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Economics of a Nordic paper mill: case study

Esa Hämäläinen (Department of Geography, University of Turku, Turku, Finland)
Ulla Tapaninen (Centre for Maritime Studies, University of Turku, Turku, Finland)

Industrial Management & Data Systems

ISSN: 0263-5577

Article publication date: 2 February 2010

944

Abstract

Purpose

The purpose of this paper is to reveal how the prices, costs, and logistics develop in the case mill and how these variables correlate with profits, and finally to give suggestions for improvements.

Design/methodology/approach

A typical Finnish paper mill is selected for the basis of the case study. The complete data for the mill for the years 2001 to 2007 at a monthly level are used. The data are obtained from the mill's financial management system and transferred to Excel. Statistica 4.1 software is used to run the statistical correlation analyses. The results can be generalized with certain limitations to paper manufacturing located at a long distance from its customers.

Findings

This paper gives an important insight into the economics of the Finnish paper industry. From theory‐building point of view, the empirical process data show that the variation in production lines is minimal, but there are important variations in paper deliveries. A lot can be gained in the logistics processes. Larger volumes delivered in tons also tend to increase profits. From the mill to the consignees, fluctuations in the process and paper sales grow substantially, which indicates longer storage times.

Research limitations/implications

The results of the case study are based on the data of a single large integrated paper mill in Finland covering the years 2001‐2007, so the results cannot be directly generalized to concern all Nordic paper mills. In May 2005, there was an industrial blackout, which considerably affected the production and deliveries of all Finnish paper mills in that year.

Practical implications

The competitive advantages of the Finnish paper industry are undermined by low paper prices and costly logistics. The mill managers should increasingly focus on overcapacity and cost issues and also deliver volumes, which all could contribute to higher profits.

Originality/value

In this paper, the Finnish paper industry is studied through a time series, economic geography, and statistical tools. This approach is a novel method and gives new insights into this research object. The mill's economic variables, such as paper prices, profits, and logistics and manufacturing costs, and the characteristics of these issues in a spatial context are studied.

Keywords

Citation

Hämäläinen, E. and Tapaninen, U. (2010), "Economics of a Nordic paper mill: case study", Industrial Management & Data Systems, Vol. 110 No. 1, pp. 5-23. https://doi.org/10.1108/02635571011008371

Publisher

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Emerald Group Publishing Limited

Copyright © 2010, Emerald Group Publishing Limited

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