Brighter Future for Papermakers

In recent years, papermakers in Pacific Northwest have been losing ground.

However, today there is a ray of hope. Surprisingly, that optimism results from the COVID-19 pandemic.

In the first days of the pandemic, grocers couldn’t keep toilet paper on store shelves even though paper mills were running 20 percent higher than normal capacity. Cardboard plants also were operating full bore making shipping boxes for medical supplies and personal protective gear.

As Amazon and online sales ramp up because stores and shopping malls are locked down, paper manufacturers see new opportunities and are again investing millions in new equipment.

“The pulp and paper industry in Washington had become a shadow of its former self as economic trends and changing business practices have combined to shrink demand for paper products,” noted Seattle business journalist Bill Virgin in January’s Seattle Business.

In the 1980s, the Pacific Northwest was a major hub for the forest products industry and the state’s map was dotted with mills producing a wide variety of papers. Today, production is confined to consumer products (toilet paper, paper towel and facial tissue) and packaging paper (linerboard and cardboard) used to ship goods.

The good news is 90 percent of our consumer paper is manufactured domestically, including at Georgia-Pacific (GP) plants in Camas, WA, and Wauna, OR. GP spent millions to modernize the Wauna mill which was built in the early 1960s to produce newsprint, business paper and consumer products.

GP is among the “big three” toilet paper makers with 14 mills around the United States. In the first week of the pandemic, it ramped up production to 120 percent of normal capacity. Since boxes of toilet tissue and paper towel are bulky, warehouse space is limited. Production planners account for market peaks but not for pandemic demand---which occurs once in every 100 year.

The larger part of the paper market is packaging which is dominated by the world's three largest paper producing countries---China, the United States, and Japan. They account for more than half of the world’s output.

China is also the largest paper and paperboard consumer using more than 113 million metric tons annually, followed by the U.S. with a consumption rate of nearly 71 million metric tons, according to Statista information published last November.

With the continued drop in demand for paper used in newspapers, magazines and offices, paper machines are being converted to make packaging stock.

The shift started in 2017, when Packaging Corp. of America announced a $150 million conversion of a machine making office and printing papers to production of linerboard at its Wallula mill near Pasco.

Longview-based North Pacific Paper Co. (Norpac) plans to convert one of its three machines to making kraft paper (a heavy brown paper most commonly seen in grocery bags), linerboard and corrugating medium ― the fluted material that separates the inner and outer walls of boxes.

Its kraft paper is likely to be in strong demand because paper bag researchers estimate more than a four percent yearly growth rate in paper grocery bags as more states ban single- use plastic bags. Also, the COVID-19 pandemic put a damper on reusable grocery sacks.

There is hope for a brighter future for Washington papermakers.

The key to keep investments flowing to Washington is making sure our mills are cost competitive. Adequate supplies of chips and quality recyclable paper, reasonable regulations which do not jeopardize our environment or health and safety, and, above all, our desire to have those papermaking investments occur in our state are paramount.

Elected officials would be wise to look at factors influencing competitiveness now so papermakers can keep providing jobs and generating taxes and economic opportunities in Washington.

(Don C. Brunell is a business analyst, writer and columnist. He retired as president of the Association of Washington Business, the state’s oldest and largest business organization, and now lives in Vancouver. He can be contacted at theBrunells@msn.com)