&EPA
United States
Environmental Protection
Agency
Office of Water Regulations
and Standards
Washington DC 20460
EPA 440/2-80-086
December 1980
Water
Economic Impact Analysis of
Proposed Effluent Limitations
Guidelines, New Source
Performance Standards and
Pretreatment Standards for the
Pulp, Paper and
Paperboard Mills
Point Source Category
Volume II
QUANTITY
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ECONOMIC IMPACT ANALYSIS OF PROPOSED EFFLUENT
LIMITATIONS GUIDELINES, NEW SOURCE
PERFORMANCE STANDARDS AND PRETREATMENT
STANDARDS FOR THE PULP, PAPER AND PAPERBOARD MILLS
POINT SOURCE CATEGORY
Volume II
Detailed Description of Product Sectors
for
U. S. Environmental Protection Agency
Office of Water Regulations and Standards
Washington, D.C. 20460
by
Meta Systems Inc
Cambridge, Massachusetts
Data Resources, Inc.
Lexington, Massachusetts
Contract Number
68-01-4675
December 1980
U.S. Environmental Protection Agency
It-V--ion 5, La he-dry (f??L-lS'
XT0 3' Do"-b"i: SUoet, fioom 1670
Chicago, IL 60604
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TABLE OF CONTENTS
Page
Introduction 1
Dissolving Pulp 4
Product Sector 4
Mills 5
Other Market Pulp 8
Product Sector 8
Mills 10
Unbleached Kraft Paper 13
Product Sector 13
Mills 15
Bleached Kraft Paper 18
Product Sector 18
Mills 20
Glassine and Greaseproof Papers 23
Product Sector 23
Mills 24
Tissue 27
Product Sector 27
Mills 29
Special Industrial Papers 33
Product Sector 33
Mills 34
Newsprint 37
37
Product Sector
Mills 39
Coated Printing Papers 42
Product Sector 42
Mills 44
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Page
Uncoated Freesheet 47
Product Sector 47
Mills 49
Uncoated Groundwood Paper 52
Product Sector 52
Mills 54
Thin Papers 57
Product Sector 57
Mills 59
Solid Bleached Bristols 62
Product Sector 62
Mills 64
Cotton Fibre 66
Product Sector 66
Mills 68
All Other Paper 70
Product Sector 70
Mills 71
Unbleached Kraft Linerboard 74
Product Sector 74
Mills 76
Bleached Kraft Linerboard 79
Product Sector 79
Mills 80
Bleaching Foldingboard 83
Product Sector 83
Mills 85
Solid Bleached Board 88
Product Sector 88
Mills 90
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Page
Semi-Chemical Corrugating Medium 92
Product Sector 92
Mills 94
Recycled Linerboard 97
Product Sector 97
Mills 99
Recycled Corrugating Medium 102
Product Sector 102
Mills 104
Recycled Foldingboard 106
Product Sector 106
Mills 108
Construction Paper and Board Ill
Product Sector HI
Mills 113
Molded Pulp Products H6
Product Sector 116
Mills H7
All Other Paperboard 120
Product Sector ^20
Mills 122
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INTRODUCTION
The following 26 memos describe each of the product sectors into which
the Pulp, Paper, and Paperboard Industry has been divided for the purposes
of economic impact analysis. They provide information required in Task 3,
"Development of a Financial and Economic Data Base on the Industry,"
Part 1, "Industry Segmentation" of Exhibit "A" — Statement of Work,
October 8, 1976. Table 1 lists the 26 product sectors by production
capacity. For each product sector, the following information is provided:
a. Type of firms
o Product sector definition
o Size, single versus multi-plant
o Percent of total industry production capacity
o Level of vertical and horizontal integration
o Concentration
o Capacity utilization rate
o Ownership characteristics (private vs. public)
o Major technological and/or economic trends
b. Type of mills
o Number
o Size
o Age, productivity, and technological obsolescence
o Location
o Indirect dischargers
o Employment
o Planned capacity expansion
Product sector definitions are standard API definitions and are those
used in the 308 Survey. Planned capacity expansion refers to all capacity
expansion that was in planning or implementation stages in 1978; no
completion date is assigned.
In order to protect the confidentiality of single mills, all tables
entries which would reveal information about aggregates of four or less
mills have been replace with an asterisk (*).
All sources are cited in abbreviated form. Full references are listed
below:
Arthur D. Little, Inc., Economic Impacts of Pulp and Paper Industry
Compliance with Environmental Regulation, Volume II, Price and Demand
Effects on the Industry's Major Product Sectors, May 1977, Draft,
EPA 230/3-76-014.
Data Resources, Inc., Pulp and Paper Review, various issues.
Data Resources, Inc., discussions with the Pulp and Paper Service
Staff of the Forest Products Group.
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TABLE 1. PRODUCT SECTOR BY CAPACITY
Product Sector Name
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
Unbleached Kraft Linerboard
Uncoated Freesheet
Coated Printing Paper
Semi-Chemical Corrugating Medium
Unbleached Kraft Paper
Tissue
Newsprint
Construction Paper and Board
Recycled Foldingboard
All Other Paperboard
Bleached Foldingboard
Solid Bleached Board
Other Market Pulp
Dissolving Pulp
Recycled Corrugating Medium
Uncoated Groundwood Paper
Bleached Kraft Paper
Recycled Linerboard
Solid Bleached Bristols
Special Industrial Paper
Thin Papers
Molded Pulp Products
All Ofeher Paper
Glassine and Greaseproof Paper
Cotton Fibre Paper
Bleached Kraft Linerboard
Production
Capacity
(Tons per Day)
42,424
20,452
13,869
13,756
12,953
12,792
11,691
10,682
10,037
8,137
6,510
5,425
5,057
4,495
3,900
3,572
3,511
3,053
2,726
2,209
1,716
1,033
665
656
552
315
Percent of
Total Paper
Paperboard ,
and Market
Pulp Capacity
20.98
10.12
6.86
6.80
6.41
6.33
5.78
5.28
4.96
4.02
3.22
2.68
2.50
2.22
1.93
1.77
1.74
1.51
1.35
1.09
0.85
0.51
0.33
0.32
0.27
0.16
Total Paper, Paperboard, and Market Pulp
Capacity 202,188 100.00
Source: 308 Survey.
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Fibre Box Association
Paper Trade Journal, published by Vance Publishing Corp., 133 E.
58th St., New York, NY 10022.
Lockwood's Directory of the Paper and Allied Trades, Vance Publishing
Corporation, New York, NY, 1978.
Pulp and Paper, published by Miller Freeman Publications, 500 Howard St.,
San Francisco, CA 94105.
Kline Guide to the Paper and Pulp Industry, 1976.
U.S. Environmental Protection Agency Financial Survey for the Pulp,
Paper and Paperboard Industry (308 Survey), 1978.
American Paper Institute, Paper, Paperboard, Woodpulp 1976-1979,
Capacity Survey with Additional Data for 1980-1982, New York, NY.
E.G. Jordan Company, "Average Daily Production [of U.K. Pulp, Paper,
and Paperboard Mills]," 1978.
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DISSOLVING PULP 4
Product Sector
Definition of Product Sector
Dissolving pulp in this report is defined as highly refined bleached
sulfite or sulphate pulps with a high content of alpha (pure cellulose) fiber.
Firms in Product Sector
There are six U.S. firms that produce dissolved pulp. The major
producers are:
ITT-Rayonier, Inc.
The Proctor & Gamble Co.
Alaska Lumber & Pulp Co.
International Paper Co.
Louisiana-Pacific Corp.
Weyerhaeuser Co.
Source: Meta Systems estimates based on Lockwood's, DRI estimates and
E. C. Jordan estimates.
Concentration
In 1978, the top five firms' capacity share was 89.8 percent and the top
six firms' capacity share was 100 percent. This is thus a highly concen-
trated product sector (Meta Systems estimates based on Lockwood's, DRI esti-
mates, and E. C. Jordan estimates).
Total Capacity and Utilization Rate
U.S. capacity to produce dissolving pulp is 4,495 tons per day, or 2.22
percent of total U.S. paper, paperboard, and market pulp production capacity
(308 Survey). In 1977, U.S. firms' capacity utilization rate was 95 percent
(Pulp and Paper, December 1977).
Vertical Integration
All of the firms in this product sector are vertically integrated back-
ward to raw materials (i.e., wood) (DRI estimate). No mills or 0 percent of
the mills in this product sector include converting operations (308 Survey).
Horizontal Integration
The six largest firms are horizontally integrated to other economic pro-
duction sectors as indicated by the following earnings percentages:
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Firm
ITT-Rayonier, Inc.
The Proctor & Gamble Co.
Alaska Lumber & Pulp Co.
International Paper Co.
Louisiana-Pacific Corp.
Weyerhaeuser Co.
Percent Earnings Publicly or
in Paper and Privately
Paperboard Sector Owned
51%
15%
79%
12%
43%
Public
Public
Public
Public
Public
Source: Paper Trade Journal, June 30, 1979, pp. 44-47.
