The Forming of Operative and Financial Strategies in Global Corporations
Chapter 8: From MoDo to Holmen: the building blocs
In the transformation of MoDo to Holmen two other larger corporations were added during the 1980s, namely Iggesund (1981) and Holmens Bruk (1988). Later MoDo, Iggesund and Holmens Bruk formed Holmen in a dramatic and complicated process (cf. Ch. 10). In this chapter the focus will be on Holmen’s main building blocs, that is to say, on what took place in the three involved corporations before the controversial merger processes started. The conditions for running forest-based industries changed rather dramatically during the late 1940s and 1950s. One serious problem addressed during the 1950s was the projected future shortage of timber. Already back in the 1930s, investigations had indicated a severe problem regarding timber supply, particularly as the industry as a whole was expected to grow substantially. This growth meant that the timber that the corporations could take out from their nearby surroundings (i.e. the geographical zone that offered a competitive timber price) would not be sufficient. To some extent this negative effect (the use of a more expensive [i.e. distant] resource) was moderated by technological improvements that made the timber use more efficient. However, that effect was also linked to the increasing economies of scale in the production processes, and as the competitors abroad invested heavily, too, it became a necessity for the Nordic companies to try to find new ways to counter the risk of timber shortage. So, for some years, the sourcing problem severely restrained the expansion of the Swedish forest-based industry.
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