Industry Innovation: A Canadian Perspective

Industry
Innovation:
A Canadian
Perspective
Overview
“Canada”

90 Mills operated by 38 companies

15 companies manage multiple mills

–
67 mills in this group
–
8 Mills are affiliated with companies with
other international operations
15 are either truly independent or
operated in partnership
23 Mills operated as individual entities
–


Energy Intensive Trade Exposed (EITE)
3 companies are among Canada’s Top 100
Corporate R&D spenders for 20141 (shown by
* in chart)
–
–

FPInnovations (hatched in chart)
–
–
2
$71.2M
3 Forest Companies in the same list for
1999
Largest industry research group, 525 staff
Members: 17 companies, 44 mills
1. http://www.researchinfosource.com/top100_corp.php
Number of Mills
0 1 2 3 4 5 6 7 8 9 10
*Resolute Forest…
Kruger
Paper Excellence
*Cascades
Domtar
Irving Pulp & Paper
Canfor
Catalyst Paper
West Fraser
*Tembec
White Birch Paper
Aditya Birla Group
Atlantic Packaging
Rolland Enterprises
Sonoco
Industry Innovation circa 1990
Mill
Technical
Teams
Corporate R&D directed
priorities and activities.
Engaged in significant
fundamental research.
Corporate
R&D
FPInnovations
Corporate
R&D
Sales Group
Universities
Technical Capacity
Mill Alignment
Corporate Alignment
Responsiveness
3




Industry
Associations
Universities provided
industry specialized
graduates.
Worked with FPI on
fundamental research.
FPI connected the industry
and supporting member
company R&D with common
initiatives.
Close relationship with key
forestry universities,
R&D Centers: A Rare Breed

Strong Tradition of Corporate R&D
Centers in Canada
–
–
–
–
–
MacMillan Bloedel
Abitibi
Domtar
Avenor
Tembec

Most downsized or incorporated into the
mills in the late 1990’s

Fundamental research transitioned to
University based Centers of Excellence

Cascades & Canfor have the only 2
declared “R&D Centers” in Canada
http://www.cascades.com/en/products-and-services/services/engineering/engineering-energy-anddevelopment/research-and-development-rdc
http://www.canfor.com/pulp-and-paper/innovation
4
Industry Innovation: the move to the mill
- Product
Development
Teams
- Technical
Departments
- Skunk Works
- Employee
Involvement
Corporate
R&D
Mill Technical
Teams
Sales
Group
Innovation
Champion
FPInnovations
FPI becomes
closer to the mill
level teams
One champion directs
priorities and activities.
Industry
Associations
Technical Capacity
Mill Alignment
Corporate Alignment
Responsiveness
5




Universities
Universities take a
larger role in
industry related
research
Mill Based Innovation: is it enough?



Traditional goals
–
–
–
Process troubleshooting
Cost reduction
Grade progression
–
–
–
–
Employees
Sales Force
Suppliers
FPInnovations
–
Most “traditional” product segments are well
supplied
Processes are relatively mature, opportunities
incremental
Internal networks very effective in this case
However
–
New products need to create new demand or disrupt
existing industries.
New innovation challenges require external
networks.
6
Innovation Networks: if you can’t beat them, join them
Direct relationships
with other companies
Company 2
Mill
Technical
Teams
Sales
Group
Technical Capacity
Mill Alignment
Corporate Alignment
Responsiveness
7




FPInnovations
Innovation
Champion
Centers of
Excellence
University
3
Industry
Associations
University University
1
2
University Networks
leverage multiple schools
Network Example: Energy Reduction in Mechanical Pulping
A university-industry collaborative research program
8
Network Components Challenged
FIBRE
 Forest Innovation
by Research &
Education
– Launched 2011
– Combined 8
networks
– 100 professors, 400
students

9
expired
FPInnovations
 525 employees
 Globally respected
 Market development
capability
– Naturex collaboration

Partnership model under
pressure
– a smaller industry with
fewer players does not
necessarily suit this
approach.
Government as a Partner
Federal Programs


26 unique programs targeting Forest
Sector Innovation
20 unique Administering
Organizations
–
–
market
access &
development
,9
direct
funding or
incentives,
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Natural Resources Canada – Canadian
Forest Service (4)
National Research Council (3)
http://www.ccfm.org/pdf/CCF
M%20Innovation%20Compendi
um%20August%2017%20EN%
202015.pdf
Provincial Programs