Economic and Technological Trends
Dissolving pulp is high purity chemical cellulose which is converted by
chemical processes into rayon, cellophane, acetate, plastics, and cellulose
derivatives. U.S. capacity to produce dissolving pulp has remained nearly
unchanged through the 1970's. This is because U.S. demand for dissolving
pulp has decreased slowly since 1974 and will continue to decrease in the
future. The market for textile filament and staple rayon, two key end uses
of dissolving pulp, is depressed due to excess polyester production capacity.
Demand for high-tenacity rayon (tire cord) is nil. Cellophane and textile
acetate production have also decreased, but acetate tow production for cig-
arette filters remains strong. The long-term projection of export demand is
favorable.
Traditionally, the United States is a net exporter of dissolving pulps,
though (Canadian imports accounted, in the mid 1970's, for over ten percent of
dissolving pulp consumed in the United States. Canadian firms specialize in
pulp production, including dissolving pulp, for export rather than integrat-
ing to on-site paper production. This is partly because Canadian pulp can be
exported duty-free while most paper products cannot, and partly because
transportation costs per unit of pulp are lower than per unit of paper.
Also, Canadian firms have a competitive advantage in high-grade market pulp
from northern softwoods, whereas U.S. producers have competitive advantages
in lower grades made from southern pine. Many domestic producers of dissolv-
ing pulp are small and specialize only in this product.. (Pulp and Paper,
December 1977; discussions with DRI Pulp and Paper Service staff.)
Mills
Number of Mills
The six firms in this product sector control nine mills which produce
dissolving pulp. These are listed by production sub-category:
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Percent of Mills in Production Sub-
Number of Mills This Product Sector category Name
* * Dissolving Kraft
* * Dissolving Sulfite Pulp
100%
Source: 308 Survey
Size
The average mill capacity is 854 tons per day, with a standard deviation
of 379; the median capacity is 638 tons per day (308 Survey).
Location
Dissolving pulp producing mills are concentrated in the southeast and
northwest parts of the United States with a regional breakdown as follows:
Region Number of Mills
Northeast 0(0%)
Southeast * ( *%)
North Central 0 (0%)
Northwest * ( *%)
West and Southwest 0 ( 0%)
Source: 308 Survey
Indirect Dischargers
No mills in the dissolving pulp production sector are indirect dis-
chargers (308 Survey).
Planned Capacity Expansion
There is no expected planned daily capacity expansion in the dissolving
pulp product sector (308 Survey). Capacity reduction as reported in the AIP
Survey from 1978 to 1982 is 40,000 tons annually (AIP Survey). Future
capacity in the dissolving pulp product sector based on 308 Survey data is
thus higher than that reported by AIP.
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Age and Productivity
The age structure of the dissolving pulp product sector is moderately
old. Most mills were built in the early to middle 1960s and none have been
added since 1972. However, productivity growth in this product sector is
high (4 percent per year) and the degree of technological obsolesence is low
(DRI estimate). Capital investment during the past five years by mills pro-
ducing in this product sector equals $518,473,000. Investment per unit
capacity equals $67,000, which is high compared to the industry as a whole.
(308 Survey) (Note: High capital investment does not necessarily correlate
with low-cost production.)
Employment
Meta Systems estimates that the Dissolving pulp product sector employed
roughly 5,000 people in 1978. This represented approximately 2.0 percent of
total pulp, paper, and paperboard mill employment, (Meta Systems estimates
based on E.G. Jordan data.)
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OTHER MARKET PULP
Product Sector
Definition of Product Sector
Market pulp in this report is defined as pulp produced for sale to pulp
consumers. All types of pulp except dissolving pulp are included. This
sector does not include transferred pulp, but does include shipments to
affiliated mills outside the United States.
Firms in Product Sector
There are 47 U.S. firms that produce other market pulp. The major
producers are:
Weyerhaeuser Co.
Scott Paper Co.
Georgia-Pacific Corp.
International Paper Co.
Crown Zellerbach Corp.
Hammermill Paper Co.
Louisiana-Pacific Corp.
Bowater, Inc.
Source: Meta Systems estimates based on Lockwood's, DRI estimates,
and E.G. Jordan estimates.
Concentration
In 1978, the top five firms' capacity share was 42.7 percent, and the
top eight firms' capacity share was 56.1 percent. This is thus an uncon-
centrated product sector. (Meta Systems estimates based on Lockwood's, DRI
estimates, and E.G. Jordan estimates.)
Total Capacity and Utilization Rate
U.S. capacity to produce other market pulp is 5,057* tons per day, or
2.50 percent of total U.S. paper, paperboard, and market pulp production
capacity (308 Survey). The 1979 capacity utilization rate for U.S. firms
producing paper grade chemical market pulp was 89 percent (Pulp and Paper,
September 1979).
Most market pulp comes from mills which have a greater pulp production
capacity (constructed to achieve greater economies of scale) than paper or
paperboard capacity. Over time, many mills increase their paper and/or board
*This figure is an estimated capacity. Mill capacity allocated to
market pulp may vary from year to year depending on demand considerations.
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production capacity; thus, there is a continual shifting in and out of
market pulp production (DRI estimate).
Vertical Integration
All of the firms in this product sector are vertically integrated back-
ward to raw materials (i.e., wood) (DRI estimate). Twenty-one mills or 28
percent of the mills in this product sector include converting operations
(308 Survey).
Horizontal Integration
The IS largest firms are horizontally integrated to other economic
production sectors, as indicated by the following earnings percentages:
Firm
Weyerhaeuser Co.
Scott Paper Co.
Georgie-Pacific Corp.
International Paper Co.
Crown Zellerbach Corp.
Hammermill Paper Co.
Louisiana-Pacific Corp.
Bowater, Inc.
ITT-Rayonier, Inc.
The Proctor & Gamble Co.
Champion International
Diamond International Corp.
Western Kraft Paper Group
Willamette Industries, Inc.
Brown Co.
Federal Paper Board Co., Inc.
Percent Earnings
in Paper and
Paperboard Sector
43%
92%
20%
79%
55%
93%
12%
44%
51%
15%
47%
54%
53%
98%
Publicly or
Privately
Owned
Public
Public
Public
Public
Public
Public
Public
Public
Public
Public
Public
Public
Public
Public
Source: Paper Trade Journal, June 30, 1979, pp. 44-47
Economic and Technological Trends
Economic trends and technology changes impact both production of and
demand for other market pulp. The most significant technological change is
the long-term substitution of bleached sulfate for bleached sulfite pulp.
This is largely because bleached sulfite pulp capacity has remained static
(as a result of pollution-related closures). Also, southern mills can use
only Kraft pulping processes on southern pine trees, and there has been
recent expansion of southern pulp mills.
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10
Market pulp is freely traded throughout the world, and the U.S. market
is highly sensitive to world market conditions. Traditionally, the United
States is a net importer of paper grade pulps.
Imports of Canadian market pulp accounted, in the mid-1970s, for over
50 percent of the bleached paper grade market pulp consumed in the United
States. Many Canadian pulp mills specialize in market pulp production rather
than forward integrating to on-site paper production, since they have com-
petitive advantages for high-grade pulp over U.S. mills and Canadian pulp can
be exported duty-free, while most paper products cannot.
Domestically produced bleached market pulp is a residual product, since
most domestic paper producers sell what they can after meeting their own
papermaking requirements. Thus, if capacity is tight in the U.S. tissue,
printing, and freesheet paper sectors, the supply of bleached market pulp
is also likely to be tight. (ADL, 1977; DRI, Pulp and Paper Review, December
1977.)
Mills
Number of Mills
The 47 firms in this product sector control 76 mills which produce other
market pulp. These are listed below by production subcategory:
Number Percent of Mills in
of Mills This Product Sector Production Subcategory Name
* * Dissolving Kraft
8 11% Market Bleached Kraft
8 11% BCT Bleached Kraft
5 8% Fine Bleached Kraft & Soda
* * Unbleached Kraft (Linerboard)
* * Semi-Chemical
* * Unbleached Kraft & Semi-Chemical
5 7% Dissolving Sulfite Pulp
* * Papergrade Sulfite
* * Unbleached Kraft (Bag)
34 45% Misc. Integrated Mills
* * Misc. Secondary Fiber Mills
* * Nonintegrated Tissue
76 100%
Source: 308 Survey.
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ii
Size
The average mill capacity is 920 tons per day, with a standard devia-
tion of 571, and the median capacity is 886 tons per day (308 Survey).
Locations
Many market pulp-producing mills are located in the Southeast, while
other are in the Northwest and throughout the United States, with a regional
breakdown as follows:
Region
Northeast
Southeast
North Central
Northwest
West and Southwest
Source: 308 Survey.
Number of Mills
8 (11%)
35 (47%)
( 9%)
(25%)
( 9%)
7
19
7
76
Indirect Dischargers
Seven mills, or 9 percent of the mills in the other market pulp product
sector, are indirect dischargers. The percents of mills in each region
which are indirect dischargers are as follows:
Region
Northeast
Southeast
North Central
Northwest
West and Southwest
Source: 308 Survey.
