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PaperCo managing director Alistair Gough believes the paper industry’s challenges need to be met head on. “We need to be focused on what the market wants,” he says. “How can we add the greatest value, and be creative and innovative?”

Last week, Gough became president of the National Association of Paper Merchants (NAPM). It’s a big role, heading up the industry body that represents a group of companies that supplies almost the entire industry through its 21 full corporate members and seven associate members.

Gough has a strong vision of the body’s future and wants the association to continue to make a significant impact through its network of support. Most of all, he believes in focusing on the positives, rather than dwelling on negatives that can drag down everyone’s view of the print and paper sectors. He believes the key areas pushing change in print and paper are the challenging market conditions, the shift in employment demographic and the environment debate.

The reasons for the tough paper market are well documented: the impact of the credit crunch, demand from emerging markets, overcapacity and pressure on margins. Partly as a result of this, the merchanting industry has witnessed dramatic consolidation, not least with Antalis purchasing Map Merchant Group and Beswick Paper acquiring Premier Paper.

“This isn’t the first time the industry has faced such severe challenges,” says Gough. “There are many examples where it has taken significant initiatives in recognition of this climate.”

Paper manufacturers have driven significant capacity reductions and reorganisation in the past. Similarly, the printing sector has been subject to substantial M&A activity. Gough argues traditional paper merchants who recognise and respond to the market’s needs will find new opportunities – and help their customers.

Profitable future
His own company, PaperCo, has diversified into new sectors and recently bolstered its industrial packaging division with the purchase of Lincolnshire-based Donington Packaging (PrintWeek, 7 February 2008). The £4m-turnover industrial packaging merchant supplies materials to the food processing and produce industries in the east of England. “There are no shortage of challenges,” Gough says. “But companies are taking costly actions to secure a more profitable longer-term future.”

One of those challenges has been for paper mills and merchants to push up prices. The reasons for this are well known: raw materials are rising in costs, strong global demand from developing nations and, of course, paper mills have been deliberately restricting supply. PaperCo’s most recent price rises were 4-8% on all its paper products; the firm posted a document on its website designed to help printers explain the cost rises to their customers.

Gough also highlights the industry’s ageing workforce and the importance of its ongoing development through training. “Attracting and developing talent is clearly recognised as a key priority for successful businesses,” he explains. He also says the industry needs to evolve with a rapidly changing workforce, citing a recent survey that suggests by 2010 only 40% of jobs will be full-time and that 25-50% of the workforce in key metropolitan areas will be made up of ethnic minorities.

One of Gough’s main concerns is that the paper industry has been at the wrong end of the environmental debate for many years. Paper’s environmental impact is a “massive subject”, he adds. As part of the Paperlinx empire, PaperCo has a fleet of trucks managed through DeliveryCo, reducing carbon emissions in the supply chain. “It ticks all the boxes, which is the strength of the multinational group.”

PaperCo has also committed to drive forward its environmental stance after a reshuffle of its corporate social responsibility (CSR) strategy.

Collectively, a lot of the market hasn’t communicated in promoting the environmental benefits of paper to a wider audience, according to Gough. Instead, more of a debate seems to exist on whether FSC and PEFC is the more appropriate certification programme.

In response to the environmental debate, the NAPM has pledged to continue to play a key role in the support of its members. Gough is looking for support for a soon-to-be-announced pro-paper campaign. “It aims to set the record straight in terms of our customers’ perception of paper and its environmental impact,” he says. The association is also planning to launch a Level 3 Introductory Certificate in Management, aimed at individuals within the paper industry.

Within his role as NAPM president, Gough says one of his main objectives is to ensure all of the association’s members “operate legally, ethically and with business integrity”. Clearly there are challenges ahead. Yet Gough consistently argues that it’s all too easy for the industry to focus on the negatives, and that there are many examples where it has taken the initiative. “We will continue to recognise the need to restructure ourselves,” he adds. “We will continue to recruit and promote the many positive environmental benefits of paper and print.”