The Japan Times WORLD EYE REPORTS NORWAY
©THE JAPAN TIMES	Thursday, November 15, 2001

A global paper trail leads to Norske Skog The road to Norske Skog may be unassuming yet the company that lies at the end of this road is anything but that. In the midst of the meadows and fjords of Norway lies the headquarters of a company that is charging full force into the global paper production market. And they aren't taking this charge lightly. The plan of attack is simple. Build on what you have, acquire what you need along the way but preserve and strengthen the solid foundation built by the people behind the Norske Skog logo.

Jan Reinas has a history of makin risky decisions that turn into successes.

When Jan Reinås entered the pulp and paper industry in 1994, Norske Skog had many different activities. Since it was established in 1962, their competencies ranged from forestry, floorings and building materials to energy and paper production. As recently as 1990, only 50 percent of its business focused on paper production.

While these products helped sustain Norske Skog's position, they did nothing to propel the company to the ranks of other global players. Seeing this as a barrier to their growth, Jan Reinås knew what was necessary, if not vital for Norske Skog to succeed.

"We decided to be one of the remaining healthy companies in 2002 and saw that we had to divest our activities which are very locally oriented in Norway. You can't spread capital or management resources to so many areas. That's the rational behind this strategy," he explains.

"In 1990, we produced 1.3 million metric tons of paper. Today, we produce 7.8 million tons. At that time, 50 percent of our business came from publication paper. Today, it's closer to 95 percent. In 1990, 100 percent of our production was in Norway; now, it is 20 percent," he adds.

Over the next five years, Norske Skog's activities beyond publication paper began to diminish. Even products within the paper category, which did not fall under publication paper, were sold off. Just between February and June of 2000, three pulp mills and one lumber company were divested. In all, 18 units across all of their original fields went to new owners. All in response to Norske Skog's repositioning of goals and objectives to be the number one publication paper company in the world.

Onwards and Upwards

While Norske Skog was minimizing their product lines, they were strategically plotting their next move in the rebirth of the company.

Mergers and acquisitions are a common theme among many large companies these days. It is no longer realistic to think a company can prosper and survive in this global game without reinforcing and building their forces.

And all games pose risks, fortunately for Norske Skog, Reinås is not a gambler. He takes calculated risks within the framework of the company's Vision, Goal and Strategy.

"In late 1997, we went to Asia and saw the opportunities in a period of recession. Greater opportunities occurred just after this. We took the risk and invested heavily. Later on, we formed Pan Asia Paper Company. It was a risk investment at that time. But investing in top quality and well-organized and run companies, we where sure that it would be a success later on. And we where right. Our Asia activities have become a success," Reinas relates.

With the consolidation of core competencies well under way, and operations developing in Asia, Norske Skog began concentrating on further global expansion.

In January 2000, Norske Skog entered into negotiations with Fletcher Challenge Ltd. of New Zealand regarding the purchase of FC's global operations. Seven months later, complete ownership was transferred to Norske Skog and the largest acquisition in paper industry history was complete. In April of 2000, Norske Skog and Klabin, Brazil agreed to a 50-50 ownership of the largest mill in South America further increasing Norske Skog's global position.

In 10 years, Norske Skog has gone from producing 1.3 million to 7.8 million metric tons of paper.

As a result of this activity, Norske Skog is now the third largest producer of publication paper and the second largest producer of newsprint in the world. Norske Skog's operations spans 15 countries with 24 subsidiaries and 13,500 employees. No small task considering where they were five years ago. Norske Skog is also acquiring two mills in Europe to add more magazine paper.

And as a result of these acquisitions and mergers, Norske Skog not only gains new power and positioning throughout the world, but most importantly they gain colleagues, as they like referring themselves at Norske Skog.

Openness, Honesty and Cooperation

Those three words translate into one powerful statement for Norske Skog - success. It is a success that is achieved through a delicate balance of understanding and leadership from management, and belief and acceptance from employees.

"It's important to build relationships and trust each other from the very beginning so you can move fast and in comfortable negotiating conditions. Of course, we are there and discussing but they need to understand they have the freedom to plan and execute based on the understanding of our common goals and understandings," the company chief explains.

So what do the words openness, honesty and cooperation mean to Reinås and his managerial team tasked with bridging cultural gaps before, during and after an acquisition or merger.

"We are discussing these principles all the time to ensure that we are implementing our overall strategy and structure and that we are not trying to implement the Norwegian culture. There is pressure on the managers to openly discuss this with their employees, what the challenges will be. That's the main idea. On the other hand, cooperation and honesty are important. But if you are not open, then you cannot cooperate and you also will not ask. We have to stick to this principle. It's very simple."

This principle is understood among Norske Skog's employees. But what is most important is this understanding extends beyond the confines of the corporate offices in Norway. For Norske Skog, everything has turned global.