% of Mills
Planned Capacity Expansion
Planned daily capacity expansion in the pulp product sector is expected
to be 10,159 short tons per day. This represents an expansion of capacity
in 60 mills. However, no all this increased capacity will necessarily go
toward market pulp; the increased pulp capacity may be used to increase paper
or paperboard production. A capital investment of $1,288,922,000 is planned
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12
for this expansion. These data apply to projects which are under construction
in 1978 or budgeted and approved for expenditure. (308 Survey)
Assuming 349 operating days per year as listed in the American Paper
Institute (API) capacity survey, the planned daily capacity expansion
reported in response to the 308 Survey equals 3,545,000 tons annually.
Capacity expansion as reported in the API Survey from 1978 to 1982 is
844,000 tons annually (API Survey). The 308 Survey reported capacity
expansion for the other market pulp product sector is thus much higher than
capacity expansion reported by API.
Age and Productivity
The age structure in the other market pulp product sector is fairly new
with new mills coming regularly on-stream. Productivity growth in this
product sector was exceptional in the 1960s and slowed considerably in the
1970s. The degree of technological obsolescence depends on the specific
process used, and varies within the product sector. (Discussions with DRI
Pulp and Paper Service staff, August 2, 1979.) Capital investment during
the past five years by mills producing in this product sector totals
$3,793,949,000. Investment per unit capacity equals $55,000, which is moder-
ately high compared to the industry as a whole. (308 Survey) (Note: High
capital investment does not necessarily correlate with low-cost production.)
Employment
Meta Systems estimates that the market pulp product sector employed
roughly 15,400 people in 1978. This represented approximately 6.2 percent of
total pulp, paper, and papaerboard mill employment. (Meta Systems estimates
based on E.G. Jordan data.)
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UNBLEACHED KRAFT PAPER
Product Sector
Definition of Product Sector
Unbleached Kraft paper is defined in this report as paper containing
more than 50 percent unbleached sulfate wood pulp that is used for wrapping
paper, shipping sack, bag and sack other than shipping sack, and other
converting papers that are 18 pounds and over.
Firms in Product Sector
There are 29 U.S. firms that produce unbleached Kraft paper. The major
producers are:
St. Regis Paper Co.
Continental Forest Industries
International Paper Co.
Union Camp Corp.
Crown Zellerbach Corp.
Georgia-Pacific Corp.
Boise Cascade Corp.
Gulf States Paper Corp.
Hudson Pulp & Paper Corp.
Longview Fibre Co.
Source: Meta Systems estimates based on Lockwood's, DRI estimates,
and E. C. Jordan estimates.
Concentration
In 1978, the top five firms' capacity share was 52.2 percent and the top
eight firms' capacity share was 66.2 percent. This is thus a moderately con-
centrated product sector (Meta Systems estimates based on Lockwood's, DRI
estimates, and E. C. Jordan estimates).
Total Capacity and Utilization Rate
U.S. capacity to produce unbleached Kraft paper is 12,953* tons per day
or 6.41 percent of total U.S. paper, paperboard, and market pulp production
capacity (308 Survey). The 1979 capacity utilization rate was estimated at
92.3 percent (Paper Trade Journal, June 30, 1979 estimates).
*One mill in this product sector did not report capacity data and was
not included in this total.
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14
Vertical Integration
Most of the firms in this product sector are vertically integrated (DRI
estimates). Vertically integrated here means integrated from raw materials
(wood, wastepaper, etc.) to converted product. Twenty mills or 44 percent of
the mills in this product sector include converting operations (308 Survey).
Horizontal Integration
The 15 largest firms are horizontally integrated to other economic pro-
duction sectors as indicated by the following earnings percentages:
Firm
St. Regis Paper Co.
Continental Forest Industries
International Paper Co.
Union Camp Corp.
Crown Zellerbach Corp.
Georgia-Pacific Corp.
Boise Cascade Corp.
Gulf States Paper Corp.
Hudson Pulp S Paper Corp.
Longview Fibre Co.
Champion International
Gilman Paper Co.
Westvaco Corp.
Weyerhaeuser Co.
Hammermill Paper Co.
Percent Earnings Publicly or
in Paper and Privately
Paperboard Sector Owned
82%
22%
79%
89%
55%
20%
53%
90%
83%
47%
90%
43%
93%
Public
Public
Public
Public
Public
Public
Public
Public
Public
Public
Public
Public
Public
Source: Paper Trade Journal, June 30, 1979, pp. 44-47.
Economic and Technological Trends
Shipments of unbleached Kraft papers peaked in 1974. Within this sector,
shipments of unbleached Kraft wrapping and converting paper have declined in
absolute terms since 1974, while shipments of shipping sack have remained
constant (due in part to several mill strikes in 1978). Unbleached grocery
bag and sack shipments peaked in 1978. These and shipping sacks have with-
stood recent plastics competition due to better packaging properties at a
competitive unit cost.
Reasons why consumption of products traditionally wrapped in unbleached
Kraft packaging papers has increased faster than demand for these papers
include:
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15
o the durability of plastic wraps and bags;
o use of lower basis weight papers;
o the printability of plastic products; and
o an increased proportion of total food expenditures spent on
eating out.
Source: ADL, 1977; DRI, Pulp and Paper Review, December 1977, p. 55
and April 1978, pp. 49-50.
Mills
Number of Mills
The 29 firms in this product sector control 44 mills which produce
unbleached Kraft paper. These are listed below by production subcategory:
Number
of Mills
Percent of Mills in
This Product Sector
11%
9
16
*
*
*
*
*
6
44
20%
36%
*%
*%
*%
*%
*%
14%
100%
Production Subcategory Name
Unbleached Kraft and
Semi-Chemical
Unbleached Kraft (Bag)
Misc. Integrated Mills
Deink (Tissue)
Tissue from Wastepaper
Paperboard from Wastepaper
Nonintegrated Fine Papers
Nonintegrated Paperboard
Misc. Nonintegrated Mills
Source: 308 Survey.
Size
The average mill capacity is 921 tons per day, with a standard
deviation of 758, and the median capacity is 886 tons per day (308 Survey).
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16
Location
Unbleached Kraft paper producing mills are located throughout the
United States, many in the southeast, with a regional breakdown as follows:
Region Number of Mills
Northeast 7 (16%)
Southeast 20 (45%)
North Central 8 (18%)
Northwest * ( *%)
West and Southwest * ( *%)
44
Source: 308 Survey.
Indirect Dischargers
Seven mills or 16 percent of the mills in the unbleached Kraft
product sector are indirect dischargers. The percents of mills in each
region which are indirect dischargers are as follows:
Region
% of Mills
Northeast *
Southeast *
North Central *
Northwest *
West and Southwest 0
Source: 308 Survey.
Planned Capacity Expansion
Planned daily capacity expansion in the unbleached Kraft product
sector is expected to be 149 short tons per day. This represents an
expansion of capacity in four mills. This expansion will be an increase
of 1 2 percent in the capacity to produce unbleached Kraft paper by all
mills A capital investment of $14,079,000 is planned for this expansion.
These data apply to projects which were under construction in 1978 or
budgeted and approved for expenditure. (308 Survey)
Assuming 356 operating days per year as listed in the American Paper
institute (API) capacity survey, the planned daily capacity expansion
reported in response to the 308 Survey equals 53,000 tons annually.
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17
Capacity expansion as reported in the API Survey from 1978 to 1982 is
80,000 tons annually (API Survey). The 308 Survey reported capacity
expansion for the unbleached Kraft paper product sector is thus slightly
lower than capacity expansion reported by API.
Age and Productivity
The age structure in the unbleached Kraft product sector was in
somewhat of a decline in the late 1970s after a revitalization in the 1960s.
Productivity growth in this product sector was high (3 to 4 percent per
year) in the 1960s and low (1 to 2 percent per year) in the 1970s. The
degree of technological obsolescence in this product sector is low (DRI
estimates). Capital investment during the past five years by mills
producing in this product sector totals $1,512,810,000. Investment per unit
capacity equals $36,000, which is moderately low compared to the industry
as a whole. (308 Survey) (Note: High capital investment does not
necessarily correlate with low-cost production.)
Employment
Meta Systems estimates that the unbleached Kraft product sector employed
roughly 12,100 people in 1978. This represented approximately 4.8 percent
of total pulp, paper, and paperboard mill employment. (Meta Systems estimate
based on E.G. Jordan data.)
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BLEACHED KRAFT PAPER
Product Sector
Definition of Product Sector
Bleached Kraft paper is defined in this report as paper used for wrap-
ping paper (e.g., delicatessen paper, butcher paper), shipping sack, bag
and sack other than shipping sack, and for other converting papers which
contain more than 50 percent bleached Kraft wood pulp.
Firms in Product Sector
There are 30 U.S. firms that produce bleached Kraft paper. The major
producers are:
Crown Zellerbach Corp.
International Paper Co.
Longview Fibre Co.
St. Regis Paper Co.
Scott Paper Co.
Union Camp Corp.
James River Corp.
Menominee Paper Co., Inc.
Source: Meta Systems estimates based on Lockwood's, DRI estimates, and
B.C. Jordan estimates.
Concentration
In 1978, the top five firms' capacity share was 64.2 percent, and the
top eight firms' capacity share was 78.0 percent. This is thus a concen-
trated product sector. (Meta Systems estimates based on Lockwood's, DRI
estimates, and E.G. Jordan estimates.)
