on of recent years, Stora Enso’s responsibility to clearly mark the type of and separates all reusablebeing sought at Stora Enso. Having a strong “Practical respon- efforts in its established European home trash they’re for. Yellow, materials from it. She thensustainability platform is no longer enough: the sibility work is market have really been put to the test after blue and black all signify a sells those materials on sogoal must be to gain a better understanding increasingly about closing down mills and paper machines. Koipi- type of waste.” they can be used again.”of the stakeholder groups that are affected by concrete, down-to- järvi believes, however, that European mills Barbara Demol Edilzon Alves da Silvathe company’s operations, as well as to know earth efforts,” says remain important in leading the way in practical 35, Ghent, Belgium 32, São Paulo, Brazilwhich stakeholder groups have the greatest Terhi Koipijärvi, responsibility work.impact on the company’s business. Head of Global “At Stora Enso, good means of supporting “From a European perspective, inves- Responsibility. those who have lost their jobs, as well as theirtors, customers and personnel are obviously families, have been found, and in my opinionimportant stakeholders for us, but it is entirely that work has succeeded in many locations. I’m T EEMu k u uSiMuRTO J O n i M ä k i TA L Opossible that in our new operating areas in sure some mistakes were made along the way,Brazil, Uruguay and China, we have not even but the most important thing is that we learn “At the moment, I am “The lack of recyclingidentified all of our key stakeholder groups.” from those mistakes.” recycling an old barn. Tourists facilities is in fact a big According to Koipijärvi, once methodical Koipijärvi remains solidly optimistic about are carrying parts of the barn problem in Russia. Andmapping of the stakeholder groups has been the future. home with them in the frames as we have no system forcarried out, the intention is to find the most “I strongly believe that as a big player we I make, so the barn will end it, nobody really recycles.suitable co-operation models with each group. have the opportunity to make a change for the up all over the world. There is The state, however, hasStora Enso takes an ambitious approach to better. We don’t run from our responsibilities; no system for recycling in my plans for recycling. This is astakeholder dialogue, and is determined to we genuinely wish to be responsible every- house. However, I do take old good idea, and I personallyengage in open and honest discussion with where we operate and thereby build Stora Enso newspapers and magazines would like to take part ininterested stakeholders – not shying away even into a company in which sustainability is an to a designated collection recycling efforts.”from difficult topics. integral part of our corporate image – and part point – unless I burn them in Tatiana Kachalova “In our line of work, attention is easily of every employee’s daily activities.” the fireplace.” 32, Saint Petersburg,focussed on those groups who have the oppor- Veijo Kurko Russiatunity to be seen and heard in the media. It is 53, Vantaa, Finlandjust as important, however, to find our silentstakeholder groups who may not have the niinA STREnG niinA STREnGsame opportunity to voice their concerns. Theyshould also be heard,” Koipijärvi stresses. “I recycle paper, cans “About once a month and plastic bottles. It’s I take paper, like old news- the street vendors here papers and packages, toLocal solutions who frequently recycle a nearby recycling station.Stakeholder dialogue can sometimes be chal- the waste paper, cans and The nearest station is onlylenging for a global company. In fact, Stora bottles local families have 100 metres away from myEnso has encountered situations, for example, discarded. Other than front door. Aluminium cansin Brazil and China, where land ownership and that, trash is not classified and PET bottles I take backhuman rights issues have spurred vehement before it is sent on to a to the store and collect thereactions among NGOs and rural communities. “Stora Enso only has one dump.” deposit.” “It is crucial to find solutions that benefitboth sides, also in the long term. A good set of values and one Code Jiachao Zhu Martin Lindgren 26, Shanghai, China 36, Stockholm, Swedenexample of this is our tree farming initiative in of Conduct that are appliedBrazil; local farmers can boost their businessby farming eucalyptus trees to be used by the wherever we operate.”Veracel Pulp Mill.” -Terhi Koipijärvi Y uA nJ i A L u64—Rethink Stora Enso—65
