Valmet and Rauma merger: Creates integrated 'from forest to paper' supplier
The merger of Valmet and Rauma, which will officially take place at the end of this month, will create an integrated comprehensive supplier handling the fiber, paper and automation sectors - or a 'full scope' supplier, according to Leo Allo, corporate communications. Metso, the new name for the group, will be listed on the Helsinki and New York stock exchanges from 1 July 1999.When questioned by Alan Rooks, editor, PIMA's North American Papermaker, about benefits of the merger, Mr Allo responded that the company is hoping to make USD 75 million per year in cost savings. But since Metso will be made up of companies in complimentary, generally non-overlapping business areas, the scope for cost savings is in fact relatively limited. However stock prep is one exception, where cost savings will be brought about through a rationalisation of Sunds and Valmet operations. Unlike some of the other mergers taking place in both supplier and paper producer areas in recent times, the merger will have only a limited impact on staff levels. There will be some staff cuts, but Mr Allo estimates that these will be in the hundreds rather than the thousands. The new company will have a combined employee payroll of 23,000 people. Metso will be comprised of three divisions says Mr Allo: * the Fiber and Paper Technology division will be comprised of the former Valmet paper machine and Sunds Defibrator businesses; * the Automation and Control Technology division* the Machinery divisionThe Fiber and Paper Technology division will be the largest business area for the company, given that it accounted for 52% of net sales of the group last year. Machinery ranked second, with 32% of net sales, followed by 16% for Automation and Control. The new company will provide customers with a comprehensive range of services, including process automation solutions. Arto Aaltonen of Neles Automation noted that there is a trend towards embedding process automation architecture in paper machines.Most of the Fiber and Paper Technology division's RTD center operations will remain in Scandinavia post-merger, with the exception of the through air drying and non-wovens operations located in Bedford, ME, USA. Leo Allo attributes this to the necessity of being close to the customers who are most willing to install innovative technology: that is, European papermaking companies. By contrast, Leo Allo observed that North American companies prefer proven technology to the untried and untested.Asian papermaking companies have tended to choose the tried and proven technologies as well, noted Mr Allo. But this is changing. One example is Dong Il Paper, which started up an innovative Condebelt testliner drying process on 20 January this year, at its mill near Seoul, South Korea. The Condebelt dryer replaces the steam-heated cylinders found in conventional dryers with two steel belts. The upper belt evaporates the moisture in the web, which condenses on the lower belt. Dong Il's converting customers report a 40% increase in compression strength for boxes made from Condebelt-produced liner, according to Valmet. The Dong Il condebelt is only the second installation in the world. (For the full story, see the Dong Il mill report in the April 1999 issue of Asia Pacific Papermaker. )(SPCI News,Robert Ryan)