Total Capacity and Utilization Rate
U.S. capacity to produce bleached Kraft paper is 3,511* tons per day,
or 1.74 percent of total U.S. paper, paperboard, and market pulp production
capacity (308 Survey). The 1979 estimated capacity utilization rate for
packaging paper other than unbleached Kraft (including bleached Kraft
papers) was 82.5 percent (Paper Trade Journal, June 30, 1979, estimate).
*Five mills in this product sector did not report capacity data and
were not included in this total.
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19
Vertical Integration
Most of the firms in this product sector are vertically integrated
(DRI estimates). Vertically integrated here means integrated from raw
materials (wood, wastepaper, etc.) to converted product. Twenty-one mills,
or 51 percent of the mills in this product sector, include converting oper-
ations (308 Survey).
Horizontal Integration
The 17 largest firms are horizontally integrated to other economic
production sectors, as indicated by the following earnings percentages:
Firm
Crown Zellerbach Corp.
International Paper Co.
Longview Fibre Co.
St. Regis Paper Co.
Scott Paper Co.
Union Camp Corp.
James River Corp.
Menominee Paper Co., Inc.
Georgia-Pacific Corp.
Boise Cascade Corp.
Hammermill Paper Co.
Weyerhaeuser Co.
Brown Co.
Equitable Bag Co., Inc.
Fraser Paper Ltd.
Merrimac Paper Co.
Shawano Paper Mills, Inc.
Percent Earnings
in Paper and
Paperboard Sector
55%
79%
83%
82%
92%
89%
29%
20%
53%
93%
43%
78%
80%
Publicly or
Privately
Owned
Public
Public
Public
Public
Public
Public
Public
Public
Public
Public
Public
Public
Public
Source: Paper Trade Journal, June 30, 1979, pp. 44-47.
Economic and Technological Trends
The chief competition for packaging material for bleached Kraft paper
is high-density polyethylene bags which penetrated the bleached bag market
heavily in the 1970s and have captured new markets as they have opened up.
Plastic bags and wraps are competitively priced and have many superior user
characteristics with respect to bleached bag, sack, and wrap. Among the
most important plastics' inroads into the bleached Kraft paper market have
been the switch by many supermarkets to low-density polyethylene films for
packaging and the increased use by farm fertilizer producers of plastic sacks
-------
20
rather than 50-pound bleached Kraft shipping sacks. Many retail merchandise
stores have also switched to plastic bags due to:
o higher consumer appeal;
o tear resistancy with associated light weight;
o good printability;
o multicolor characteristics;
o acceptability of small orders so small stores can have their own
printed bags; and
o easy storage due to light weight and compactness.
The only bright spot in the bleached bag market has been the fast-food
industry. Usage in this sector increased rapidly in the 1970s, but the
upswing in this market has been overwhelmed by the loss of share in other
bleached bag markets (DRI, Pulp and Paper Review, December 1977, p. 57).
Mills
Number of Mills
The 30 firms in this product sector control 40 mills which produce
bleached Kraft paper. These are listed below by production subcategory:
Number Percent of Mills in
of Mills This Product Sector Production Subcategory Name
* * Fine Bleached Kraft & Soda
* * Unbleached Kraft (Bag)
17 42% Misc. Integrated Mills
* * Deink (Tissue)
* * Tissue from Wastepaper
* * Paperboard from Wastepaper
* * Misc. Secondary Fiber Mills
* * Nonintegrated Fine Papers
* * Nonintegrated Tissue Papers
* * Nonintegrated Lightweight
* * Nonintegrated Paperboard
6 15% Misc. Nonintegrated Mills
40 100%
Source: 308 Survey.
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21
Size
The average mill capacity is 653 tons per day, with a standard devia-
tion of 601, and the median capacity is 420 tons per day (308 Survey).
Location
Bleached Kraft paper produ9ing mills are located throughout the United
States, with a regional breakdown as follows:
Region Number of Mills
Northeast 10 (24%)
Southeast 12 (29%)
North Central 11 (27%)
Northwest * ( *%)
West and Southwest * ( *%)
40
Source: 308 Survey.
Indirect Dischargers
Nine mills, or 29 percent of the mills in the bleached Kraft product
sector, are indirect dischargers. The percents of mills in each region
which are indirect dischargers are as follows:
Region % of Mills
Northeast *%
Southeast 0%
North Central *%
Northwest *%
West and Southwest *%
Source: 308 Survey.
Planned Capacity Expansion
Planned daily capacity expansion in the bleached Kraft product sector
is expected to be 465 short tons per day. This represents a reduction of
capacity in one mill, an expansion of capacity in five mills, and one mill
with new capacity coming on-stream. This expansion will be an increase of
13.3 percent in the capacity to produce bleached Kraft paper by all mills.
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22
A capital investment of $119,847,000 is planned for this expansion. These
data apply to projects which were under construction in 1978 or budgeted
and approved for expenditure. (308 Survey)
Assuming 350 operating days per year as listed in the American Paper
Institute (API) capacity survey, the planned daily capacity expansion re-
ported in response to the 308 Survey equals 163,000 tons annually. Capacity
expansion as reported in the API Survey from 1978 to 1982 is 38,000 tons
annually (API Survey). The 308 Survey reported capacity expansion for the
bleached Kraft paper product sector is thus higher than capacity expansion
reported by API.
Age and Productivity
The age structure in the bleached Kraft product sector is generally
older than in the unbleached sector which reached its height in the 1960s.
There have been no new mills or machines added recently. Productivity
growth in this product sector has been lower than unbleached Kraft, papers.
The degree of technological obsolescence in this product sector is rela-
tively high (DRI estimates). Capital investment during the past five years
by mills producing in this product sector totals $1,214,639,000. Investment
per unit capacity equals $45,000, which is moderate compared to the industry
as a whole. (308 Survey) (Note: High capital investment does not neces-
sarily correlate with low-cost production.)
Employment
Meta Systems estimates that the bleached Kraft product sector employed
roughly 5,700 people in 1978. This represented approximately 2.3 percent
of total pulp, paper, and paperboard mill employment. (Meta Systems estimates
based on B.C. Jordan data.)
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GLASSINE AND GREASEPROOF PAPER
Product Sector
Definition of Product Sector
Glassine and greaseproof paper is defined in this report as paper used
for industrial converting, including glassine, greaseproof, and vegetable
parchment, and some bleached and unbleached sulfite packaging papers.
Firms in Product Sector
There are eight U.S. firms that produce glassine and greaseproof paper.
The major producers are:
St. Regis Paper Co.
Philip Morris Industries Paper Group
Deerfield Specialty Papers, Inc.
James River Corp.
Crown Zellerbach Corp.
Mosinee Paper Corp.
Westfield River Paper Co., Inc.
Weyerhaeuser Co.
Source: Meta Systems estimates based on Lockwood's, DRI estimates, and
E.G. Jordan estimates.
Concentration
In 1978, the top five firms' capacity share was 80.5 percent, and the
top eight firms' capacity share was 100 percent. This is thus a highly con-
centrated product sector. (Meta Systems estimates based on Lockwood'_s, DRI
estimates, and E.G. Jordan estimates).
Total Capacity and Utilization Rate
U.S. capacity to produce glassine and greaseproof paper is 656* tons
per day, or 0.32 percent of total U.S. paper, paperboard, and market pulp
production capacity (308 Survey). The estimated 1979 capacity utilization
rate for packaging paper other than unbleached Kraft (including glassine
and greaseproof paper) was 82.5 percent (Paper Trade Journal, June 30, 1979,
estimate).
*One mill in this product sector did not report capacity data and was
not included in this total.
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24
Vertical Integration
About half the firms in this product sector are vertically integrated
(DRI estimates) . Vertically integrated here means integrated from raw
materials (wood, wastepaper, etc.) to converted product. Six mills, or 60
percent of the mills in this product sector, include converting operations
(308 Survey) .
Horizontal Integration
The eight largest firms are horizontally integrated to other economic
production sectors, as indicated by the following earnings percentages:
Percent Earnings Publicly or
in Paper and Privately
Firm Paperboard Sector Owned __
_, Public
St. Regis Paper Co. a^° Pnhlic
Philip Morris Industries Paper Group 5% __
Deerfield Specialty Papers, Inc. ~ Public
James River Corp. 29% ^
Crown Zellerbach Corp. ^=>*
Mosinee Paper Corp.
Westfield River Paper Co., Inc. ~
43% ir UP -Lie
Weyerhaeuser Co.
Source: Paper Trade Journal, June 30, 1979, pp. 44-47.
Economic and Technological Trends
Economic trends and technology changes have affected glassine and
greaseproof paper in much the same way as bleached Kraft papers. The major
recent trend has been severe competition from plastics. In ^ra1'^"
quality glassine and greaseproof packaging materials have held out against
inroads by plastics, while lower grades have not. (Discussions with DRI Pulp
and Paper Service staff, August 2, 1979).
