U.S. manufacturing base needs shot of rejuvenation

U.S. manufacturing base needs shot of rejuvenation
Posted by Doug Dugal:
http://www.postcrescent.com/article/20090111/APC0701/901110518/1436/APC03

Research and innovation made the U.S. the leader in the agricultural industry. Even today we could be called the food basket of the world.

During the industrial revolution, the U.S. again became the leader. But lately, our manufacturing base is eroding due to outsourcing. Keep in mind that outsourced services can be easily brought back to the U.S., but bringing back outsourced manufacturing facilities will be difficult, time-consuming and expensive.

U.S. manufacturing base: Loren Thompson is quoted by Greg Grant in the Dec. 15 issue of Policy that in 1981, manufacturing made up nearly 25 percent of the U.S. economy, compared with 12 percent today. Our merchandise trade deficit doubled to $800 billion and those trends are driven by the erosion of domestic manufacturing. If America loses what's left of its auto industry, or its aerospace industry, or its chemical industry, our superpower status will ebb away.

The long-term implication is that soon the U.S. will no longer build anything. The fact, however, remains that economic growth generated by making world-class products is more sustainable. It is not that other countries are better at manufacturing than we are; they are just better at protecting their manufacturing base.

Paper industry manufacturing base: The mantra that we are the biggest and the best is losing its luster. We must wake up to reality. At one time China was the fifth- or sixth-largest producer of paper and board; now it is the second largest and quickly catching up with the largest producer, the U.S.

In the last 15 to 20 years China has installed more than 30 paper machines, whereas the U.S. has shut down many. Writing and printing papers are already under attack from China. Pretty soon our tissue and towel manufacturing will be under pressure as well; China is now buying high-speed tissue machines. We were a net exporter of paper goods; soon we will be a net importer.

Conclusion: Currently the world business environment is going through a "hiccup."

But, I think, over the long run future growth markets for consumer goods will be India, China, Africa and certain parts of South America because they have huge numbers of "information/goods hungry" consumers. Industrialized nations such as the U.S. and Japan are mature markets and will not have extensive growth unless nifty value-added products are developed through research, development and innovation. We need to revitalize the U.S. manufacturing base to satisfy domestic market, fast. The choice is ours: Either the U.S. can close mills and withdraw or protect manufacturing base and seriously compete.

I think our dependency of essential goods on foreign countries may be a big mistake in the long run. One of the major reasons is that we put economic "sanctions" on certain countries when their actions are against our national security interests. These economic sanctions also include "goods" those countries need but do not produce. So if our manufacturing base is compromised, guess who is going to put sanctions on whom? Just a thought. Wise up.

Free-trade agreements must have the same playing fields for all traders. Granted, in the global economy goods will be produced where they are made best; but why can't that manufacturer be the United States?

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Paper war breaks out as White Birch undercuts Abitibi

Paper war breaks out as White Birch undercuts Abitibi's price discipline
By Andrew Ragsly
http://www.ft.com/cms/s/2/25d563fa-cb97-11dd-ba02-000077b07658,dwp_uuid=e8477cc4-c820-11db-b0dc-000b5df10621.html

White Birch Paper broke ranks with other newsprint manufacturers this month by slashing prices to capture market share amid dwindling demand, industry sources and two buysiders told Debtwire.

Privately held White Birch is the second largest producer of newsprint in North America with 18% of total market share. The company is flouting attempts by industry leader AbitibiBowater to enforce price discipline by lowering its going contract rate. Abitibi wants to protect pricing in the face of persistent order declines from ailing newspaper publishers, said the sources.

Specifically White Birch cut a deal with Gannett Company this month to supply newsprint through 2009 well-below November's industry-average price point of USD 770 per ton, said two of the industry sources and one of the buysiders. While at a lower price point, the deal is rumoured to boost the volumes White Birch will supply to Gannett year-over-year, one of the sources said.

The pricing war is hitting AbitibiBowater at a particularly inopportune moment. The company faces USD 919m of maturities over the next year, including a USD 347m Libor+ 800bps term loan due 30 March. Management needs to impress lenders with a bullish cash flow story if it hopes to refinance those obligations, said the buysiders.
Spokespersons for White Birch, AbitibiBowater and Gannett declined to comment.

