1. NE Minnesota Pulp and Paper Industry: A decade of change 2010-2020

2. Jussi Pesonen, Pres/CEO UPM: “Structural changes in the industry – intensified partly by the financial crises – are both inevitable and necessary. The new forest industry is currently seeking its form.” 1/2009

3. NE MN Pulp and Paper Mills:

4. Paper End Use and Consumption Trends End Uses (NA) Demand by Grade (NA)

5. But Pricing Has Held, Mostly… Q: WHY?

6. A: M&A/Cost Control/Efficiency/Capacity Shuts

7. Mill Mgr. Challenge: Compete in Class 48 46 84 99 0 200 400 600 800 1000 1200 1400 1600 Lowest Cost Mill“Our” MillAverage Cost MillHighest Cost Mill CFS Cash Cost (US $ / Ton) Ongoing Capex / Credits Chemicals Materials Hourly Labor Overhead Energy Fiber

8. Mill Mgr Challenge: Compete in World Total Cash Cost and Cumulative Production Cumulative Production, FST per Year (x1,000,000) 0246810121416 C o s t, U S D p e r F S T 0 100 200 300 400 500 600 700 800 900 0 Asia Pacific Europe North America © 2006-2011 Fisher International, Inc. Source: FisherSolve™

9. Mgr Challenge: New Product Development (Seeking higher margins)

10. Corporate Challenge: Revolutionary Product Development (seeking growing and high margin market) Sappi – Dissolving Pulp UPM – Biodiesel

11. What can NE MN Landscape Plan Do? Keep fiber costs down Retain logging, forest mgmt and mill infrastructure Support new developments at mill sites and in region Other: The new forest industry is currently seeking its form.” J. Pesonen, UPM