Now is the time

London, Feb. 3, 2009 - , in mid winter in this part of the world, I received my first power and light bills for the year 2009, and I was shocked beyond measure. In the latter part of last year, UK suppliers of gas and electricity decided - on mass - to increase prices to consumers by an unprecedented amount, some by as much as 50% (isn’t that a cartel?). No amount of disloyal ducking and diving and swapping and changing of energy suppliers could avoid this wave of increases, even with the aid of the ingenious ‘uswitch’ and ‘gocompare.com’ websites.

The fact is, all of the energy suppliers on this island have jumped on the band wagon, at first blaming the massive hike in oil prices last year, and now – conveniently - making their prices stick as they profess that they suddenly need the extra billions they having cunningly extracted from us to invest in the ‘renewable future’ of wind, water, sun, and no doubt a lot of bull dust as a way of creating energy. My bills now appear ridiculous, off the scale, having lurched from the basic and affordable utilities, to a real and ugly dent in our household finances each month.

So, now the use of energy has become a luxury in my house, I have even begun switching off all the lights and heating, just like my dad used to do in my long and distant memory! And that’s why I am shivering as I write this.

Why the difference?

But why is there such a difference in making prices stick between one industry and another? It seems that some industries have carte blanch to put up prices on a whim, particularly the oil and gas suppliers, whereas industries like pulp and paper have interminable battles just to get a couple of percentage point rises through to their customers. But other manufacturing industries also manage to fare better, for instance the cement and steel industries. What do they do that is so different?

My guess is that the paper industry, like the printing industry which makes up the majority of customers, still sees itself in the line of ‘skilled craft and desired product’ as opposed to the one of ‘absolute necessity’, which in my opinion is the wrong approach. Just take away cut size paper, favorite magazines and newspapers, and even better toilet tissue, and it will soon be apparent just what a necessity paper is in the 21 Century.

There is always one

I have spent the first part of 2009 in the in the company of a variety of top people in the field of print, pulp and paper, and all to a man and woman are anxious beyond measure at the state their various businesses are in. One of the problems that both print and paper producers and manufactures have, is that they are good at innovating, but very bad at keeping the profits, and maintaining the margins, simply because of the competitive marketplace. There is always one supplier willing to let all the others down by coming in at a lower price. This is not allowed to happen in cement and steel,simply because the producers as a whole will not allow it, they pull together. And this can’t be described as a cartel; this is a gentleman’s agreement to not commit financial suicide. The pulp and paper industry needs to learn this trick.

Thank goodness for wood

One set of business people I have also been in dialogue in the last few weeks have been the suppliers to the industry, both the ‘big ticket’ and the more specialist ones. These guys are refreshingly free of anxiety about the future; in fact I would go as far as to say they are even optimistic for pulp, paper in the long term. Why? Because they have peered over the precipice,and seen the New World, the one that consists of a new dimension, the one of wood and biofuels, the one that, if the industry plays it right, will be the saviour of the industry as well as giving it a spring board into the future. The key here is for all the players to take opportunities, consolidate, club together,and have one message and make sure that not only pulp and paper is maintained as a valuable business, but that the opportunity to produce energy and biofuels is maximized, and that the precious potential of the sustainable source of wood is grabbed with both hands and taken full advantage. And to do it before another industry does.

I have already started, I am now off to warm myself by my lovely wood fire!