UPM’s Thomas Waltasaari talks about the challenges faced by the paper industry

Whether it's rising energy prices or the massive disruption caused by Covid, the paper industry has been in turmoil over the last few years, something which has had a knock-on effect on publishers with large print portfolios.

At the FIPP World Media Congress, Thomas Waltasaari, UK and North Europe Area Sales Director at UPM Communication Papers, sat down with FIPP President and CEO James Hewes to delve into the challenges and success stories of paper producers during this turbulent period.

And while Waltasaari described Covid as a "major speedbump", he ensured delegates it has not knocked UPM's journey towards greater sustainability off course.

"From a company perspective, sustainability is at the heart of everything we do, so it's not something that we can just stop and start, even if the challenges are as large as Covid," he said.

"Even though the Covid situation gave us a chance to evolve in certain areas, the driving ethos of our company continues to be sustainability and that went all the way right through the pandemic and is ongoing."

UPM is aiming to reduce CO2 emissions by 65% by 2030 and 30% within its supply chain by the same year.

"Our whole company is based on producing sustainable products and the sustainability goals that we have are built into our strategy," added Waltasaari. "We’ve got pretty well stated goals and none of those have changed. In fact, if anything, they’re speeding up."

UPM's client base are equally interested in greater sustainability, said Waltasaari, with the number of enquiries increasing year on year.

"As governments become more of a driving force in the countries that we’re working in, I think we’ll see that being sustainable will become more and more of a critical factor when choosing paper."

Waltasaari admitted that the forestry industry has not done a good enough job pushing the green credentials of paper after being put on the backfoot by the emergence of digital.

"We weren't exactly sure about the impacts digital had," he said. "Clearly, they are not completely emission free. There is a lot going on behind the scenes.

"But from a digital perspective, we’re not here to put that business down. I think it's quite clearly an area that we want to work in conjunction with when it comes to being a platform for communication.

"We are of course at pains to try and highlight the positive developments that UPM and other forestry industry players are playing – that we produce or grow four trees for every one that we cut down. We’re also helping to expand the overall forest size within Europe, along the lines of 11 million tonnes additional forests in hectares in the last 20 years."

Waltasaari called on publishers to do their bit when it comes to highlighting how sustainable paper is.

"Ultimately, what we are interested in from a from a paper producers’ point of view is also making sure that the right story comes out," he said, adding that publishers could explain the ethos of their own magazines and how that relates to how it's produced.

"From our end, we like to do collaborative work with publishers on how we can both spread the word to the wider audience, and anyone who uses paper, that they’re not using a medium which is negative in any way, but it's actually got a very positive story."

Assessing the massive impact of Covid on the paper industry, Waltasaari talked about the drop in demand that happened during the pandemic, which then led to an upswing.

"I think ultimately where COVID was a social upheaval, we still managed to manoeuvre our way through it, and then the back end of our businesses has reacted to that.

"Towards the second half of 2022 demand for paper was rebounding at a reasonable level. The first four months of 2023 has been quite a difficult situation and overall we’re looking at declines in usage of around 25 to 28%.

"The question that we have, and I think all businesses have and our publishers have as well, is whether this is the new norm, whether this will continue throughout the rest of the year or whether as we see it, there should come an evening out."

The surge in energy costs caused by the war in Ukraine has been another crisis for the paper industry to deal with and has inevitably resulted in higher paper prices. Waltasaari pointed out that prices were already on the increase in late 2021 as energy costs started to rise.

"We were very cognisant of wanting to maintain the relationships and the contracts that we had in place and so we didn't manoeuvre our pricing based on energy in 2021, much to the detriment ultimately of our bottom line.

"In 2022 it started picking up at a real pace and you saw a lot of businesses hiking up prices as we did as well because we needed to follow what was taking place from an energy point. And normally we were always behind so prices increased quite substantially during the course of 2022 for that reason.

"Entering 2023, demand is dropping quite heavily. Energy prices are dropping quite heavily. I would say that market prices have been moving in line with the situation as such."

With seemingly no end in sight when it comes to the war in Ukraine, inflationary pressures is set to remain for UPM.

"I think expectations are probably that this continues on for a little while and I don't think that there's anyone who's willing to put their hat on being able to forecast what the energy costs are going to be in three or six months time, much less what all the other, shall we say, potential inflationary impacts might be.

"We’re hopeful ultimately that things are going to come down and allow us to lower prices in line with that, which would be great. Because we also want to see an industry ultimately that's successful and healthy and that we 100% rely on at the end of the day.

"If there aren't any magazine or newspaper publishers or brokers able to sell our paper, we are going to be in a world of hurt. So, we are here to support the best we can."