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Strategic & Financial Arguments(TM)
for the pulp and paper industry worldwide

October 2019

Participating as industry experts in pulp and paper financing and M & A deals around the world  for over two decades, we continue to see the same mistakes made over and over.  This newsletter is designed to help you avoid costly mistakes we have seen others make.  We will be giving you one or two points each month to help improve your performance.
 
Defensive Actions when it comes to the Chinese

By Jim Thompson
 
Having watched Chinese companies come into the US market and buy up mills and machines that conventional wisdom said were obsolete, pulp and paper companies seem to be seriously looking about their own backyards for others that they may have thought were not worth saving.  It just may be possible that the Chinese do think they are worth saving.

Even if the Chinese take the output off shore to sate their own home domestic needs, they can still cause disruptions in the mill's sited country.  In the United States, southern mills were caught by surprise a number of years ago when British power plants began buying up southern pine chips to burn with their coal to meet hometown environmental regulations.

No one wants this type of action to disrupt their domestic supply stream again.  Yet, that is just what the Chinese are doing in the United States and may be attempting to do elsewhere.

This just brings home to us that we are truly in a global industry and threats may come from any corner of the globe.  The prudent operator and investor will keep their mind and their eyes open to threats.

Have a comment?  Email me at jim.thompson@ipulpmedia.com

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If you have a casual question or a major deal, call me on my personal cell phone - 404-822-3412 or email me at jthompson@taii.com. We are here to help.

 

Sincerely,

 


Jim Thompson, CEO
Talo Analytic International, Inc.
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JRT Banker's Engineer