Opticom International Research and Nordic Paper Journal presents the results from a new Swedish study surveying perceptions related to change readiness in the forest industry, which challenges the sector are meeting and how the future prospects are perceived.

In total 432 respondents working within the Swedish forest industry has participated in a web survey concerning the forest industry and its future. The survey was sent out via email by Nordic Paper Journal as well as being accessible on Nordic Paper Journal’s website. The survey was open for response during June-August 2009.

”The results from the Swedish study are very interesting and clearly shows that the industry needs to become more market focused, create a better environment for “thinking outside the box” and to achieve a higher level of innovation. There is however no lack of faith in the future and the majority still believe in the forest industry.” (Mikael Selling, Corporate Advisor & Partner at Opticom)

10 overall conclusions from the survey

1. The significance of the forest industry in Sweden will be reduced
• The majority, 61 % believe that the significance of the forestry industry in Sweden will be reduced.
• 38 % however consider that the decrease is temporary and that the industry will pick up again one way or another.

2. Increased market and customer focus is most important in order for the forest industry to be more successful
Responding to: Which 3 factors are most important to focus on in order for the forest industry to be more successful?

• 62% of the respondents consider that “increased market and customer focus” is most important for a forest company in order to become more successful.
• A “higher level of innovation” is coming in as number 2 with 59% of respondents.
• The third most important factor, mentioned by 53% of respondents is to “increase the utilization/usage of bi-products”.
• “Reducing costs” and “increasing productivity” are of course mentioned by respondents but are not among the top three.

3. The forest industry has too narrow a focus
Responding to: Which 3 factors are given priority by the forest industry today?

• Almost all respondents, 91% consider that “reducing costs” is the predominant factor that the industry focuses on today.
• On second and third place are “increasing productivity” and “mergers/acquisitions”
• The conclusion according to the survey is that the forest industry has too narrow a focus on production related issues, and hence market issues do not get the necessary attention.

4. The environmental debate is an obvious opportunity for the forestry industry
• 93 % of respondents see the environmental debate as an obvious advantage for the forest industry. This is a very interesting and important signal to the industry but also to opinion leaders, authorities, government and to the EU-commission.

5. The forest industry’s environmental communication can almost be described as a fiasco
• As many as 44% of respondents view the forest industries environmental communication as unsuccessful/without results which must be considered as a clear underperformance.
• Only every fourth respondent consider the forest industry’s environmental communication successful.
• It is worth noting that 30 % of respondents claim that the environmental communication is neither successful nor unsuccessful. If it’s not successful then it hasn’t left any impression and the money is practically wasted, which in turn means that the communication has failed.
• With these results as a reference it’s quite obvious that the environmental communication can almost be described as a fiasco.

6. The forest industry is faced with a permanent trend shift and the consumption of printing and writing paper is going to drop in Europe
• 76% of respondents say that the forestry industry is facing a permanent trend shift and the consumption of printing and writing paper is going to drop in Europe.
• There are however divided opinions as to whether the drop will be significant or not. Almost half believe that there will be quite a small drop whereas 42 % expect a sharp drop.

7. The forest industry is seen as technology and production orientated
• It’s absolutely clear that the forest industry is regarded as “production and technology orientated”. This is the perception among as many as 94 %.
• When it comes to “marketing and customer orientated” the picture looks different. Only 35 % agree with that statement.
• “The forest industry is an industry of the future” is still regarded as true statement by a majority – 55 %. Only 4 % consider it not to be!
• According to a majority of respondents the forest industry is not perceived as “open minded and creative”, and this is both unfortunate and troublesome.
• Only 19 % of respondents believe that the forest industry has “a high level of innovation”

8. The forest industry does too little to exploit the potential in cellulose fibre
• The majority (83%) think that the pulp industry should change its production in order to manufacture something else out of the cellulose fibre in addition to paper pulp.
• As many as 76% think that the forest industry does too little to exploit the potential in cellulose fibres.

9. A narrow majority see the forest industry as a good employer
• A narrow majority (52 %) sees the forest industry as a good employer and would promote the forest industry as an attractive employer to a friend or child.
• However, as many as 30 % would not recommend the industry to friends or family.

10. Many in favor of investing money in forest shares
• There are obviously many respondents who believe in a positive development for forest companies. As many as 70 % would consider investing in forest shares given the opportunity.
• Only 14 % say that they would not consider forest industry shares if they had money to invest. The result at least reflects that there is a clear belief in the future among respondents.

Conclusions and general reflections

• The forest industry is one of the most capital intensive industries and has invested in high technology production facilities. High capacity utilisation and cost efficient production is a fundamental key to maintain profitable operations and be competitive. That is why it is simply necessary that one is production and technology orientated. But, at the same time one must also be market and customer orientated and be highly innovative in order to survive the razor sharp competition in the global market and in order to be successful. This is where weaknesses within the industry can be seen; according to the survey, the industry is primarily focusing on cost cutting and efficiency measures and giving too little attention to market related matters and innovation. Here, the industry clearly has to rethink!

• There is no doubt that the industry must increase its market focus, create a better environment for “thinking outside the box” and to achieve a higher level of innovation. It is especially important to make use of the cellulose fibre for products other than just paper. There is great and unexploited potential here. This is particularly important since there is an expected drop in the demand for printing and writing paper in Europe due to a change in reading and media habits.

• The forest industry has a good environmental story to tell, but they have not managed to demonstrate this well enough in the debate. In this area there is still plenty to work on.

• In spite of the various challenges the majority of respondents in spite of everything see the forest industry as an industry of the future and the majority would tell their children that it is a good industry to work in.

• That there is faith in the future can clearly be seen in terms of how many that would be willing to invest their money in forest shares if they won Euro 10.000, which the majority would do. That can be interpreted as a good sign!

For more information, or ordering the results from the survey, please contact Mikael Selling at:
Opticom International Research, Grev Turegatan 30, SE-114 38 Stockholm, SWEDEN
Direct phone: +46 (0)8 50 30 90 13
Mobile phone: +46 (0)708 39 90 13
Fax +46 (0)8 50 30 90 01
E-mail: Mikael@opticom.se

Opticom International Research is a leading global market research and consulting firm with the mission to help our customers make better business decisions. Since 1987, we have been dedicated to serving clients within the pulp, paper & board industry with customised research services focusing on commercial and marketing related issues. In combining our large global in-house research capabilities, state-of-the-art information technology and our forest industry competence we have proved to be a unique partner for a number of leading forest products companies all over the world that value not only speed and quality but also cost effectiveness in surveys and analyses.

Opticom offers experience and in-depth knowledge across a wide range of commercial and market related issues relevant to our customers: branding, customer and market segmentation, customer satisfaction, concept testing, campaign evaluation, pricing and positioning, channel/distribution strategy.

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