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One of the most important trends in any industry is consolidation all industries are experiencing it in one stage or another. Consolidation occurs when organic growth becomes too expensive and companies grow by merger and acquisition. It is a process that is observed as companies seek to sustain profitable growth while their markets mature and growth rates fall. In December 2002 the Harvard Business Review presented an article by A.T. Kearney that described the consolidation curve showing how industries mature over time Figure 1. In this figure the left vertical axis shows the degree of consolidation across a range of industries. The authors show here the percentage market share of the top three producers. On the right vertical axis the same data is shown on the HHI scale1 a standard measure of consolidation. Over time industries evolve and the authors chose to divide this development curve into four stages opening scale focus and balance and alliance. Applying this four-stage model to the paper industry we can say that China in the late 1990s to early 2000s and the Western paper industry in the 1950s and 1960s are examples of Stage 1 consolidation. North America and Europe were in Stage 2 consolidation in the 1970s and 1980s. North America entered Stage 3 consolidation in the 1990s and early 2000s. And from late 2000s on North America and Europe have entered Stage 4 consolidation. However market leaders do not comprise the 70-90 By rod Fisher President Fisher International Consolidation in the pulp and paper industry share that the model prescribes. Why not It is important to recognise that paper is not a global business. Markets tend to be regional. This fact is dramatically illustrated when we look at a chart of all the paper producers worldwide segmented by grade and capacity consolidation occurs when organic growth becomes too expensive and companies grow by merger and acquisition Figure 2. No individual company or companies dominates. There are large players but the market share of even the largest is only a few percent. Further analysis by segment and region reveals striking differences. Using FisherSolve industry data and analytics well examine the current Figure 1. The pulp and paper industry would be in Stage 2 consolidation if seen as a global industry 1. HHI - Hirschman-Herndahl Index corresponds to the sum of the squared market shares of all companies and is greater than 90. Industry trends world pulppaper 9