  • 34. Jouko Karvinen’s office is continue on the improvement path. Structural day ahead, good that I got some sleep on the changes and lots of rethinking needed. Now way even if turbulence did wake me up a fewwhere he and his mobile need to prepare for meeting our new partners times. ⑩phone are. These photos at Inpac, their customers, public officials and the media. Two busy days before returning That’s what you get for arriving an hour early...and captions were taken home, and the weekend. :) no driver.and written by Jouko on Gate F62, Air China 912. ⑤ ⑥ 6.50, in the car going to the hotel. Will have timehis two business trips in Landed in Beijing 9 am, 1 am UK time. to study the Montes del Plata board materialNovember 2010. Hotel, shower, team lunch and then an Inpac some more. customer visit.It appears being the CEO in Sweden–China Heading, after lunch, to visit a strategic Very intense board meeting with Arauco and Montes del Plata. Brilliant team work in thea company like Stora Enso customer in China, an important one! Good Montes del Plata board. Great challenges After returning home Saturday night, out the to be back in China, so much going on and so ahead but there is also a great winning far from a tidy office job. ⑦ door again 5.30 am on Monday morning. much positive energy! Not easy, but we are one strong team in a On the road back to the airport, a long week country that welcomes us, and wants us toText and photos Jouko Karvinen ahead. ① After the visit, off to Qian’an for dinner with show we are there not only for the good of the partner’s people. Official ceremonies and the companies, but for the good of this braveA 6 am terminal 5 at Heathrow. Boarding, 7 am. media tomorrow. :) ⑥ young nation. Very encouraging. ⑪ Yak. ② At Beijing airport, on my way home. ⑦ On my second day, a dense 3-hour Veracel Turbulent landing! Arrived in Stockholm at board meeting. The new, young CFO from ① ⑧CEO’s 10.30 am local time, next the Arlanda Express Going home after a very good, if long, week. Stora Enso is excellent, one of the best I have to the Stockholm office, and from there to a Very good meetings with the partner and local seen on my long journey. Lots of work on lunch presentation. ③ authorities. We even show up on the front page productivity improvement, forestry, sustain- of China Daily’s business section! This country ability etc. Now these guys need to focus on Heading to the Stockholm office. ④ is so full of positive energy and enthusiasm! max performance for the rest of the year, as wediary Good to be home for the weekend before my all do. Great challenge to be the team running A busy couple of days up ahead: first, a SEB Monday take-off to São Paulo, Brazil. ⑧ the lowest-cost pulp mill in the world! lunch presentation in Stockholm on Monday, ② and a day-and-a-half Group Executive Summary ⑨ Back in London on Thursday before sunrise, Management Meeting. Then off to China to the November 15th 5.36 am 3 degrees Celsius. ⑫ signing of the Inpac acquisition, and to meet to November 19th 5.11 pm. the media. Back Friday night. 18 123 kilometres; 4 days, 11 hours; London– And on my way home and to the shower. Stockholm–Beijing–Qian’an–Beijing–London Good constructive dialogue at SEB. We get Summary credit for what we have done... Lots of work From 22 November 6.17 pm ③ ahead to make us more dependent on what we do, and less on external economic factors. brazil ⑩ to 25 November 7.57 am. 19 002 kilometres; 2 days, 14 hours; London–São Paulo–London Monday, close to midnight. First part of the Here I go again, early on a Monday evening. Group Executive Team (GET) meeting done, After a day of conference calls and going During his two trips, Jouko flew altogether critical we keep running all the way to the end through the mail, back to the airport and on to 37 125 kilometres, totalling 4 000 kg in CO² of the year to make this a really good one, São Paulo. ⑨ emissions. It takes the biomass of six full- relatively at least. Other important stuff today grown eucalyptus trees to absorb this amount was a review of capital expenditure plans for What I am in for this week: Monday, overnight of carbon dioxide from the air. 2011, as well as incentives for the upcoming to Brazil. Veracel board after showering, quite ④ year for board review in December. Then, a a few afternoon meetings and then straight ⑪ hamburger and a beer plus one hour of bowling to dinner with the Montes del Plata team and with the whole team. Talked to the family. Now, Arauco. Next, Montes del Plata board meeting lights out. and a few interviews...and back to London overnight. Well, one night out of three in a real At the gate to fly to China on Tuesday. Long day bed till Thursday is not so bad, is it? Important Foggy Beijing with the team. Good momentum to drive the days for both Montes del Plata and Veracel. in November 2010 fourth quarter of 2010 and beyond; I don’t need ⑤ to ask, great. Lots of work to better integrate Arrival in São Paulo on Tuesday at 6.15 am, ⑫ some of the Group functions into businesses to an hour early. Hope driver will be there. Long66—Rethink Stora Enso—67
  • 35. PhenomenonTree gardenersE ucalyptus seedlings at Veracel’s nursery are the best in their class. The clone selection follows local climate and soil criteria for achieving optimalpulp productivity – and quality. Shoots of thebest eucalyptus clone are carefully collected,and cuttings are placed in plastic tubes witha mix of burned rice husks, vermiculate (amineral) and fertiliser. Before being adaptedfor plantation, they still undergo the stages ofshading and growth. The eucalyptus nurseryof Veracel, a joint venture company of StoraEnso and Fibria in Southern Bahia in Brazil, hasan annual production capacity of 24 000 000seedlings.E d uA R d O M O O dY68—Rethink Stora Enso—69
