The story of Metsä Tissue originates from the paper mill founded by G.A. Serlachius in Mänttä, Finland, in 1868. The production of tissue paper started in 1908, under the direction of Serlachius’s nephew, Gösta Serlachius. In 1987, Metsäliiton Teollisuus and G. A. Serlachius merged to form Metsä-Serla. The tissue paper business then became one of Metsä-Serla’s businesses, and in 1991, the tissue business was separated into a separate company, Metsä Tissue. From 2004 onwards, the company has continued to operate as Metsä Tissue under the umbrella of the Metsä Group.
Metsä Tissue now has eight mills operating in five countries in the European region, employs some 2,450 people, has sales of EUR1.2 billion (US $1.28 billion) and has become a growing force in the tissue industry in the region. SAGA Tissue brands include Lambi, Serla, Mola, Tento, and Katrin.
T360: Can you tell us about Metsä Tissue’s eight mills, where they are located, and the products they make?
Kaikkonen: Metsä Tissue has eight tissue mills around Europe producing hygiene tissue products for consumers and professionals and one greaseproof paper mill for professional and consumer use. The mills are located in Germany, Poland, Slovakia, Sweden, and Finland, close to our Northern, Central, and Eastern European key markets.
Our head office is in Espoo, Finland. Consumer tissue products are sold under the market leading brands Lambi and Serla in Nordics, and Tento in Central and Eastern Europe. In the Polish market the company operates with both Lambi and Mola brands. Katrin brand portfolio is targeted to professional users across Europe, and SAGA is Metsä Tissue’s greaseproof papers brand.
We supply hygiene papers for tens of millions of Europeans on a daily basis and we can reach some 65 percent of the total consumption of tissue in Europe from our mills.
Where are your customers located and what markets do you serve?
We improve the hygiene of tens of millions of people daily in Europe with our sustainable and high-quality toilet tissues, household towels and hand towels, and our greaseproof papers are designed for the needs of the global food and packaging industry, as well as for home cooking.
Our key markets are Northern, Western, and Eastern Europe for tissue papers, and we serve our greaseproof paper customers globally.
We serve our customers in the UK & Ireland, Continental Europe, and Nordics both in professional and consumer hygiene markets.
What is your opinion on current market trends?
One of the key drivers in the market today is sustainability, the demand for which is constantly increasing and very visible in all stakeholder discussions. There is a high demand for transparency in sustainability topics and a desire to understand and improve on the different areas of sustainability. Also, regulation is heavily increasing in this area. We see the discussion in general as very positive as sustainability topics are high on our agenda and we want to be a forerunner in this area. It is important to offer sustainable choices when it comes to products and make the action on sustainable development visible. Metsä Tissue uses its unique position in the markets to drive its sustainability-based value proposition forward. We efficiently deliver daily hygiene to our customers from sustainable northern fresh forest fibers, minimizing our ecological footprint.
Another very topical trend is the decline in consumer confidence due to the very volatile market environment. Due to the unrest in Europe as well as surging inflation, the confidence level is coming down and impacting the general mood and consumption behaviors. While companies are needing to increase prices due to the increasing cost base and market volatility, consumers wish to downsize consumption due to limited financial resources.
Naturally, there are categories like tissue products which stay in regular demand, but consumer behavior starts to change toward cheaper products. In this situation it is important to keep in mind that the cheapest product option is not always the best—or actually the cheapest. For example, imports OVER long distances increase both cost and negative environmental impacts. Choosing locally produced products supports both local businesses and, most importantly, the local availability of necessity products.
Along with our single ram models, American Baler now combines an automatic plastic strapping system with our narrow-box two ram baler to create an extremely versatile tissue baling system. We select the finest materials and components, ensuring a lower operating cost per ton.
Established in 1945, American Baler Company is one the most respected baler manufacturers in the world. The company manufactures a complete line of balers that provide solutions to customers in a wide range of industries. These products include manual-tie and auto-tie single-ram horizontal balers and two-ram auto-tie balers for both low-volume and high-volume production applications. American Baler Company specializes in highly efficient balers that are designed to keep energy costs and baling wire consumption to a minimum.
As we all know, there is something of an energy crisis in Europe at the moment. Can you tell us how Metsä Tissue is dealing with these challenges?
As for all energy and raw material intensive businesses, also for the tissue business, the operating environment is highly volatile and faces challenges in supply chains, especially in terms of energy prices and availability, as well as in raw material availability and quality. Costs are high, inflation is soaring. The high inflation will also not help consumers’ trust.
Despite the uncertainty and turbulent market conditions, we at Metsä Tissue are looking to the future with confidence. We produce tissue products from sustainable, renewable raw material for everyday needs. We are proud to stand out in the market with our unique value chain, from sustainably managed forests to the responsible production and distribution of renewable products. We operate close to our main raw material and markets, minimizing the need for unnecessary transport.
