CEOs Must Embrace Change

Increasing cost pressures, supply chain efficiency, greater customer focus, and improved long-term sustainability top the list of key concerns for ceos in the forest, paper and packaging industry.

CEO Perspectives—Viewpoints of CEOs in the Forest, Paper & Packaging Industry Worldwide is a new survey just released by PricewaterhouseCoopers. It comprises the views of ceos from companies around the world with a combined sales total of $70 billion. The survey explores their views on the state of the industry, the key issues the industry faces, and its future direction.

“The profit squeeze on the industry means that executives are juggling their approaches to make supply chains better and towards the emerging markets, sustainability and a stronger focus on the consumer—not easy challenges,” says Robert Barnden, global forest, paper and packaging leader.

Among the ceos, customer retention and defending a strong market share were seen as key priorities.

All ceos questioned are looking towards the emerging markets—either as a new customer base or for advantageous conditions—but not all are looking in the same direction. Demand is shifting toward Asia-Pacific while fiber supply is shifting towards South America. While some ceos see most opportunity in China and Asia, others view markets such as Russia as the next global giant in terms of low-cost fiber supply and close proximity to high-growth consumer markets like China.

Although there was optimism about growing demand for, and the long-term viability of, the sector’s products, there is major concern by the ceos over the increasing pressure on the cost structure of the industry over the short term. ceos are taking various measures to focus on building short-term profitability, including reducing capacity to restore a better equilibrium between supply and demand in mature markets. However, there was a view that strong leadership is needed to break the cycle of low return expectations within the industry. All the ceos agreed that further industry consolidation is essential for producers to generate consistently acceptable returns.

For more information on this report, contact Barnden at 011 46 709 29 30 16 or email robert.barnden@se.pwc.com.