  • 36. ColumnFor the love of wood i love trees and wood. One reason for this is completely selfish. After all, my name, Tuija, comes from Thuja Plicata, the Latin name for stacked on top of each other at odd angles – I really miss wood. I am not talking about dark log houses Western Red Cedar. or alpine architecture. I am talking about the Another reason for my love of wood is the incredible lightness and elegance, the play of Alvar Aalto influence under which all of us light and shadow, the countless tones of colour Finns seem to be. There is no denying that that can be achieved with skilful use of wood, Aalto sparked a new respect for wood with both structurally and decoratively. his technical experimentation and his ability I’m thinking of Finnish and Japanese archi- to create practical visual beauty with it. His tecture – both old and contemporary – at their interiors and furniture are now architecture and wooden finest. I’m thinking of the Italian RenzoL Au R i O L A n d E R design classics, yet just as “modern” today as Piano’s brilliant use of wood slats at Jean they were in the 1930s. Marie Tjibaou Cultural Center in New CaledoniaTuija Seipell (1998). Or just recently, RDAI Architects’ use of It should be noted that certain state- M ments herein which are not historicalis a writer for y love of trees has grown even stronger in wood-slat “huts” as departments in the Paris facts, including, without limitation those regarding expectations for marketrespected blogs and the past two decades when I have lived Hermès store built inside an old hotel swim- growth and developments; expecta-print publications, in Vancouver. Here, massive 500–800-year-old ming pool. I’m also thinking of the ingenious tions for growth and profitability; and statements preceded by “believes”,a speaker, and a Western Red Cedars have provided the native use of pine beetle-infested wood as a massive “expects”, “anticipates”, “foresees”, or similar expressions, are forward-lookingcommunication and tribes with the material for everything from component in the roof of the Richmond statements within the meaning of the United States Private Securities Litiga-customer-experi- clothes and canoes to longhouses and totem Olympic Oval, the long-track speed skating tion Reform Act of 1995. Since theseence consultant to poles for thousands of years. venue for the 2010 Vancouver Winter Olympics. statements are based on current plans, estimates and projections, they involvebusinesses. So when, as the senior writer for The Cool risks and uncertainties, which may W cause actual results to materially differ Hunter, I see yet another variation of the ood’s inherent value as material is in from those expressed in such forward- looking statements. Such factors include, architecture-du-jour – white concrete boxes the time it takes for a tree to mature. A but are not limited to: (1) operating factors tree carries with it not just the life experience such as continued success of manufac- turing activities and the achievement of of the tree – whatever it may have seen and efficiencies therein, continued success of product development, acceptance ofAbove the eyes endured in its lifetime – but also the character new products or services by the Group’s targeted customers, success of theWooden ceiling of the climate, the soil, even the pests. Every existing and future collaboration arrange-construction is growth ring tells a story, every crosscut reveals ments, changes in business strategy or development plans or targets, changesbeautifully displayed a calendar. in the degree of protection created by the Group’s patents and other intellectualat the Richmond Wood is not trendy. It is a demanding, property rights, the availability of capital on acceptable terms; (2) industry conditions,Olympic Oval. noble, ancient, living material that perhaps only such as strength of product demand, the finest marble can match. Yet even marble intensity of competition, prevailing and future global market prices for the Group’s lacks the tactile variety, the visual diversity or products and the pricing pressures thereto, price fluctuations in raw materials, the aroma of wood. It certainly lacks the almost financial condition of the customers and the competitors of the Group, the potential personal way in which each type of wood ages introduction of competing products and in its specific surroundings. technologies by competitors; and (3) general economic conditions, such as In wood, the architect, designer and builder rates of economic growth in the Group’s principal geographic markets or fluctua- face the exhilarating challenge of the sculptor – tions in exchange and interest rates. to reveal the character of the specific species, Cover stock LumiArt 170 g/m² the specific tree. I hope more will aspire to Stora Enso, Oulu Mill meet that challenge. (ISO 14001 certified) Text stock LumiArt 115 g/m² Stora Enso, Oulu Mill For more information, visit (ISO 14001 certified), R i C H M O n d O LY M Pi C OvA L70—Rethink
  • 37. This is not garbage,this is raw material.Our mill in Langerbrugge, Belgium makes its business from what some would consider waste. Only recoveredpaper is used as raw material. The mill produces its own bioenergy and even the ashes left from theprocess are reused as raw material for the building industry. Valuable business can be grown from thingssome deemed worthless. Sometimes it pays to rethink your approach. Find out more about