Mills
Number of Mills
The eight firms in this product sector control ten mills which produce
glassine and greaseproof paper. These are listed below by production sub-
category:
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25
Number Percent of Mills in
of Mills This Product Sector Production Subcategory Name
* * Papergrade Sulfite
* * Misc. Integrated Mills
* * Nonintegrated Fine Papers
* * Misc. Nonintegrated Mills
10 100%
Source: 308 Survey.
Size
The average mill capacity is 224 tons per day, with a standard deviation
of 314, and the median capacity is 105 tons per day (308 Survey).
Location
Glassine and greaseproof producing mills are located throughout the
United States except in-the West and Southwest, with a regional breakdown as
follows:
Region Number of Mills
Northeast
Southeast
North Central
Northwest
West and Southwest
5
*
*
*
0
(50%)
( *%)
( *%)
( *%)
( 0%)
Source: 308 Survey.
Indirect Dischargers
One mill or ten percent of the mills in the glassine and greaseproof
product sector are indirect dischargers. For reasons of confidentiality, no
location data are provided (308 Survey).
Planned Capacity Expansion
Planned daily capacity expansion in the glassine and greaseproof
product sector is expected to be five short tons per day. This represents
an expansion of capacity in two mills. This expansion will be an increase
of 0.8 percent in the capacity to produce glassine and greaseproof by all
mills. A capital investment of $415,000 is planned for this expansion.
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26
These data apply to projects which were under construction in 1978 or
budgeted and approved for expenditure. (308 Survey) American Paper Insti-
tute capacity expansion data are unavailable for the glassine and grease-
proof product sector and therefore no comparison is possible.
Age and Productivity
The age structure in the glassine and greaseproof sector is old. There
have recently been no new mills or machines added. Productivity growth in
this product sector is low (1 to 2 percent per year), and the degree of
technological obsolescence is high. (Discussions with DRI Pulp and Paper
Service staff, August 2, 1979). Capital investment during the past five
years by mills producing in this product sector totals $221,804,000. Invest-
ment per unit capacity equals $99,000, which is very high compared to the
industry as a whole. (308 Survey) (Note: High capital investment does not
necessarily correlate with low-cost production.)
Employment
Meta Systems estimates that the glassine product sector employed
roughly 1,600 people in 1978. This represented approximately 0.6 percent
of total pulp, paper, and paperboard mill employment. (Meta Systems estimates
based on E.G. Jordan data.)
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TISSUE
27
Product Sector
Definition of Product Sector
Tissue in this report includes sanitary grades (i.e., toilet, facial,
napkin, toweling, sanitary napkin, diaper, wiper, and special sanitary
papers) for brand name sale (or produced for store brands) in supermarkets,
drugstores, etc., and sanitary grades for industrial use and waxing,
wrapping, wadding, and miscellaneous grades.
Firms in Product Sector
There are 42 U.S. firms that produce tissue. The major producers are:
Scott Paper Co.
The Proctor & Gamble Co.
Kimberly-Clark Corp.
American Can Co.
Crown Zellerbach Corp.
Fort Howard Paper Co.
Georgia-Pacific Corp.
Brown Co.
Source: Meta Systems estimates based on Lockwood's, DRI estimates, and
B.C. Jordan estimates.
Concentration
In 1978, the top five firms' capacity share was 65.5 percent and the
top eight firms' capacity share was 80.1 percent. This is thus a
concentrated product sector (Meta Systems estimates based on Lockwood's,
DRI estimates, and E.G. Jordan estimates).
Total Capacity and Utilization Rate
U.S. capacity to produce tissue is 12,792 tons per day, or 6.33 percent
of total U.S. paper, paperboard, and market pulp production capacity
(308 Survey). In 1979, U.S. firms' capacity utilization rate was 88.3
percent (Pulp and Paper, April 1979 estimate). (This may be low due to
effects of several West Coast mill strikes in 1978 and 1979.)
Vertical Integration
Most of the firms in this sector are vertically integrated (ADL, 1977
and DRI estimates). Vertically integrated here means integrated from raw
materials (wood, wastepaper, etc.) to converted product. Fifty-eight mills
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28
or 64 percent of the mills in this product sector include converting
operations (308 Survey).
Horizontal Integration
The 15 largest firms are horizontally integrated to other economic
production sectors as indicated by the following earnings percentages:
Firm
Scott Paper Co.
The Proctor & Gamble Co.
Kimberly-Clark Corp.
American Can Co.
Crown Zellerbach Corp.
Fort Howard Paper Co.
Georgia-Pacific Corp.
Brown Co.
Hudson Pulp & Paper Corp.
Diamond International Corp.
Erving Paper Mills
Marcal Paper Mills, Inc.
Potlatch Corp.
Nitec Paper Corp.
Statler Tissue Co.
Percent Earnings
in Paper and
Paperboard Sector
92%
15%
92%
9%
55%
100%
20%
78%
90%
54%
64%
64%
Publicly or
Privately
Owned
Public
Public
Public
Public
Public
Public
Public
Public
Public
Public
Public
Public
Private
Private
Source: Paper Trade Journal, June 30, 1979, pp. 44-47.
Economic and Technological Trends
In the 1950s and 1960s, consumer tissue displaced reusable fabrics in
the napkin and towel product categories. By roughly 1968 this displacement
was completed. Future demand for tissue products will relate closely to
factors such as consumer disposable income and household growth (since
tissue displacement of reusable fabrics has subsided). Consumer tissue is,
and is expected to continue to be, more recession-proof and less subject
to cyclical swings in consumption levels than the pulp and peiper industry,
or the economy as a whole. Many consumer tissue producers rely heavily
on non-price incentives to market their products, in contrast to the
majority of paper and paperboard products producers whose sales of
commodities are almost entirely based upon price considerations.
The only economical substitute for consumer tissue is a return to
reusable cloth fabrics. A new process to produce fluffier tissue using
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29
less pulp has very recently been developed (discussions with DRI Pulp and
Paper Service staff; ADL, 1977; Kline Guide).
Industrial tissue products may contain a large amount of recycled
material in addition to, or as a substitute for, virgin wood pulp. Much
of it is therefore produced in non-integrated secondary fiber mills.
Industrial tissue demand closely follows employment patterns and consumption
is based almost solely on price (rather than on non-price characteristics
as in the consumer tissue sector). Demand for industrial tissue is less
recession-proof than demand for consumer tissue, and fluctuates as
employment and GNP fluctuate. It is likely that future industrial tissue
production will shift toward large vertically integrated producers and
away from the urban based smaller non-integrated producers. Though the
integrated producers use more virgin fiber in their furnish, which is more
costly than waste fiber, the economies of scale associated with large
operations, the present relatively low cost of company-owned wood, and the
ability to offer consumers higher quality products will create difficulties
for the marginal, non-integrated producers. In addition, it is possible
that increases in industrial tissue prices may cause some consumers to
economize on consumption (discussions with DRI Pulp and Paper Service staff;
DRI, Pulp and PaperReview, Au«uit 1979, pp. 67-68; ADL, 1977; Kline Guide).
Mills
Number of Mills
The 42 firms in this product sector control 89 mills which produce
tissue paper. These are li -l
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30
Number Percent of Mills in
of Mills This Product Sector Production Subcategory Name
* *% Nonintegrated Lightweight
* *% Misc. Nonintegrated Mills
89~ 100%
Source: 308 Survey.
Size
The average mill capacity is 285 tons per day, with a standard
deviation of 353, and the median capacity is 137 tons per day (308 Survey)
Location
Tissue producing mills are located mainly in the northeast and
north central sections of the United States, with a regional breakdown as
follows:
Region
Number of Mills
Northeast 38 (43%)
Southeast 12 (13%)
North Central 22 (23%)
Northwest 8(9%)
West and Southwest 9 (10%j
89
Source: 308 Survey.
Indirect Dischargers
Twenty-seven or 30 percent of the mills in the tissue product sector
are indirect dischargers. The percents of mills in each region which are
indirect dischargers are as follows:
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31
Region % of Mills
Northeast 32
Southeast *
North Central 27
Northwest 0
West and Southwest 78
Source: 308 Survey.
Planned Capacity Expansion
Planned daily capacity expansion in the tissue product sector is
expected to be 1,141 short tons per day. This represents an expansion of
capacity in 13 mills. This expansion will be an increase of 8.9 percent
in the capacity to produce tissue by all mills. A capital investment
of $377,552,000 is planned for this expansion. These data apply to
projects which were under construction in 1978 or budgeted and approved
for expenditure. (308 Survey)
Assuming 352 operating days per year as listed in the American Paper
Institute (API) capacity survey, the planned daily capacity expansion
reported in response to the 308 Survey equals 402,000 tons annually.
Capacity expansion as reported in the API Survey from 1978 to 1982 is
751,000 tons annually (API Survey). The 308 Survey reported capacity
expansion for the tissue product sector is thus lower than capacity
expansion reported by API.
