CEPI’s New Director General: ‘A Remarkable Industry’

CEPI’s new director general, Sylvain Lhôte, has come from outside of pulp and paper and is already deeply impressed with this great industry. Paper360° Senior Editor Europe Mark Rushton spoke to him recently at CEPI’s Brussels headquarters.

MARK RUSHTON

The Confederation of European Paper industries (CEPI) has been working hard on behalf of the industry—particularly in lobbying on the major issues in the European parliament—for the last 25 years. CEPI will hold its 25th Anniversary event in the city of Brussels in November this year. Sylvain Lhôte joined CEPI as director general in November last year, from a senior position in the aluminum industry.

RUSHTON: How have your first 10 months as CEPI’s director general gone?  

LHÔTE: It has been a deep dive into a new industry for me, particularly on the forestry side. The other areas—for instance, production in mills and factories—I am much more familiar with, and in this context the industry is much like many others: it is a chain, with each link having its own specific challenges. What I do find fascinating is the links and loops in this industry all the way from renewable to recyclable—that is pretty unique.

My job over the last 10 months has found me putting my feet in many different people’s shoes, from foresters to manufactures to recyclers, and in many diverse regions of Europe. Each culture and region has its own areas of forestry and manufacturing, and all have a specific set of opportunities and challenges. Being DG of CEPI is certainly a varied occupation.

Coming from outside of the industry, can you give us an impression of what you see? What potential does the pulp and paper industry have? Are you impressed and, if so, with what?

What impresses me most about the pulp and paper industry is its resilience. Just take a look at what has been thrown at it over the last few years—the worst financial crisis seen since the last century, and a massive market change in the decline of graphic papers, which came very quickly.

There are not many heavy industries that would have been as resilient and adaptable. Pulp and paper manufacturing is often tagged as a “traditional industry,” perhaps even by many as “old fashioned,” but when it has to respond to change, it really moves. The industry leaders should be very proud of what they have done; it has been an extraordinary journey in recent times.

On the environmental and sustainability front, this industry is truly amazing. As I have said, what other industry can boast that it makes products from renewable materials, and that those products can be 100 percent recyclable? It is an environmental showcase, and a fantastic area to be working in. I think the industry has huge potential in this area, not just in Europe where we have a shared goal, but also on a global scale.

The potential for fiber technology to be used in many different, intelligent products is enormous, and we have to raise the agenda and capitalize on the sustainability aspect. There is a lot of opportunity out there.

Can the pulp and paper industry learn anything from the aluminum industry?   

Actually, I think the aluminum industry could learn a lot from the pulp and paper industry, particularly on its resilience in times of change.

The aluminum industry has been very adept when it comes to maximizing opportunities in generating its own energy and has made huge progress on dealing with the energy markets. The pulp and paper industry in Europe could do more, and capitalize further on the possible energy “batteries” through its own power and energy creation.

Also, global trade in the aluminum industry has had to confront a fundamental change in global market dynamics, particularly in relation to Chinese overcapacity issues. The same thing also happened to steel and petrochemicals. We need to be aware that global change can occur very quickly and the way we prepare for it is really important. The pulp and paper industry could certainly learn from other industries’ experiences in handling this.

What is the general state of health of the European pulp and paper industry?

The general state of the industry in Europe is solid; we will be releasing the market data for 2016 shortly. Consumption is rising and production looks to be stabilizing, and even any decline in certain grades is becoming more manageable. Also, 2017 is looking good so far.

Yet we need to be vigilant in Europe; as I said earlier, the changing dynamics in global trade could mean that things may change very fast.

What are the real challenges and opportunities you can see that lie ahead?

There are many challenges, but the biggest I can see is how the industry will embrace a range of technology evolutions and revolutions that are all happening at once.

We have evolutions taking place at the moment in the digitization of production processes through, for instance, Big Data and the Industrial Internet of Things (IIoT). There are both challenges and opportunities in this area—but there are also revolutions. For instance, we have a European innovation that could change the pulping process as we know it altogether: Deep Eutectic Solvents could well be available commercially at the beginning of the next decade. We have a number of potential industry game-changing innovations going on in Europe.

We also have the challenge of bringing in new skills; as the industry transforms and develops new products, we will need to compete for top people with other industries in a big way in the future, in the fields of bio-chemical engineers and algorithm specialists. The industry must promote itself as a leading bio-technology industry. I think the industry is getting better at attracting talent, but it needs to be top of its game in the future.