Abitibi's USD 347m Libor+ 800bps term loan was bid at 75 today, down from 82 on 2 December, according to Markit. Bowater's USD 250m 9% traded at 27 on 3 December, down from 45 on 19 November, according to TRACE. White Birch's USD 100m Libor+ 480bps second-lien term loan was bid at 15 today, down from 33 on 10 November. The company's USD 475m Libor+ 275bps first-lien term loan was bid at 48.25 today, down from 59.12 on 24 November, according to Markit.

"AbitibiBowater, as the number one market share player [with 41%], was always going to hold onto prices as long as they could," said one of the industry sources. "It's finally starting to show up now that smaller players are breaking ranks, but White Birch and other companies had been making their undercutting moves since back around September."

AbitibiBowater bowed to pressure from White Birch last week when it rescinded a USD 20 per-ton price increase, according to three of the industry sources. The Canadian-US behemoth also announced last week the removal of 830,000 tons of newsprint capacity.
West Coast paper producers Catalyst Paper (7.8% market share) and Norpac (5%), have already been pricing at a discount to the AbitibiBowater-dominated East Coast market for the better part of a year. West Coast newsprint prices tracked near USD 700 per ton in November, said the sources. An official from Norpac declined to comment, and Catalyst Paper did not return calls.

The pricing conflict is also spreading into the coated free sheet paper market as Gannett is rumoured to have negotiated a USD 1,060 per ton contract with NewPage, down from November's USD 1,100 per ton price point, said one of the buysiders. A spokesperson for NewPage would not comment on specific contracts with its customers, but maintained the company is "holding price just fine".
Similar to newsprint, the coated paper sector has been under pressure to take out capacity in order to offset demand declines and boost pricing. Coated free sheet and newsprint consumption were both down roughly 15% year-to-date, according to a sellside analyst.
NewPage's USD 800m 10% second-lien notes due 2012 were bid at 40.5 on 5 December, down from 56.5 on 24 November, according to TRACE

Reading into the pulp mill fictions

Reading into the pulp mill fictions
Judith Ajani
http://canberra.yourguide.com.au/detail.asp?class=your+say&subclass=general&story_id=1053684&category=opinion

The silent sleeper in the Gunns pulp mill debate is its commercial viability. Perhaps Environment Minister Malcolm Turnbull, with his business blood, cannot imagine a company advancing a $1.5billion investment without having done its sums, carefully. Turnbull is not alone here, most people would think it incredible.
But Gunns is no ordinary company. It has never experienced a conflict-free business day since its mid-1980s beginnings. Its business battles are as much battles against greens as they are for market share.

Gunns is a company lifted by a cheer squad rooted in four decades of battles over hydro-electric dams, mining, woodchipping and pulp mills in an island state of just 500,000 people. While its cheer squad bears little commercial responsibility for Tasmania's largest-ever investment, financial prudence requires that Gunns' board somehow keeps its feet firmly on the ground.

Gunns is reserving its final judgment on the viability of the mill until the approvals are in. But because the environmental and political debate precedes the economic judgment, the mill's commercial viability has slipped under the radar. It is quite possible it will fail the test.

In Tasmania, a grudge factor has simmered since the late 1980s when Canadian paper maker Noranda pulled out of the Wesley Vale joint venture pulp mill proposal with North Broken Hill. The public understood the pull-out as industry's response to then federal environment minister Graham Richardson's tightened requirements. This was just half the story.

Since Noranda's decision, globally traded chemical pulp prices have halved in real terms, a scenario they had not planned for and an economic reality of little interest to grudge-bearers. In the shadow of Wesley Vale, Gunns' proposed pulp mill is so emotional and politically complex that neither Turnbull nor his shadow, Peter Garrett, should assume economic rationalism drives the show.

Despite the mill's commercial viability remaining untested publicly, both Gunns and the Tasmanian Government promote its wider economic benefits. If the pulp mill's financials do not stack-up, neither does the $6.7billion boost to Tasmania's economy and the 1617 new jobs calculated by the Allen Consulting Group as input to Gunns' integrated impact statement.

Allens did not investigate the financial viability of the mill before calculating these figures. The study's project director later argued that "it is difficult to see why this [the mill's commercial viability] is anything other than a matter for Gunns and the company financiers" and questioned the legitimacy of government or the public interest in the commercial viability of major industrial projects. Allens, however, ignores the Tasmanian public's business interest through Forestry Tasmania who will supply most of the wood from public native forests.

