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The Final Word by Jim Thompson
Did you ever feel like you were in the middle of a forest fire? If not now, when? Chesapeake Corporation, in the United States at least, is no more. Smurfit Stone is looking for debtor-in-possession financing to the tune of USD 750 million to file for Chapter 11 Bankruptcy (the obvious alternative being Chapter 7 or liquidation). Others are in trouble. Aracruz has had derivative losses to the tune of USD 1.2 billion and instead of being the acquirer (as thought some years ago) of VCP, may be acquired by them.

As the inferno rages, we can be certain of a few long-term conditions:

1. Sanitary tissue products will continue to be used in near normal per capita volumes. They may not be premium grade, but they will be consumed.
2. Disposable diapers will continue to be consumed in near normal per capita volumes.
3. The corrugated box business will continue, no doubt with some dips in volume, but it also can be counted on to revive early in any upturn.
4. Structural cellulose products will continue to replace more expensive alternatives (such as steel) in packaging and other uses.
5. Communications papers will continue to decline.

Plan your business and career accordingly. Our industry will come through this.

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