Age and Productivity
The age structure of consumer tissue mills is fairly young; there have
recently been many new mills and machines added. The age structure of
the tissue mills is old but becoming younger as large integrated companies
move in; there have been several new mills and several new machines added
in the 1970s. Productivity growth in this product sector is high (3 to
4 percent per year). Consumer tissue mills' technologies are modern, since
this is a prime basis of competition among producers. The degree of
technological obsolescence in industrial tissue mills is high; however,
many old, inefficient mills are being replaced (discussions with DRI Pulp
and Paper Service staff, August 2, 1979). Capital investment during the
past five years by mills producing in this product sector totals
$1,270,515,000. Investment per unit capacity equals $43,000, which is
moderately low compared to the industry as a whole. (308 Survey)
(Note: High capital investment does not necessarily correlate with
low-cost production.)
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32
Employment
Meta Systems estimates that the tissue product sector employed roughly
37,400 people in 1978. This represented approximately 15.0 percent of
total pulp, paper, and paperboard mill employment. (Meta Systems estimates
based on E.G. Jordan data.)
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SPECIAL INDUSTRIAL PAPER
33
Product Sector.
Definition of Product Sector
Special industrial paper in this report is defined as paper of all fur-
nishes designed for specialized end uses, such as abrasive paper, absorbent
paper, cable paper, electrical insulation, and similar grades.
Firms in Product Sector
There are 40 U.S. firms that produce special industrial paper. The
major producers are:
James River Corp.
Hollingsworth & Vose Co.
The Proctor & Gamble Co.
Mosinee Paper Corp.
Knowlton Brothers
Boise Cascade Corp.
Prairie State Paper Mills,
Div. of Chippewa Paper Prod. Co.
Filter Materials, Inc.
Source: Meta Systems estimates based on Lockwood's, DRI estimates and
E. C. Jordan estimates.
Concentration
In 1978, the top five firms' capacity share was 43.5 percent and the top
eight firms' capacity share was 52.3 percent. This is thus an unconcentrated
product sector (Meta Systems estimates based on Lockwood's, DRI estimates,
and E. C. Jordan estimates).
Total Capacity and Utilization Rate
U.S. capacity to produce special industrial paper is 2,209* tons per day
or 1.09 percent of total U.S. paper, paperboard, and market pulp production
capacity (308 Survey). Capacity utilization rate data are not available.
Vertical Integration
Few of the firms in this product sector are vertically integrated (DRI
estimates). Vertically integrated here means integrated from raw materials
(wood wastepaper, etc.) to converted product. Forty mills or 63 percent of
the mills in this product sector include converting operations (308 Survey).
*Two mills in this product sector did not report capacity data and were
not included in this total.
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34
Horizontal Integration
The 17 largest firms are horizontally integrated to other economic pro-
duction sectors as indicated by the following earnings percentages:
Firm
Percent Earanings
in Paper and
Paperboard Sector
James River Corp.
Hollingsworth & Vose Co.
The Proctor & Gamble Co.
Mosinee Paper Corp.
Knowlton Brothers
Boise Cascade Corp.
Prairie State Paper Mills,
Div. of Chippewa Paper Prod. Co.
Filter Materials, Inc.
Bemis Co., Inc.
Spaulding Fibre Co., Inc.
Texon, Inc.
Bird & Son, Inc.
Brown Co.
Chase Bag Co.
Mead Corp.
Sorg Paper Co.
Kimberly-Clark Corp.
29%
15%
53%
48%
78%
44%
92%
Publicly or
Privately
Owned
Public
Public
Public
Public
Public
Put) lie
Public
Source: Paper Trade Journal, June 30, 1979, pp. 44-47.
Economic and Technological Trends
Though there are few direct substitute materials for special industrial
paper, a number of the end products such as decorative laminat€:s and luggage
compete with substitute products made from other materials. Overall, demand
for special industrial paper correlates well with the industrial production
index, since special industrial paper has a wide variety of technical and
industrial applications (ADL, 1977).
Mills
Number of Mills
The 40 firms in this product sector control 63 mills which produce
special industrial paper. These are listed below by subcaterory:
-------
Number
of Mills
*
*
*
11
*
*
14
*
18
Percent of Mills in
This Product Sector
*
17%
*
*
*
22%
*
51%
63
100%
35
Production Subcategory Name
Fine Bleached Kraft & Soda
Papergrade Sulfite
Unbleached Kraft (Bag)
Misc. Integrated Mills
Tissue from Wastepaper
Paperboard from Wastepaper
Misc. Secondary Fiber Mills
Nonintegrated Fine Papers
Nonintegrated Tissue Papers
Nonintegrated Filter & Nonwoven
Nonintegrated Lightweight —
Electrical Allowance
Nonintegrated Paperboard
Misc. Nonintegrated Mills
Source: 308 Survey
Size
The average mill capacity is 190 tons per day, with a standard deviation
of 411, and the median capacity is 58 tons per day (308 Survey).
Location
The majority of special industrial paper producing mills are located
in the Northeast, while others are distributed throughout the United States
as follows:
Region
Northeast
Southeast
North Central
Northwest
West and Southwest
Source: 308 Survey
Number of Mills
39 (62%)
7 (11%)
13 (21%)
* ( *%)
* ( *%)
63
Indirect Dischargers
Twenty-six mills or 41 percent of the mills in the special industrial
product sector are indirect dischargers. The percent of mills in each region
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36
which are indirect dischargers are as follows:
Region % of Mills
Northeast 38
Southeast *
North Central 54
Northeast 0
North Central *
Source: 308 Survey
Planned Capacity Expansion
Planned daily capacity expansion in the special industrial product sector
is expected to be 63 short tons per day. This represents an expansion of
capacity in six mills. This expansion will be an increase of 2.9 percent in
the capacity to produce special industrial paper by all mills. A capital
investment of $26,841,000 is planned for this expansion. These data apply to
projects which were under construction in 1978 or budgeted and approved for
expenditure. (308 Survey)
Assuming 330 operating days per year as listed in the Americcin Paper
Institute (API) capacity survey, the planned daily capacity expansion reported
in response to the 308 Survey equals 21,000 tons annually. Capacity expansion
as reported in the API Survey from 1978 to 1982 is 87,000 tons annually (API
Survey). The 308 Survey reported capacity expansion for the special indus-
trial product sector is thus lower than capacity expansion reported by API.
Age and Productivity
The age structure in the special industrial product sector is old, with
no new mills or machines recently added. Productivity growth in this product
sector is low (1 to 2 percent per year) and the degree of technological obso-
lescence is high. (Discussions with DRI Pulp and Paper Service staff, August
2, 1979). Capital investment during the past five years by mills producing
in this product sector totals $593,611,000. Investment per unit capacity
equals $40,000, which is moderatly low compared to the industry as a whole.
(308 Survey) (Note: High capital investment does not necessarily correlate
with low-cost production.)
Employment
Meta Systems estimates that the special industrial product sector
employed roughly 6,200 people in 1978. This represented approximately 2.5
percent of total pulp, paper, and paperboard mill employment. (Meta Systems
estimates based on E.G. Jordan data.)
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NEWSPRINT
Product Sector
Definition of Product Sector
Newsprint is defined in this report as paper made largely from ground-
wood pulp, used chiefly in the printing of newspapers.
Firms in Product Sector
There are 16 U.S. firms that produce newsprint. The major producers
are:
Bowater, Inc.
St. Regis Paper Co.
Kimberly-Clark Corp.
Garden State Paper Co., Inc.
Publishers Paper Co.
Nekoosa Papers, Inc.
Boise Cascade Corp.
International Paper Co.
Source: Meta Systems estimates based on Lockwood's, DRI estimates,
and E.G. Jordan estimates.
Concentration
In 1978, the top five firms' capacity share was 60.2 percent, and the
top eight firms' capacity share was 83.1 percent. This is thus a concen-
trated product sector (Meta Systems estimates based on Lockwood's, DRI
estimates, and E.G. Jordan estimates).
Total Capacity and Utilization Rate
U.S. capacity to produce newsprint is 11,691* tons per day, or 5.78
percent of total U.S. paper, paperboard, and market pulp production capacity
(308 Survey). In 1979, U.S. firms' capacity utilization rate was estimated
at 93.0 percent (Pulp and Paper, February 1979 estimate).
Vertical Integration
All of the firms in this sector are vertically integrated backward to
raw materials (i.e., wood) (DRI estimate). Four mills, or 17 percent of the
mills in this product sector, include converting operations (308 Survey).
*Two mills in this product sector did not report capacity data and
were not included in this total.
-------
Horizontal Integration
The 15 largest firms are horizontally integrated to other economic
production sectors, as indicated by the following earnings percentages:
Firm
Bowater, Inc.
St. Regis Paper Co.
Kimberly-Clark Corp.
Garden State Paper Co., Inc.
Publishers Paper Co.
Nekoosa Papers, Inc.
Boise Cascade Corp.
International Paper Co.
Crown Zellerbach Corp.
Abitibi Corp.
Southwest Forest Industries, Inc.
Georgia-Pacific Corp.
Manistique Pulp & Paper Co.
Hearst Corp.
Inland Empire Paper Co.
Percent Earnings
in Paper and
Paperboard Sector
44%
82%
92%
96%
53%
79%
55%
80%
35%
20%
Publicly or
Privately
Owned
Public
Public
Public
Public
Public
Public
Public
Public
Public
Public
Public
Source: Paper Trade Journal, June 30, 1979, pp. 44-47.