It also ignores the risk of more Federal Government hand-outs if Tasmania's public purse is used to keep an uneconomic mill alive. ITS Global, the consultants engaged by the Tasmanian Government to review the social and economic benefits of the pulp mill, also started with the premise of the mill's commercial viability.

CommSec, using information Gunns presented in its impact statement and its own market analysis, concluded the mill would be marginally positive for Gunns but emphasised the project was highly risky, strongly leveraged to a volatile commodity price and subject to approval and construction risk. Its analysis was hamstrung by data constraints, especially on native forest log prices that remain confidential to Gunns and the Tasmanian Government. Other broker reports agree with CommSec's risk assessment but give a more positive assessment of the mill.

Five years ago, Visy Industries broke through the pulp mill barrier in Australia when it commissioned its softwood plantation mill near Tumut. Environmentalists gave it a tick having passed the first hurdle no native forest logging and the second concerning emissions. Visy also engaged in real public consultation. On environmental and consultation matters, the two pulp mills are fundamentally different. They also differ in their market orientation, and herein lies the high economic risk CommSec associated with the Gunns mill.

Visy processes softwood pulp into paper to supply its domestic box-making plants. It enjoys the transport and familiarity advantages of a domestic market. Visy's strategy copies the global corporate structure of integrated pulp and paper production. Gunns can't follow suit, as its hardwood pulp is geared for printing and writing paper. This is because PaperlinX, Australia's monopoly producer of such paper, has the domestic market effectively stitched up through its own production or its subsidiaries' imports. Gunns must therefore compete in the global pulp market, a market that's both a dumping ground in economic downturns for old players and the target of new, extraordinarily low-cost producers in South America. CommSec believes Gunns cannot match their costs.

For many decades now, real (inflation-adjusted) pulp prices have followed a roller coaster down in this gruesome market. Gunns' forceful lobbying to keep costs down is no surprise. The problem lies in the Tasmanian Government who leads the cheer squad.

Under intense political pressure, Turnbull brings in scientists to help fix the growing political problem. An economic evaluation would be equally valuable. It would help shape how the Federal Government might best bring Australia's native forest pulp mill saga to a close. For Opposition Leader Kevin Rudd, this task includes managing the forestry union and Labor politicians who will not forget Wesley Vale days.

Judith Ajani is an economist at the Australian National University and author of the recently published The Forest Wars, by Melbourne University Publishing, 368pp, $34.95.

Shutdown feared at Catalyst Paper

Shutdown feared at Catalyst Paper
by Gordon Hamilton
Vancouver Sun
Published: Wednesday, May 30, 2007

Catalyst Paper has called a meeting today with union leaders from its four pulp and paper operations in what is widely believed to be an announcement that it intends to shut down capacity.

"I would say things are not looking too bright at Catalyst," said investment analyst Paul Quinn of Salman Partners. "It's really difficult right now for Canadian producers with the Canadian dollar where it is and fibre costs going up.

"I wouldn't rule out temporarily shutting down some capacity."


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Font: ****Catalyst has mills at Port Alberni, Powell River, Crofton and Campbell River. It could close one entire mill or several machines at a number of mills. The company lost $25 million in the first quarter of 2007.

Catalyst is the coastal region's prinicipal pulp and paper company, with 3,800 employees. Besides the four paper mills, it runs the province's only plant producing recycled paper.

The meeting with union leaders comes after Catalyst's board of directors met Tuesday in Vancouver. Representatives of the company's largest shareholder, Third Avenue Management of New York, were on hand for the meeting.

Catalyst is being squeezed by poor paper markets and because its operating costs are all in Canadian dollars. But the majority of Catalyst's business is conducted in export markets, so its transactions are for the most part completed in US dollars. As the Canadian dollar climbs versus the greenback, the company's revenue stream is less able to cover its operating costs.

The Canadian dollar closed above 93 cents US on Tuesday.

The last time Catalyst temporarily shut down capacity was in early 2005 when one paper line was closed at Port Alberni. That shutdown lasted for almost two years before the company declared it permanent.

Port Alberni Mayor Ken McRae was prepared for the worst Tuesday, saying he expects the company will announce it is closing further capacity there. Catalyst's Port Alberni mill produces lightweight coated paper and directory paper. Lightweight coated prices are weak and the directory machine has high operating costs.

"We have been hearing so many stories -- that the mill has been sold to someone else, that they are going to shut down another machine. You never know. The machines are old, eh?" said McRae.