This also relates to our products. Whether it is a piece of A4 paper or a sophisticated packaging system, there is a lot that can be done with the surface of the sheet that can add major value by embedding technology. Has the paper industry got the innovation and the skills to really capture this area before other companies move in and do it for them? There is a lot of extra margin to be made in the areas of intelligent paper and packaging, which dynamic paper industry players can capture. The industry needs skilled, clever people from differing commercial areas to make this happen.

Another major challenge we have is that we must move away from the mindset of “selling tons of paper”—which we have done for centuries. We need to be working in a world where the product is appreciated for its functionality and its surface qualities. These products, successfully marketed, can see high returns. We need to embrace, lead, understand, manage and control the way technology revolutions can be brought from the process to the products and beyond into the marketplace.

But perhaps the biggest challenge—and opportunity—we have is how we deal with the seminal changes that come with climate change. This is happening at a pace that is mostly underestimated, and how we manage, preserve, and protect our access to the raw materials our industry needs could leave us in a very strong position—or a very weak one. We will be in a very strong position if, as an industry, we are recognized for the contribution we make to sustainable forestry management.

What are your thoughts on the US pulling out of the Paris Agreement?

The US administration’s recent decision to step down from the Paris Agreement sadly puts at risk the global efforts needed to address climate change. It also regrettably reflects a view that climate action would undermine industry competitiveness. To make the case for action— and win back the US—Europe must decisively demonstrate that decarbonization can go hand-in-hand with industrial competitiveness and investments.

The European paper industry has a vision through its Investment Roadmap to decarbonize by 80 percent, create 50 percent more added value, and increase its investment by 40 percent by 2050. This should be done in the background of a Paris Climate Change Agreement that provides a solid framework for climate action and fosters a global, level playing field.

How about the circular economy, with any particular reference to the pulp and paper industry?

The circular economy on paper concept is a great advert for the industry in Europe to really prove and showcase its sustainable qualities. What better example is there of the circular economy than an industry that operates in fully renewable and recyclable material? No other industry does both!

This is where the pulp and paper industries can lead, particularly in northern Europe on the recycling front. The entire European paper recycling value chain has recently committed to a 74 percent recycling target for 2020. This is part of a major push away from a “waste management” vision to highlighting the true worth and economic value of waste streams. This is a really important area for the growth of the industry in Europe.

Any comments on duties or competition from outside the EU?

There has been a lot of activity in this area, and we see a lot of measures taken regarding regional and local protective practices. Globally, we have seen it with the US and Australians adopting anti-dumping duties on uncoated woodfree paper. Europe is both an exporter and an importer of paper and remains very open, as long as other regions, areas and countries remain open, with a level playing field. That level playing field is very important, and we will push to protect and preserve it. If we don’t see fairness, we will take action, as we have done with the recent submission of a trade complaint to the EU against Turkey on its unfair, non-automatic import licensing system on exports of uncoated woodfree paper.

As we have seen with transforming and emerging markets, there is sometimes extra help given from governments for trade in those regions. This should not be the case, and we are and will be very vigilant on developments to make sure it is fair for all companies operating in the European region.

Finally, can you tell us about the CEPI 25th Anniversary celebrations at the end of the year?

CEPI is now moving away from being a teenager and into maturity. We really want to celebrate the past 25 years at our special gathering in Brussels in November, but we also want to look forward to the next 25 years.

Guests will be welcomed to the event from all over the world. We will showcase past innovations and successes, but more importantly we will be looking forward to where we could be in the next 25 years. We want our guests to experience everything through all the five senses, so there will certainly be some surprises in store.

For information on attending CEPI’s 25th Anniversary celebrations, visit www.cepi.org

Mark Rushton is senior editor, Europe and Asia, Paper360° and can be reached at [email protected]

Meet Sylvain Lhôte

Appointed by CEPI’s board in June 2016, Lhôte brings 25 years of government and public affairs expertise with leading material technology and manufacturing industries on climate and energy policies, sustainability and industrial affairs, as well as competition and international trade issues.

Prior to joining CEPI, Lhôte was vice-president governmental affairs and business development in the EMEA Region for Alcoa, the aluminum and metals engineering group. He previously directed EU and sustainability affairs for the Borealis Group, in the base chemicals and plastics industry. He also chaired FleishmanHillard’s Public Affairs practice in Europe and headed its environment department, advising major trade associations and industries in the field of sustainability policies and PA strategies.

Lhôte started his career in parliamentary cabinets at the European Parliament and at the French National Assembly. A French national, Lhôte studied political sciences, international law and business administration at Strasbourg and Paris-Sorbonne Universities and post-graduated cum laude in European administration at the College of Europe in Bruges.

Lhôte speaking at European Paper Week.

On the environmental and sustainability front, this industry is truly amazing,’ says Lhôte.