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Strategic & Financial Arguments(TM)
for the pulp and paper industry worldwide

January 2018

Participating as industry experts in pulp and paper financing and M & A deals around the world  for over two decades, we continue to see the same mistakes made over and over.  This newsletter is designed to help you avoid costly mistakes we have seen others make.  We will be giving you one or two points each month to help improve your performance.
What may happen next to capital projects

by Jim Thompson

Last month we talked about demand outstripping capacity on capital projects.  We are already seeing this in engineering, one of the first services to be procured when one sets about accomplishing a capital project.

As this shortage works through the system, be sure and query executives on the firmness of commitments they have for all the services and components necessary to execute their capital project plans.  They may think they know the answers to such queries, because for many years they have been in the driver's seat.

But with the eruption of capital projects we've seen in the last few months, someone or some ones are going to be left unsatisfied--the services they think they can buy won't be there.

There is a clue to who will be left with a shortage of equipment and services.  Those companies cut out of the procurement chain will be those who have no track record of doing projects or those with a track record of doing projects poorly.

The engineers, constructors and equipment providers can be guaranteed to act rationally.  They will take care of those customers who have been taking care of them through the lean years. The Johnny-come-latelies to the capital project game will be left wanting.

For you as an analysts, it means budgets may be overrun, schedules may slip and production may be late to market.  

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If you have a casual question or a major deal, call me on my personal cell phone - 404-822-3412 or email me at jthompson@taii.com. We are here to help.




Jim Thompson, CEO
Talo Analytic International, Inc.

JRT Banker's Engineer