“At SCA Forest Products, we focus extensively on innovation in terms of products, business development and creative business solutions. We have to work innovatively to strengthen our competitiveness and to take the best possible advantage of the investments made in our plants. But what we don’t need is political broadsides below the waterline,” says Ulf Larsson, President of SCA Forest Products.
How do you rate the competitiveness of SCA Forest Product’s industrial facilities?
“We have large and competitive production facilities, and we have access to a fantastic fibre raw material. Forward-thinking energy investments have enabled us to internally build up a cost-efficient energy supply system that has significantly contributed to the competitiveness of the plants. The mills in Aylesford and Laakirchen are attractively located close to the markets in the UK and central Europe, whereas the mills in Sweden are close to the raw material. They operate under tougher conditions, with long transport distances to their customers.
“Then the politicians come along with one deathblow to the industry after another, in the form of short-term or non-existent energy policies and sulphur restrictions on marine fuel, which are disastrous for the competitiveness of Swedish industry and, in practice, increase environmentally harmful emissions. As a result of these restrictions, it will be cheaper to transport pulp from South America to Europe than from Scandinavia, thus undermining our competitiveness.
“I am extremely disappointed with the current Swedish government, because if it is not prepared to protect the competitiveness of Swedish industry, who will? In the longer perspective, there is an impending risk that production will be moved from Sweden. SCA is a global company with operations across the globe. Why should we continue production in Sweden if the conditions are not sufficiently favourable? There is a real chance that the next investment won’t be in Sweden.”
Yet you choose to focus on innovations?
“Yes. Regardless of where we are, we must identify tomorrow’s products to ensure production and utilise the huge investments we have already made in our facilities. Demand for publication paper is not growing, so we’ve initiated a broad innovation process to develop the next generation of products.”
What is an innovation?
“At SCA, we define innovations in three different categories:
- Upgrade, which involves modifications of existing products.
- New Generation, which involves a new offering for the company, aimed at an existing customer or consumer segment.
- Breakthrough, which involves new growth platforms that change the entire sector and create new customer or consumer segments, or that involve an offering that is completely new to the market aimed at an existing customer segment.
“It is vital that we have a clearly innovative business approach that we continuously evaluate to make it more efficient and more profitable. Innovation always means long-term and hard work. Successful innovation leads to differentiation and greater added value for SCA’s customers and consumers, which in turn promotes strong, market-leading and value-generating products and brands.”
Can you give us some successful examples?
"The development work has not just been limited to products – it has also involved development of business models, service and distribution solutions."
“Over the past ten years, SCA Timber has made great progress and has implemented major changes by developing and refining customised products for interiors, carpentry and building materials suppliers. The development work has not just been limited to products – it has also involved development of business models, service and distribution solutions. In collaboration with customers, we have been able to take over entire process steps in the value-adding chain, thus saving money and resources for everyone involved.”
How does the innovation process work at SCA’s publication paper mills?
“The large industrial sites have previously enjoyed fantastic margins and a stable market trend. It’s no longer possible for us to take continued market growth for granted, so I’ve asked the organisation to review the main processes and examine whether we can generate revenues from supplementary product flows. In parallel, we have established an organisation and processes for developing products with the potential to replace the present ones. The aim is to ensure the continued viability of our facilities in the future.
Our development work is based on short-, medium- and long-term perspectives. Now at the beginning, we have to take a slightly broader focus and gather as many good ideas as possible. The problem then is to funnel a large number of ideas and hypotheses down into a few products that can be commercialised, which is not always so easy. It is more of a craft and something we must develop further. Enhancing the efficiency of the process is a major challenge. We’ve trained a number of key personnel in the organisation to improve their way of working with this type of process.
“We have talented and skilled people who know our business, and it’s important to capture all the good ideas and utilise the existing resources we have in the organisation.”
Will we see a continued focus in the energy field?
"We’re working with an open mind to identify new products for the future."
“Yes, absolutely. We are sharpening our strategic focus on energy. The demand for renewable energy will almost certainly increase. In 2010, we created a new business unit, SCA Energy, to coordinate and develop our business in this field. We’re planning a number of large wind power projects, both as joint ventures and on our own. We will also examine a number of other processes that can benefit from the advantage that we have as a major European owner of production facilities with surplus heat and forest.”
What other areas are currently important?
“We’re working with an open mind to identify new products for the future. Our starting point is our strengths in relation to competitors. Naturally, packaging is an interesting area where we have know-how within the Group”
Is parallel development of innovations also taking place in logistics?
“Yes, at SCA Transforest, we’re good at business development and creative business solutions. We’re already working innovatively by being constantly on the lookout for new and better logistics solutions. For SCA, Transforest is a prioritised and strategic resource that enables us to create cost-effective distribution solutions.”
How about the horizon in terms of time? When will Ortviken switch product strategy?
“Ortviken will continue to produce publication paper for a long time. We’ve successfully developed high-quality publication paper products that are in demand, even in a weak market, and this work will continue. We will also continue to move towards more value-added products. Generally speaking, nothing stops dead or grows dramatically – in the case of Ortviken it will be a case of cautious and gradual change, and transition to other products.”
Carl Johard Source New Ways 4 / 2011