Economic and Technological Trends
Demand for newsprint depends on newspaper advertising, circulation, and
commercial printing demand. Commercial printing is the largest non-newspaper
use of newsprint. Newsprint quality for commercial printing is almost that
of uncoated groundwood, the improvement in quality coming from technological
innovations. All newsprint uses correlate closely to growth in GNP as well
as measures of total consumer expenditures, new car expenditures, corporate
profits, real disposable income, and number of households. Although news-
paper advertising faces stiff competition from radio, TV advertising, and
other printed media, its advertising costs are expected to remain competi-
tive through 1981. Newspaper advertising costs will increase by roughly 9
percent per year, compared to 9 to 10 percent for magazines and L6 percent
for network television. Several factors, including new printing technology,
product development by newsprint producers, the low cost of newsprint rela-
tive to other printing grades, and newspaper advertising gains, have led to
a recent large growth in U.S. demand for newsprint.
Scandinavia has consistently supplied 3 percent of U.S. newssprint demand
through the mid-1970s. Canadian firms have supplied roughly 80 percent of
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39
North American newsprint in the 1950s, 70 percent in the 1960s, and 61 to
65 percent in the 1970s, with U.S. firms producing almost all the rest.
Causes for this recent decline include:
o rising Canadian production costs relative to their U.S. competitors;
o rapidly increasing newsprint capacity in the United States stimu-
lated by this production costs trend; and
o expanding newsprint markets in the southern United States, where
most of U.S. newsprint capacity is located, giving U.S. producers
a large transportation advantage.
Source: DRI, Pulp and Paper Review, December 1977 and March 1979;
ADL, 1977; Kline Guide.
Mills
Number of Mills
The 16 firms in this product sector control 24 mills which produce news-
print. These are listed below by production subcategory:
Number Percent of Mills in
of Mills This Product Sector Production Subcategory Name
* * Groundwood—Thermo-Mechanical
* * Groundwood—Coarse, Molded,
Newsprint
17 71% Misc. Integrated Mills
* * Deink (Newsprint)
24" 100%
Source: 308 Survey.
Size
The average mill capacity is 961 tons per day, with a standard deviation
of 549, and the median capacity is 836 tons per day (308 Survey).
Location
Newsprint producing mills are located throughout the United States,
with a regional breakdown as follows:
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40
Region Number of Mills
Northeast * ( *%)
Southeast 7 (29%)
North Central * ( *%)
Northwest 7 (29%)
West and Southwest * ( *%)
24
Source: 308 Survey.
Indirect Dischargers
Fewer than five of the mills in the newsprint product sector are
indirect dischargers. Therefore, no regional breakdown can be given.
Planned Capacity Expansion
Planned daily capacity expansion in the newsprint product sector is
expected to be 1,477 short tons per day. This represents an expansion of
capacity in six mills. This expansion will be an increase of 12.6 percent
in the capacity to produce newsprint by all mills. A capital investment of
$239,488,000 is planned for this expansion. These data apply to projects
which were under construction in 1978 or budgeted and approved for expen-
diture (308 Survey).
Assuming 357 operating days per year as listed in the American Paper
Institute (API) capacity survey, the planned daily capacity expansion re-
ported in response to the 308 Survey equals 527,000 tons annually. Capacity
expansion as reported in the API Survey from 1978 to 1982 is 1,329,000 tons
annually (API Survey). The 308 Survey reported capacity expansion for the
newsprint product sector is thus lower than capacity expansion reported by
API.
Age and Productivity
The age structure in the newsprint product sector is very new, with
over 50 percent of the mills built in the 1960s and 1970s. There have
recently been several new mills and many new machines added. Productivity
growth in this product sector is high (3 to 4 percent per year), and the
degree of technological obsolescence is low. (Discussions with DRI Pulp and
Paper Service staff, August 2, 1979). Capital investment during the past
five years by mills producing in this product sector totals $879,557,000.
Investment per unit capacity equals $38,000, which is moderately low com-
pared to the industry as a whole. (308 Survey) (Note: High capital invest-
ment does not necessarily correlate with low-cost production.)
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41
Employment
Meta Systems estimates that the newsprint product sector employed
roughly 10,500 people in 1978. This represented approximately 4.2 percent
of total pulp, paper, and paperboard mill employment. (Meta Systems estimates
based on E.G. Jordan data.)
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COATED PRINTING PAPER
Product Sector
Definition of Product Sector
Coated printing paper is defined in this report as bleached paper with
a coating weight of at least two and one-half pounds on either side and at
least 50 percent of the coating consisting of pigment. Among the specific
products included in the coated printing paper sector are coated-one-side,
coated-two-side Nos. 1-4, and coated-two-side No. 5.
Firms in Product Sector
There are 30 U.S. firms that produce coated printing paper. The major
producers are:
Consolidated Papers, Inc.
Mead Corp.
International Paper Co.
Westvaco Corp.
Champion International
Crown Zellerbach Corp.
St. Regis Paper Co.
Blandin Paper Co.
Source: Meta Systems estimates based on Lockwood's, DRI estimates, and
E.G. Jordan estimates.
Concentration
In 1978, the top five firms' capacity share was 40.5 percent, and the
top eight firms' capacity share was 57.4 percent. This is thus an unconcen-
trated product sector. (Meta Systems estimates based on Lockwood's, DRI
estimates, and E.G. Jordan estimates).
Total Capacity and Utilization Rate
U.S. capacity to produce coated printing paper is 13,869 tons per day,
or 6.86 percent of total U.S. paper, paperboard, and market pulp production
capacity (308 Survey). The 1979 capacity utilization rate for U.S. firms
producing coated groundwood publication papers was 95.4 percent, and the
1978 rate for No. 5 coated publication papers was 100 percent (Pulp and
Paper, May 1979 estimate and May 1978).
Vertical Integration
Most of the firms in this product sector are vertically integrated (DRI
estimate). Vertically integrated here means integrated from raw materials
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43
(wood, wastepaper, etc.) to converted product. Twenty-seven mills, or 60
percent of the mills in this product sector, include converting operations
(308 Survey).
Horizontal Integration
The 15 largest firms are horizontally integrated to other economic
production sectors, as indicated by the following earnings percentages:
Firm
Consolidated Papers, Inc.
Mead Corp.
International Paper Co.
Westvaco Corp.
Champion International
Crown Zellerbach Corp.
St. Regis Paper Co.
Blandin Paper Co.
Nekoosa Papers,-Inc.
Boise Cascade Corp.
Scott Paper Co.
Niagra of Wisconsin Paper Corp.
Fraser Paper Ltd.
Potlatch Corp.
Bowater, Inc.
Percent Earnings
in Paper and
Paperboard Sector
79%
44%
79%
90%
47%
55%
82%
96%
53%
92%
80%
64%
44%
Publicly or
Privately
Owned
Public
Public
Public
Public
Public
Public
Public
Private
Public
Public
Public
Public
Public
Public
Source: Paper Trade Journal, June 30, 1979, pp. 44-47.
Economic and Technological Trends
Coated printing paper production can be divided roughly into 88 percent
coated-two-side and 12 percent coated-one-side. Coated-one-side papers are
almost entirely (85 percent) used for labels and wraps, especially in the
processed food industry. Changes in packaging technology, cost, and con-
sumer preferences threaten continued growth here due to:
o consumer acceptance of plastic wraps, labels, and bottles; and
o large increases in coated paper prices due to market tightness
created by demand for coated-two-side papers, while plastic price
increases have been very low over the same time period.
In general, the price of plastic substitutes relative to coated-one-side
paper helps determine the degree of plastic's penetration into this market.
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44
Coated-two-side Nos. 1-4 papers have grown recently due largely to
consumer preference for high-quality media and advertising paper, the excel-
lent printing qualities of Nos. 1-4, and the availability of extensive forest
resources from which producers make the bleached chemical pulps used as the
furnish for coated freesheet papers, Coated-two-side papers will benefit
from the continuation of the current U.S. advertising boom, especially if
cost differences between printed and electronics media increase.
There are three noteworthy long-term trends for coated-two-side Nos.
1-4. The first is a long-term trend toward use of lower basis weight paper
in response to higher postal rates. The second is that when the economy is
on a cyclical upswing, the proportion of high-quality papers (Nos. 1-4)
increases. The third is that technology advancements improving the quality
of uncoated groundwood may create future competition for coated-two-side
Nos. 1-4.
Use of coated-two-side No. 5, while closely following magazine publish-
ing activities in recent years, has not grown as much as other coated-two-
sides, due in part to consumer preferences for the higher quality papers.
However, expanded product diversification and lower unit prices, compared to
coated freesheet grades, have made coated groundwood papers a more attractive
commodity, especially in the commercial printing sectors. (AOL, 1977; DRI,
Pulp and Paper Review, December 1977, March 1979, and August 1979; Pulp and
Paper, May 1978 and May 1979).
Mills
Number of Mills
The 30 firms in this product sector control 45 mills which produce
coated printing paper. These are listed below by production subcategory:
Number Percent of Mills in
of Mills This Product Sector Production Subcategory Name
13 29% Fine Bleached Kraft & Soda
6 13% Groundwood—Fine Papers
10 22% Misc. Integrated Mills
* * Misc. Secondary Fiber Mills
8 18% Nonintegrated Fine Papers
* * Nonintegrated Lightweight
* * Nonintegrated Paperboard
* * Misc. Nonintegrated Mills
"45 100%
Source: 308 Survey.