"Whatever they do, they will do. And we will just move on."

ghamilton@png.canwest.com

© The Vancouver Sun 2007

Cascades withstands perfect storm of price increase and low fibre generation

Cascades withstands perfect storm of price increase and low fibre generation
http://www.cbc.ca/cp/business/070510/b0510103A.html

MONTREAL (CP) - Packaging company Cascades Inc. (TSX:CAS) recorded a first quarter profit after surviving a "perfect storm" that saw Asian demand dramatically boost recycled fibre costs in light of a seasonal North American slowdown in material generation.

The price of recycled fibre, which represents 75 per cent of Cascades' fibre input, more than doubled after Christmas to US$150 a tonne. It has now settled at US$90.

"Old recycled fibre, whether it be corrugated cardboard or office paper, all categories skyrocketed," president and CEO Alain Lemaire told a news conference Thursday following the company's annual meeting.

The change cost Cascades $33 million in the quarter. Yet it earned $22 million, or 22 cents a share for the period ended March 31, thanks to special items such as proceeds from the sale of a U.S. boxboard plant.

That compared with seven cents a share when it made $6 million a year earlier.

Excluding one-time items, Cascades earned $5 million in the quarter, down $1 million from 2006. The five-cent earnings were below market expectations.

Continue Article

The impact of the fibre cost increase was severe because the world's ninth largest user of recycled paper consumes 2.5 million tonnes of the waste per year.

Asian demand, particularly from China, surged when producers looked to build inventory before starting up large new mills.

Analyst Pierre Lacroix of Desjardins Securities called the confluence of Asian demand and weaker North American generation a perfect storm that will weaken in the coming months.

"The results in the first quarter were impacted by one-time items or temporary factors such as waste paper price surge," he said in an interview.

"At the same time product prices are going up in boxboard, container board and tissue, so the end products are healthy, prices are rising and you have a softening of the cost pressure."

Cascades' diversified portfolio should help it confront the pulp and paper industry's ongoing challenges of weaker demand, Lemaire said.

"We are lucky to be in different sectors that will be more equal," he told reporters.

Looking ahead, Lemaire said he expects continued challenges as the company moves ahead this year, but it will focus on growing its business and keeping costs under control.

"We intend to evaluate our assets and remain on the lookout for acquisitions that allow us to reinforce our position in our best sectors," he told shareholders.

"We clearly demonstrated in 2006 that we could adapt and excel in difficult business conditions and we will continue to do so."

Cascades said it had one-time gains in the quarter, notably a $25-million gain before taxes on the January sale of its 40 per cent interest in GSD Packaging to Rock-Tenn Co. for US$32 million.

The company also benefited from its move to acquire the other half of its former joint-venture unit Norampac, Canada's largest cardboard producer, from Domtar (TSX:DTC).

But it was also hit by a boiler failure that shut down production at its coated recycled boxboard mill in Toronto.

Quarterly revenues jumped to just over $1 billion for the first time, from $818 million.

Cascades' drive to be an industry leader on the environmental front was marked last quarter by the launch of a degradable polystyrene foam tray. Popular Quebec restaurant chain St. Hubert has become among its first customers for takeout containers.

Lemaire said the company continues to prove that pushing sustainable development can also be profitable.

"If some companies rush to adopt responsible behaviour, Cascades can boast to them that it has been green for more than 40 years," he told shareholders.

Founded in 1964, Cascades produces packaging and tissue products composed mainly of recycled fibres. The company employs nearly 14.000 people at 100 mills and production centres in North America and Europe.

The board of directors declared a four-cent quarterly dividend to be paid June 14.

On the Toronto Stock Exchange, Cascades shares gained 26 cents to $11.97 in Thursday trading.

© The Canadian Press, 2007

NewPage reports $20M 1Q loss

NewPage reports $20M 1Q loss
Dayton Business Journal - 10:13 AM EDT Monday, May 7, 2007
Paper company NewPage Corp. posted a $20 million loss in the first quarter on lower sales.

Sales were down 6 percent to $476 million from $507 million in first quarter 2006, the company reported Monday.

The loss, however, was narrower than the $60 million loss in the same quarter last year.

Volume and price were down as the company continued to see negative effects of imports of coated paper from China, Indonesia and South Korea, said Mark Suwyn, chief executive officer and chairman.

The Dayton company filed petitions with the U.S. Department of Commerce and U.S. International Trade Commission last year seeking antidumping and countervailing taxes on coated paper imports from the three countries. Countervailing taxes help restrict international trade where imports are subsidized by a foreign country and hurt domestic producers. Dumping happens when a country exports a significant amount of goods at prices much lower than in the domestic market.

