Metso: New products to reach a broader market

Metso’s Tissue Business has come through a very tough period.

The company, known for its world-leading technology, was in deep trouble a few years ago as sales dropped sharply. A new management team has come in and turned the situation around.

“A good plan, violently executed now, is better than a perfect plan next week.” – General George S. Patton, US Army

Perini Journal

Metso’s Tissue Business Line, headquartered in Karlstad, Sweden, has in recent years faced perhaps the most challenging times in its nearly 150-year history. The Tissue Business Line (TBL) has had to change its business model completely and go through a major transformation since 2002 as the technically innovative leader in tissue machines suddenly found itself in a crisis situation about five years ago.

Now the group has reinvented itself in a slimmed down structure which at the same time has been able to offer a much broader product line through its Advantage DCT machines, therefore greatly expanding its potential customer base. Simultaneously it has introduced new technology like the ViscoNip press which gives improved paper quality and energy savings, as well as better runnability.

SALES DROP AS TAD ORDERS DRIED UP. The situation was pretty critical in 2003-04 as sales revenue had collapsed from around US$200 million in 2002 to US$75 million in 2004. That is an enormous hit to take and it is clear that the top management at Metso’s headquarters in Helsinki, Finland, was thinking very seriously about what, if anything, could be done to rescue the tissue business.

Around 2002 the bottom fell out of the market, especially for TAD machines, due to a combination of several factors that all came about more or less at the same time. These included the September 11 attacks in New York, the rise in energy costs, a bulge of new capacity that had started in 2000-2001, and the phenomenal growth of private label tissue in Europe. All of this led to hardly any new orders being placed for TAD machines.

ANDERS BJÖRN, WHO HAD BECOME PRESIDENT OF THE METSO PAPER KARLSTAD FACILITY IN 2005, explains more of the background. “We had very good relations with the big tissue makers and they were normally buying big new TAD and conventional machines on a regular basis. So we quite simply didn’t focus on other market segments. This was going to change rapidly.”

Against this background in 2004 Marco Marcheggiani was requested to take a look at the Metso tissue business. He had been with Metso for more than 20 years, quite often being cast into difficult situations which required fast action in a short time. In 2004, he was living in Knoxville, Tennessee, USA, where he was president of Metso Paper's North American operations.

“I was asked by the incumbent President of Metso Paper to see what I thought could be done with the tissue business. I thought it looked pretty challenging, but I saw the possibilities for a turnaround and decided to take the job.” Thus he became President of Metso’s Tissue Business Line. The line also includes Metso Paper, Biddeford, which is responsible for the TAD drying technology, Metso Paper, Gorizia, responsible for Yankee Air Systems drying technology and the Karlstad foundry, where the Yankee cylinders are cast.

This broad scope and the ability to supply the entire line made Marcheggiani confident about the situation. “Metso Paper is the only company remaining with direct control over its key components for tissue machine deliveries. This eliminates a huge number of technical variables, which are otherwise in the hands of a string of sub-contractors, as is the case for our competitors.”

Marcheggiani, however, decided that for family reasons it was best to continue to live in the USA, and to “commute” to Sweden.

Needless to say, it is a pretty long commute across the Atlantic Ocean. In general he makes the trip monthly.

FROM TAILOR MADE TO STANDARDIZED PLATFORM. Marcheggiani, following his favorite quote from General Patton about violently executing a good plan today, moved quickly with his plan for a renewed customer focus, tightening relations with customers to understand what they wanted, launching products to meet these needs, reducing costs and getting everyone in the company involved so that they could all contribute fully to the effort.

When he arrived in Karlstad, Marcheggiani says, he was pleased to see that “some of the new products like the DCT series and the ViscoNip press were already in the pipeline. The key was to get past the development stage and rapidly into the launch process so we could get the products into the market and generate sales revenue.”

The Advantage DCT series was a critical item needed to get sales moving again. “To widen the customer base,” explains Björn, “we needed smaller, competitively priced machines to appeal to new markets and to new entrepreneurs entering the tissue business. To do this we had to change our technology. So we broadened our business from the old model of a tailor-made solution for each new order to the new standardized models based on a common platform.”

ADVANTAGE DCT LAUNCHED. The launch of the new Advantage DCT tissue machine series took place in 2004. The DCT is built on a common platform to simplify machine specification and construction, speed up the delivery process and lower the overall cost.

Thus tissue makers could get the Metso quality that best fit their needs, without adding and paying for a lot of extra performance that might not initially be needed. At the same time, the machines were designed to be easily upgraded, allowing increased performance to be added when needed.

The DCT was a big hit with numerous orders coming in rapidly from all over the world. At the same time several TAD orders materialized as well. This quickly allowed Metso to rebuild its order book and get back on stable ground.

STILL MAKING THE HIGH-END MACHINES. Marcheggiani says it is very important to note that Metso is still totally committed to the tailor made solutions for the high-end customers who need that service. “These are extremely important customers for us and we still make these machines. But we have broadened our product line to reach a larger customer universe, which is natural for any company to do.”

As far as the highly competitive market for tissue machines, he says that Metso is in a good position. “The field is pretty crowded but I think we have been successful in standing out from the rest due to our total package offering. This includes of course top quality machinery with the most productive technology, at the same time backed up by very deep knowledge and expertise of starting tissue machines and helping customers fine tune their tissue making processes. Quite simply, our machines start up extremely rapidly and run well for years and years, supported by the best knowledge in the industry. This is incredibly valuable to a tissue company.”

NEW FOCUS ON ENERGY. Energy is clearly priority number one these days for tissue makers. Marcheggiani and Björn say they don’t believe that there is any magic solution to the energy problem but that through a series of key improvements, energy consumption can be cut sharply. The company has set a target to offer tissue making technology that can reduce energy consumption by over 30%.

Says Marcheggiani, “The choice of equipment is critical when it comes to energy costs. Unfortunately purchasing managers that are buying new machines are often unaware that energy costs can be twice the capital cost on a per ton basis. And they are judged by the price they pay for the capital equipment rather than the operating costs over the equipment's lifetime. I really think it is time for this to change. Perhaps the energy price shocks that we are experiencing today will speed up awareness, especially at the CEO level.”

LOWER COST FOR STRUCTURED/TAD TISSUE TECHNOLOGY. Another area of focus is to decrease the cost for structured tissue. TAD is seen as complicated and an energy hog by the industry. Metso has been working on its new Structured Tissue Technology (STT) for several years, but is not yet convinced that it is a good replacement for large TAD machines. “We are taking our time with STT to make sure we do it right. We have a reputation to safeguard, so we would never introduce technology without being fully convinced it is right for the market. For smaller markets, STT may be the best solution, but for markets demanding large quantities, high-speed TAD machines running flat out are still the most effective.”

A WORK IN PROGRESS. Clearly Metso has been through a tough experience with its tissue business. “One of the most important lessons that we have learned through this period,” concludes Marcheggiani, “is that a winning concept does not last forever. We have reinvented ourselves to deal with the realities of the tissue market and we will keep on doing so. It is a work in progress, continuously evolving and our young, determined management team is focused and committed to the challenge.”•

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