We expect the market to continue to be challenging, but we have prepared ourselves well for the situation. We are implementing contingency investments to be able to use alternative energy forms to natural gas in Western Europe; we continuously evaluate opportunities for energy efficiency improvements; and we focus on optimizing our portfolio for efficiency. Pricing is also one of the main tools that needs to follow the challenging cost development.
However, as we are an integrated player, Metsä Group is generating more bioenergy to send to the European energy market than it needs in the coming years, and this integration de facto also helps Metsä Tissue in turning fossil free by 2030, as per our commitment. This also clearly shows that the forest-based bioeconomy plays a big part in the transition of different industries.
Are you looking at any particular non-fossil fuel energy technology at any of your mills?
In the papermaking process, gas plays an important role in the drying phase of the tissue paper, and dependence on gas is still high. To ensure the security of supply of essential products and continuous production, we are implementing investments to enable the use of alternative energy forms to natural gas in our Western European mills.
We are continuously aiming to improve energy efficiency in our mills and have several projects ongoing in this area. In addition to mill specific projects, our fresh fiber strategy improves energy efficiency. As an example, one of the paper machines in our Kreuzau mill was converted into fresh fiber production this autumn.
We are currently exploring, in general, the alternative routes to fossil-free production as part of our Future Mill Programme development projects, as we are committed to reaching fossil-free production by 2030. But we are not operating in isolation, and thus we must follow the energy infrastructure development in Europe.
There are several different discussions and actions ongoing on this energy topic from existing technologies, like solar and wind, and new technologies like hydrogen. Meanwhile, we have to turn more to LNG and even to oil to cover our daily needs. Unfortunately, the transition to green energy will not be easy in Europe and will also carry substantial costs.
Can you tell us about the Mariestad mill expansion in Sweden?
We have recently announced that we will be modernizing and expanding the Mariestad mill. At a cost of EUR370 million (US $395 million), this is one of the largest investments in the tissue industry in Europe. The mill produces high quality Lambi, Serla and Katrin tissue products for both consumer and professional use and the current capacity will be doubled to around 145,000 metric tpy. After the expansion, the mill will have a new modern paper machine with the capacity of 70,000 metric tpy, and three new converting lines for both rolled and folded tissue.
Tissue production is local and it is not sustainable to transport tissue products across long distances. These daily necessity products need to be available in all situations and sustainable local production helps to safeguard the security of supply in the market. This investment aims at just that—availability of sustainable, locally made tissue in a region which is currently one of the largest net importers of tissue finished goods in Europe. We are proud to develop this business to be even more sustainable and locally driven to make what we think are the best tissues in the world, available to consumers in all situations.
Can you tell us about your future mill projects and the plan for a possible mill to be located in the UK?
The plan consists of 240,000 metric tpy of tissue production capacity, built in several phases during a period of 10 years. The plans are part of our Future Mill Programme to drive world-class environmental and industrial performance in tissue production.
The production of the planned UK mill would be based on using sustainable fresh fiber pulp, as that for the Mariestad mill investment, and the first phase of the investment will be ready during 2025 to serve the professional and consumer tissue markets in the UK and Ireland. At the moment, the search for the mill location is in progress.
What is your main raw material? Are you looking into any wood fiber alternatives?
Our main raw material is fresh wood fibers, and in addition we also use recycled fibers in our production. However, as the availability and quality of recycled fibers is fast declining, we foresee the importance of fresh fiber production growing further. We are experiencing ever tightening competition and lack of sorting of these materials as, for example, carton board manufacturers, who have better financial resources than the tissue industry, are expanding their operations in our main markets.
Any comments to make regarding tissue manufacturing technology? Is Metsä Tissue utilizing any new digital technology at any of its mills?
We have just recently implemented a new manufacturing excellence system in our mills and are currently creating concepts based on obtaining data to improve our business processes further. This system enables operations and production processes to be harmonized. Online monitoring and data-based decision making will play a key role in developing a more resource and environmentally efficient mill fleet for Metsä Tissue. We see data and data analytics as playing a key role in developing the value chain together with our customers.
Ultimately, we will use the best available technology in our mills in the future and standardize the choices of technology to the fullest extent in order to be capital-cost and environmentally efficient. We believe that by combining the best technologies on the market we can boost our mill fleet enormously.
Can you talk about the importance of sustainability at your mills and in the industry as a whole?
Sustainability has a core role in Metsä Group’s strategy—ecological, social, and economic considerations are to be embedded in everything we do. It is about both becoming a more sustainable business and about contributing to better sustainability of our society.
Our objective in Metsä Tissue is to contribute to people’s wellbeing through our products and actions. We strive to minimize the environmental impacts of our operations and products throughout their life cycle, from sourcing of raw materials to production and from delivery to consumption and final disposal. We do this in cooperation with our suppliers, customers, business partners, and consumers.
We currently see that the CO2 emitted in our value chain from the forests to the end customers—in the entire value chain—will be priced in one form or another. This means that the value chains, not only in the tissue industry, but also in other industries, will shorten. I believe this is a great opportunity for Metsä Tissue.