The commerce department imposed preliminary countervailing taxes on the countries in March. An answer on the dumping cases is expected this month.

"We are willing to compete with anyone in the world as long as we have a level playing field," Suwyn said.

NewPage has been planning an initial public offering since 2006 but has yet to go public. The company has about 4,300 employees, including 250 at its Dayton headquarters. The company produces coated paper at plants in Michigan, Maryland, Maine and Kentucky.

Analysis: paper

Analysis: paper
Helen Morris, printweek.com, 22 March 2007
http://www.printweek.com/paper/news/645623/Analysis-paper/

Industry braces for yet more increases, with 15% rises on the cards.

Come September, printers could be paying 15% more for paper. March has brought a rise in paper prices of up to 8% and there is no obvious sign of a let-up.

A few years ago, price rises were described as unpredictable, which some say made things worse. Now they’ve become a bi- or even tri-annual event printers have to factor in.


This month’s increase has been blamed on a fall in capacity following the closures of loss-making mills and equally rising energy and pulp costs, which have conspired to drive manufacturers to raise prices.


Many in the industry feel that the price increases will continue this year. Freddie Kienzler, managing director of Essex-based commercial printer Formara, says paper costs are certainly an important factor for any print business. He cites as an example his firm, which has already had two increases this year on business papers and one on other stocks. Kienzler adds that printers are also being warned of further increases later this year. He says: “That is potentially a 15% rise during 2007. I don’t know of any printer that can pass that 15% on to their customers.”

Prepared for worse
Alasdair Browne, managing director of trade stationery printer Abbot Print in Hemel Hempstead, agrees. He says that day-to-day, he needs to deal with the reality of the situation, and believes the price rises will continue year on year. Those tied into contracts to print a particular product over a period of time need to have put a caveat in place. “It needs to say they can then pass on the cost of a paper increase. Those that have not got this, or are unable to make their customer appreciate this, are going to suffer.”

Many believe that mills are just reacting to a decline in the market and shutting operations and switching capacity.

Browne says mills need to work at marketing and advertising paper. “We all hear of the paperless office, but nothing is being done to promote paper to the end-user and reverse this trend.”


For example, he says that carbonless is a far cheaper and quicker way of producing month-end statements for a medium-sized company than reams of blank A4 and loads of ink cartridges and this should be promoted.

Cost-effective
He adds that he believes there is no concerted effort to respond and suggest that pre-printed is actually more cost effective and better quality. “They have something to sell, so sell it. Carbonless should be a good news story. At the very least, the mills should promote the particular product.”


Kienzler says that stability is a another issue that needs to be addressed. “How about customers who are willing to pay a little more for a service that offers something a cut above the usual. Now, that would make a change.”

But there could be light at the end of the tunnel.

One commercial printer thinks the number of increases cannot continue in the next couple of years, blaming the mills for creating an artificial shortage in order to boost prices. He says: “If they go up too much, then Far Eastern mills will all of a sudden be interested in supplying Europe again and the prices will have to fall.”


Browne says the simple answer is to help the mills pass on the costs. He would be happier with a price increase if it was part of a broader strategy that in­cluded marketing what printers and mills sell. He says: “Unfortunately, the reality is that mills will reactively cut costs and increase prices in a downturn, not proactively spend on marketing to reverse it. How many other industries have this approach and survive?”

Tumut pulp mill expansion gets planning green light

Tumut pulp mill expansion gets planning green light
http://www.abc.net.au/news/newsitems/200705/s1913138.htm

Planning approval has been given for the $450 million expansion of a pulp and paper mill at Tumut, in southern New South Wales, but there is still doubt about the project because local roads will need to be upgraded.

Visy plans to more than double the capacity of its mill is expected to create 900 jobs, 400 of them ongoing.

But a company spokesman, Tony Gray, says $24 million is needed to bring local roads up to scratch.

"The issue of roads and transport management is definitely one of the major stumbling blocks to definitely proceeding with the mill," he said.

"We have already put a lot of work into the traffic plan and we'll be attempting to minimise the number of truck movements wherever possible."

Tumut Mayor Gene Vanzella says he is also concerned about roads.

He says the expansion will put a lot of pressure on local resources.