Additive to specific Federal Programs
–
Quebec, Alberta
–
BC Hydro IPO
–
Ontario CRIBE, Northern Ontario
Heritage Fund
Supportive to Federal Programs
Regional Development Focus
Targeted Community Focus
–
10
Manitoba, Saskatchewan
fostering
collaboration
,9
innovation
capacity, 2
codes and
regulations, 2
Putting it Together
11
Pulp and Paper Green Transformation Program
- June 2009 –
March 2012
- $1 Billion
- 24 companies
- 98 projects
- 38 communities
For many
companies, their
first experience
with federal
programs
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Transformative Technologies Program
Pilot Scale Demonstration
program managed with
FPInnovations.
•
Hollow Fiber Contactor
effluent treatment at AV
Cell Pulp Mill in Atholville,
NB
•
Nanocrystalline cellulose
plant at Domtar in
partnership with Domtar
and Quebec
•
Cross Laminated Timber
(CLT) in Okanagan Falls,
BC using beetle-killed
pine and other softwoods.
http://www.ndia.org/Divisions/Divisions/ScienceAndEngineeringTechnology/Documents/C
oyle%20NDIA.pdf
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Investments in Forest Industry Transformation (IFIT)
Created in 2010
• Phase 1:
$100M
•
•
•
•
14 projects
6 mill based
Phase 2:
$90.4M
• 2015-2019
107 unique
proposals
received in the
first 2 Calls
Mill
Aditya Birla Group - AV Cell,
Atholville, NB
Alberta Pacific Boyle Mill Boyle, Alberta
Cascade - Norampac-Cabano,
Cabano Quebec
Domtar Dryden Mill - Dryden,
Ontario
Domtar Windsor Mill Windsor, Quebec
Kruger Trois Rivierès Mill Trois Rivierès, Quebec
Millar Western Forest Products
- Whitecourt, Alberta
Resolute Forest Products
Thunder Bay Mill - Thunder
Bay, Ontario
West Fraser Hinton Pulp Hinton, Alberta
Program
Project
TTP & PPGTP
Biogas from mill effluents
IFIT
Extracting biomethanol for mill operations
IFIT
IFIT
Hemicellulose Hot Water Extraction
Process
Modified Softwood Pulp Fiber for HighPerformance Composites
Project
($M)
$ 12.0
$18.0
$ 4.9
$ 10.0
$ 10.0
$ 25.0
$2.0
$4.9
TTP
NCC Pilot Plant
$32.5
$ 32.5
IFIT
Cellulose Filament Demonstration,
Application Development and
Commercialization
$15.0
$ 43.6
IFIT
Bioenergy-Effluent project
$ 6.8
$ 42.0
TTP
Lignoforce pilot-scale demonstration
facility
IFIT
Lignin Recovery Plant
$ 10.0
$ 22.0
http://www.nrcan.gc.ca/forests/federal-programs/15867
Latent innovation potential still exists.
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Funding
($M)
$ 93.2 $198.0
Now what?
Open Innovation?
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Open Innovation Examples
16
https://ninesights.ninesigma.com/rfps/-/rfp-portlet/rfpViewer/2986
Open Innovation DIY - Kruger Contest
https://www.krugerproducts.ca/english/innovation.html
17
IFIT and Open Innovation

IFIT collaboration
with NineSigma to
present an
Innovation Gallery
–

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Announced Feb 4,
2016
A tool for marketing
Canadian innovation
and attracting
additional
collaboration and
investment
https://ninesights.ninesigma.com/web/ifit
Next Steps: Policy Innovation
CHALLENGES
Investment Barriers

Energy consumption tax impacts on EITE’s

SRED credits non refundable
Business Risks

Permit amendments

Property Tax risk

Conditional Water licenses

Regulatory requirements
Policy Uncertainty

First Nations
STRENGTHS

FPInnovations

Federal Support
–


National spending as a % GDP better
than Finland, Israel & Germany1
University Networks
–
3 universities in the global top 50
–
–
–
Lignin
MFC
NCC
Industrial Scale Facilities
1
Policy innovation will likely require the same
collaborative approach that the industry adopted
1. Globe & Mail, April 23, 2016 Dan Brenitz
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Thank You
[email protected]
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