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Company History of Empresas CMPC S.A. (2)

Publish Date 2011-08-25
Further Expansion: 1958-95

On his election as president, Alessandri was succeeded as general manager of CMPC by Ernesto Ayala. The following year CMPC entered Argentina, Bolivia, Ecuador, Paraguay, Peru, and Uruguay for the first time by selling its newsprint in these countries. Later these nations also began accepting the firm's cellulose, although at first radiata-pine pulp was unheard of. In 1961, Eliodoro Matte Ossa, a grandnephew of the founder, became a CMPC director. A stockbroker who made his fortune on the Bolsa de Comercio de Santiago, Matte Ossa decided that the company's stock was undervalued and, through purchases, raised his share from 2 percent in 1965 to 26 percent in 1972.

By then the left-wing government of President Salvador Allende Gossens had assumed rule over Chile, following the 1970 presidential election, in which Allende narrowly defeated Alessandri, who had returned to CMPC after serving one term as president of the republic. The government already had controlling interests in the other two producers of newsprint and tried, but failed, to win control of CMPC (by far the largest) as well and thereby achieve a monopoly capable of shutting down the opposition press. The government was overthrown in 1973. Writing in Pulp & Paper the following year, Albert W. Wilson contended, "The strong paper industry labor unions are credited with being the decisive factor in Allende's downfall. To save CMPC from going the way of hundreds of other companies, its customers paid bills in advance. Suppliers eased and lengthened credit." Nevertheless, La Papelera, as CMPC was commonly called, lost $30 million in this period.

Matte Ossa bought more shares of CMPC between 1974 and 1978 but left the company in 1976, turning over his role as a director to his son Eliodoro Matte Larrain, who replaced Ayala as general manager in 1981 and executive vice-president in 1986. Alessandri remained president until 1986, when he died and was succeeded by Ayala, who kept the post until he resigned in 2002 at the age of 86. Arturo Mackenna Iniguez, who replaced Matte as general manager, still held this post in 2004. CMPC opened a factory in the 1970s producing molded pulp products for the export of eggs and fruits. In 1979 it transferred most of its forests and timber stands to a subsidiary, Forestal Mininco S.A. In 1982 it purchased full control of Laja Crown S.A., the joint venture it had shared with the U.S. paper company Crown Zellerbach Corp. since 1964. Also that year, the company introduced Austral notebooks, Babysan disposable diapers, and Suave hygienic paper.

In 1986 CMPC purchased 77 percent of debt-ridden Industrias Forestales S.A. (Inforsa) for CLP 6.56 billion ($33.6 million). The purchase included a corrugated-boxboard plant in Buin, a newsprint plant in Nacimiento, 75,000 hectares (185,000 acres) of tree plantations, a sawmill, and 50 percent of wood-pulp producer Papeles Sudamerica S.A. With this purchase CMPC raised its share of national newsprint production to at least 53 percent, wood pulp to 43 percent, corrugated boxboard to 85 percent, and forest plantations in Chile to 17 percent. A government commission, however, fearing a CMPC newsprint monopoly, forced the company to sell (for $123 million) its Bio-Bio mill. As of 1986 CMPC had 18 subsidiaries (including an insurance company fully acquired in 1988) and was involved in eight joint ventures.

CMPC entered Argentina in 1990 by purchasing, in partnership with Procter & Gamble Co., Quimica Estrella San Luis S.A., a manufacturer of sanitary napkins and paper diapers that was renamed Productos Descartables S.A. (Prodesa). By 1996 Prodesa was manufacturing more than half the disposable diapers and paper tissue in that country, and used it to introduce Pampers, Babysan, and Ladysan in Argentina. In 1992 CMPC formed a strategic alliance with Procter & Gamble to develop markets for the aforementioned products in Argentina, Bolivia, Paraguay, Peru, and Uruguay as well as Chile. In 1994 CMPC bought Fabi S.A., an Argentine manufacturer of cement sacks, and Industria Papelera Uruguaya S.A. (Ipusa), the paper-tissue leader in the Uruguayan market. In that year also CMPC established Productos Tissue S.A. for the manufacture, sale, and distribution of hygienic products such as napkins and disposable tissues in Chile. (A similar company had been established in Argentina in 1991.)

New plantings, a higher level of technology, and optimal use of fertilization enabled the company's trees to mature faster, allowing them to be cut down in 18 rather than 23 years. Quality also improved, so that instead of being made into boxes for export to Japan as before, the wood was good enough to be sent to the United States. Reforestation included 20,000 hectares (nearly 50,000 acres) of eroded land in Coyhalque, planted with slower-growing ponderosa pine. In that year (1992) CMPC was the nation's third largest private company in sales and net worth. By 1995 it had reached second place. It was also the leading producer of paper tissues in South America and the sole forestry company making paper tissues in Chile and Argentina. La Papelera was one of the few Chilean enterprises to realize the dream of adding value to its prime materials. By this time the company held 500,000 hectares (nearly 1.25 acres) in Chile planted in radiata pine and eucalyptus, 142,000 hectares more than it held in 1990. It also held 250,000 hectares (nearly 625,000 acres) of pine and 52,000 hectares (128,000 acres) of eucalyptus in Argentina, where it owned Corepa, a wastepaper-collection operation.

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