"Last time when they built the stage one, accommodation was booked out as far as Wagga. There was buses coming in with guys from Wagga, Gundagai, Adelong, Batlow, Tumbarumba - even Talbingo was heavily booked," he said.

Ahead of the Bell: MeadWestvaco

Ahead of the Bell: MeadWestvaco
http://news.moneycentral.msn.com/printarticle.aspx?feed=AP&date=20070430&id=6813627

NEW YORK (AP) - Packaging company MeadWestvaco Corp. holds a meeting for shareholders on Monday, ahead of first-quarter results on Wednesday.

Analysts expect MeadWestvaco to report earnings 3 cents per share on sales of $1.55 billion, according to a Thomson Financial poll.

MeadWestvaco didn't fare too well in the fourth quarter, as profit declined 34 percent. Although pricing on its high-quality paperboard and productivity at its paperboard mills both improved, hefty restructuring charges offset results.

Elsewhere in the sector, paper company Bowater Inc. recently widened its first-quarter loss and missed Wall Street estimates by a wide margin. Bowater said weakness in newsprint demand and a seasonal slowdown in the coated paper market weighed on profit.

Bowater's results provided further evidence of weakness in newsprint demand and a seasonal slowdown in the coated paper market, analysts said.

Shares of MeadWestvaco declined 16 cents to $33.04 on the New York Stock Exchange on Friday, and are up 33.5 percent since a 52-week low of $24.76, hit in August.


© 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Mergers changing face of forest industry

Mergers changing face of forest industry
A survey shows B.C. is at the forefront of a process that is creating regionalized businesses

Gordon Hamilton
Vancouver Sun
http://www.canada.com/vancouversun/news/business/story.html?id=aefd1255-7539-4247-bcce-106e3a43945b

Thursday, April 26, 2007


Mergers and acquisitions -- some of the largest of which involve Canadian companies -- are tearing down the vertically integrated global forest industry and rebuilding it as regionalized, specialty businesses, according to a new PricewaterhouseCoopers survey.

And British Columbia is at the forefront of this industry-wide transformation, where financial players -- such as New York's Third Avenue Management and B.C. billionaire Jim Pattison -- are influencing the new direction, said PwC partner Craig Campbell, who contributed to the report.

"Ownership has very much changed. It's not only visible in the name changes on the front gate, but also back in the share registers," Campbell said in an interview Wednesday.

The PwC survey, titled Branching Out, identifies Montreal-based Domtar Inc.'s $3.3-billion US consolidation with American giant Weyerhaeuser's fine paper business as the second-largest deal in the world last year, and suggests that Weyerhaeuser is not finished hiving off assets.

Weyerhaeuser operates three sawmills in the B.C. Interior. Its Kamloops pulp mill became part of the new Domtar. The report says Weyerhaeuser is North America's largest remaining vertically integrated player and is coming under mounting pressure to restructure its remaining assets.

"They will be looking at all their assets. Canada and B.C. would be front and centre in terms of what they are evaluating," Campbell said.

West Fraser Timber Co.'s $325-million US purchase of International Paper's southern U.S. sawmills, and Cascade's $476-million acquisition from Domtar of a 50-per-cent stake in Norampac, are in the top 10 North American deals of 2006.

The largest deal was International Paper's $5-billion US sale last December of 1.6 million hectares of southern U.S. forestlands to institutional timberland investors. International Paper has led the transformation away from large, vertically integrated companies, and today is a product specialist, focused on packaging and uncoated fine papers. It has a global reach, branching out into China, Brazil and Russia.

The new emerging business model has separated forestlands from manufacturing, selling them to timber investment management organizations. Pulp and paper companies are being uncoupled from sawmills and other wood products businesses.

In B.C., Weyerhaeuser's former coastal assets have been uncoupled; the private timberlands going into privately-owned Island Timberlands. The sawmills and Crown tenures were merged with Western Forest Products. The driving force behind the restructuring on the Coast was Brookfield Asset Management and its Tricap Restructuring Fund.

In the Interior, Canfor Corp. uncoupled its pulp assets from the sawmills last July, creating Canfor Pulp Income fund, which trades separately.

"The root cause of this is under-performance across the industry and when you have an under-performing industry, you get these financial players having a look, scratching their heads and asking 'why is this industry chronically under-performing?'"

The trend for the financial players is to sell off non-core assets and focus on core assets, he said. The next step after uncoupling assets, is horizontal consolidation across the different stages of the value chain, a model International Paper has already adopted.