Forbus_disc_02nov1 Jon Bingen Sande 12/3/2002 1 RESTRUCTURING AND GLOBALIZATION OF THE FOREST INDUSTRY: A REVIEW OF TRENDS, STRATEGIES AND THEORIES Jon Bingen Sande Department of Forest Sciences, Agricultural University of Norway, Ås, Norway Abstract This paper provides an understanding of the current restructuring trends in the forest industry in the context of globalization. Globalization is likely to be one of the most important drivers of change in the forest industry. The forest industry has become more integrated globally. Evidences on that are presented. Recent strategic choices of some forest industry companies are discussed, mainly with an emphasis on changes in the companies’ external environment. It is considered whether it is possible to see any trends in the strategic choices of companies, and how their choices change the structure of the global forest industry. The paper is based on both available literature about the industry in general and specific companies as well as interviews with 11 industry executives and strategic planners in Brazil, Canada, Norway and the United States. There seems to be a shift away from diversified, vertically integrated, locally or regionally based enterprises towards companies that are more focused horizontally and vertically, and more diversified geographically. Keywords: globalization, restructuring, consolidation, strategy, and vertical integration. 1 Introduction During the 1990s a period of restructuring in the forest industry started. This process seems to have been characterized by companies consolidating to get bigger and transnational as well as breaking up, becoming leaner, less diversified, and less vertically integrated. One of the main reasons for this development is globalization. Other phenomena and societal trends that have impacted the forest industry during the same period, have been new information technology, new engineered wood products, competition from non-wood substitute products, fast growing plantation forestry, environmental awareness and forest certification. The fundamental questions discussed here are: what processes and structural changes are taking place, what characterizes them, and what are the effects of them on company strategies and industry structure? One of the most important effects of globalization on forest industry companies is perhaps the effect on vertical integration decisions. The result is that forestry has emerged as a new asset class for investors, instead of as an asset primarily owned by manufacturing companies and small woodlot owners. There is therefore here a review of these changes as they have happened in the United States and in Scandinavia as well as an overview of factors that may influence the strategies of new pure play forest operating companies. Globalization plays an important role in shaping these companies. In addition to reviewing relevant literature, statistical data and company specific information from a range of sources, interviews with strategic planners, executives and board members in 11 companies headquartered in Brazil, Canada, Norway and the United States were performed. This work resulted in case studies of 13 forest industry companies, describing their strategies and recent development. This information provided impressions and examples