Board Converting News, April 26, 2021

Consolidation Versus Competition Of Containerboard BY JOHN WIDERA The dominant driver of consolidation comes from Wall Street, where shareholder value rules. So why is it that small asset independent box making businesses have disproportionate- ly taken the biggest hits during the last 40 years of consolidation? Only 10 percent of U.S. businesses are considered large businesses. In the slightly fragmented paper industry, U.S. mills sell 91 percent of all con- tainerboard. Indeed, only the strong survive when consol- idation reduces competition. In most cases, I’m just as much a capitalist pig as the John Widera

Cascades To Establish (CONT’D FROM PAGE 8)

services sociaux de la Mauricie-et-du-Centre-du-Québec (CIUSSS MCQ). Cascades has its own health expertise centre which serves all of its operations in North America. Drawing on its experience with influenza vaccination in recent years, the company has the expertise to ensure the implementa- tion of this vaccination clinic, in compliance with the rec- ommendations of the CIUSSS MCQ. In cooperation with other companies and organizations in the region, some resources necessary to ensure the project’s success will also be utilized, especially those in logistics and communi- cations. Cascades will also recruit dozens of volunteers to ensure the operation runs smoothly. Cascades will also work in partnership with other com- pany-based vaccination sites to support our Quebec em- ployees in their vaccination process.

next guy and I don’t begrudge anyone mak- ing a buck, but constantly raising prices on the remaining independent box makers and not passing all of the increase on to your big loyal customers ultimately benefits the “rich getting richer.” This isn’t market-based capitalism anymore. In the long run, it’s a grotesque insult of misunderstanding of government antitrust power. The poet Wal- ter Scott summed it up best: “Oh, what a tangled web we weave, when first we prac- tice to deceive.” If you’re sitting on unlimited funds or have a large credit line, be bold. Now can be the time to pick up more market share at a bar- gain. But a word of caution: Integration is of- ten a losing proposition because the bigger you become, the more misplaced priorities and ever-changing is the costly technology required to compete. Integration eventually creates other problems: shareholder ROI, job competencies and the threat of large European or Chinese competitors entering the US market. Due to more demand and a strain on supply, an integrated’s indepen- dent customers are now afraid to talk pub- licly for fear of less receiving less container- board. Why the disruption? • E-commerce growth: paper mills control the digital market by setting their own commodities with low prices and dedi- cated capacity at the expense of small customer orders. • Mills buy employee loyalty with higher wages and buy customer loyalty with lower prices. Yet, there is little value. • High M&A offerings, sometimes as high as 10x EBIDTA. Making the deal is just a



April 26, 2021

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