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45
Size
The average mill capacity is 538 tons per day, with a standard devia-
tion of 367, and the median capacity is 517 tons per day (308 Survey).
Location
Coated printing paper producing mills are located mainly in the north-
east and north central parts of the United States, with a regional break-
down as follows:
Region Number of Mills
Northeast 16 (36%)
Southeast 6 (13%)
North Central 20 (44%)
Northwest * ( *%)
West and Southwest * ( *%)
45
Source: 308 Survey.
Indirect Dischargers
Eleven mills, or 24 percent of the mills in the coated printing paper
product sector, are indirect dischargers. The percents of mills in each
region which are indirect dischargers are as follows:
Region % of Mills
Northeast *
Southeast *
North Central 25
Northwest 0
West and Southwest *
Source: 308 Survey.
Planned Capacity Expansion
Planned daily capacity expansion in the coated printing product sector
is expected to be 1,615 short tons per day. This represents an expansion
of capacity in 16 mills. This expansion will be an increase of 11.6 percent
in the capacity to produce coated printing by all mills. A capital invest-
ment of $343,346,000 is planned for this expansion. These data apply to
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46
projects which were under construction in 1978 or budgeted and approved for
expenditure. (308 Survey)
Assuming 356 operating days per year as listed in the American Paper
Institute (API) capacity survey, the planned daily capacity expansion re-
ported in response to the 308 Survey equals 575,000 tons annually. Capacity
expansion as reported in the API Survey from 1978 to 1982 is 965,000 tons
annually (API Survey). The 308 Survey reported capacity expansion for the
coated printing paper product sector is thus lower than capacity expansion
reported by API.
Age and Productivity
The age structure in the coated printing paper product sector is mod-
erate, but expansion is anticipated in the next three or four years. There
have recently been a few new mills added, and a very large number of new
machines is expected to be installed. Productivity growth in this product
sector is moderately high, and the degree of technological obsolescence is
moderate. (Discussions with DRI Pulp and Paper Service staff, August 2, 1979.)
Capital investment during the past five years by mills producing in this
product sector totals $1,518,975,000. Investment per unit capacity equals
$63,000, which is moderately high for the industry as a whole. (308 Survey)
(Note: High capital investment does not necessarily correlate with low-cost
production.)
Employment
Meta Systems estimates that the coated printing product sector employed
roughly 23,200 people in 1978. This represented approximately 9.3 percent of
total pulp, paper, and paperboard mill employment. (Meta Systems estimates
based on E.G. Jordan data.)
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UNCOATED FREESHEET PAPER
47
Product Sector
Definition of Product Sector
Uncoated freesheet paper in this report is defined as bleached uncoated
printing and writing papers containing not more than 25 percent groundwood
pulp in their furnish, such as offset, tablet, envelope, business (bond,
ledger, mimeo, duplicator), form bond, cover and text, and book paper.
Firms in Product Sector
There are 53 U.S. firms that produce uncoated freesheet. The major
producers are:
Champion International
International Paper Co.
Boise Cascade Corp.
Hammermill Paper Co.
Nekoosa Papers, Inc.
Union Camp Corp.
Mead Corp.
Weyerhaeuser Co.
Source: Meta Systems estimates based on Lockwood's, DRI estimates, and
E.G. Jordan estimates.
Concentration
In 1978, the top five firms' capacity share was 40.1 percent, and the
top eight firms' capacity share was 53.5 percent. This is thus an unconcen-
trated product sector. (Meta Systems estimates based on Lockwood's, DRI
estimates, and E.G. Jordan estimates).
Total Capacity and Utilization Rate
U.S. capacity to produce uncoated freesheet is 20,452* tons per day, or
10.12 percent of total U.S. paper, paperboard, and market pulp production
capacity (308 Survey). The 1979 capacity utilization rate for U.S. firms
producing uncoated printing and writing papers was 92.3 percent (Pulp and
Paper, March 1979 estimate).
Vertical Integration
About 80 percent of the firms in this product sector are backward
*Six mills in this product sector did not report capacity data and were
not included in this total.
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48
integrated to raw materials (DRI estimate). Paper is often sold in rolls to
end users for final conversion. Smaller orders, sold as cut paper, tend to
be converted at the paper mill site. Fifty-eight mills, or 56 percent of the
mills in this product sector, include converting operations (308 Survey).
Horizontal Integration
The 15 largest firms are horizontally integrated to other economic
production sectors, as indicated by the following earnings percentages:
Firm
Champion International
International Paper Co.
Boise Cascade Corp.
Hammermill Paper Co.
Nekoosa Papers, Inc.
Union Camp Corp.
Mead Corp.
Weyerhaeuser Co.
Allied Paper, Inc.
Potlatch Corp.
Georgia-Pacific Corp.
Westvaco Corp.
Finch, Pyrun & Co., Inc.
Scott Paper Co.
Crown Zellerbach Corp.
Percent Earnings
in Paper and
Paperboard Sector
47%
79%
53%
93%
96%
89%
44%
43%
64%
20%
90%
92%
55%
Publicly or
Privately
Owned
Public
Public
Public
Public
Public
Public
Public
Public
Public
Public
Public
Public
Public
Source: Paper Trade Journal, June 30, 1979, pp. 44-47.
Economic and Technological Trends
Demand for uncoated freesheet papers has increased rapidly in the past
20 years. The underlying causes are as diverse as the markets which use
uncoated freesheet. Among these causes are:
o increases in demand for business forms, created largely by computers;
o office automation and concomitant demand for copy, electric type-
writer and duplicator papers, etc.;
o increases in offset printing use and development of commercial
printing as a major market; and
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49
o very low nominal price increases which offer an incentive to use
these papers (the average price for uncoated book papers was actually
lower, in nominal terms, in 1972 than in 1960).
This very competitive sector underwent significant capacity expansions
in the 1960s. High operating rates, needed to offset large capital invest-
ment costs, and low variable cost increases combined in the 1960s and early
1970s to keep prices low. However, suppliers, hurt by excessive inventories
in 1975, are now less prone to expand capacity, suggesting a future of in-
frequent large increments of capacity increase (following periods of very
high capacity utilization).
Business demand for several types of uncoated freesheet — business
forms, computer stock, off-set paper for commercial printing and other con-
verting, business papers, and book papers — remains strong, as do future
growth prospects. Cover and text papers probably will not grow due to con-
sumer acceptance of lower priced, lower quality grades over this very high
quality paper. Demand for Kraft envelopes will probably also remain roughly
stable. (ADL, 1977; Kline Guide; DRI, Pulp and Paper Review, August 1979;
discussions with DRI Pulp and Paper Service staff).
Mills
Number of Mills
The 53 firms in this product sector control 103 mills which produce
uncoated freesheet. These are listed below by production subcategory:
Number Percent of Mills in
of Mills This Product Sector Production Subcategory Name
17 17% Fine Bleached Kraft & Soda
* * Semi-Chemical
7 7% Papergrade Sulfite
* * Groundwood—Coarse, Molded
Newsprint
* * Groundwood—Fine Papers
20 19% Misc. Integrated Mills
5 5% Deink (Fine Papers)
5 5% Misc. Secondary Fiber Mills
34 33% Nonintegrated Fine Papers
* * Nonintegrated Lightweight
* * Nonintegrated Filter & Non-
woven
* * Nonintegrated Paperboard
8 8% Misc. Nonintegrated Mills
103 100%
Source: 308 Survey.
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50
Size
The average mill capacity is 401 tons per day, with a standard devia-
tion of 423; the median capacity is 271 tons per day (308 Survey).
Location
Uncoated freesheet producing mills are located generally in the north-
east and north central regions of the United States, with a breakdown as
follows:
Region Number of Mills
Northeast 38 (37%)
Southeast 13 (13%)
North Central 40 (39%)
Northwest * ( *%)
West and Southwest * ( *%)
103
Source: 308 Survey.
Indirect Dischargers
Thirty-four mills, or 33 percent of the mills in the uncoated freesheet
product sector, are indirect dischargers. The percents of mills in each
region which are indirect dischargers are as follows:
Region % of Mills
Northeast 39
Southeast *
North Central 35
Northwest *
West and Southwest *
Source: 308 Survey.
Planned Capacity Expansion
Planned daily capacity expansion in the uncoated freesheet product
sector is expected to be 1,247 short tons per day. This represents a reduc-
tion of capacity in two mills and an expansion of capacity in 17 mills. This
expansion will be an increase of 6.1 percent in capacity to produce uncoated
freesheet by all mills. A capital investment of $190,579,000 is planned for
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51
this expansion. These data apply to projects which were under construction
in 1978 or budgeted and approved for expenditure. (308 Survey)
Assuming 352 operating days per year as listed in the American Paper
Institute (API) capacity survey, the planned daily capacity expansion re-
ported in response to the 308 Survey equals 439,000 tons annually. Capacity
expansion as reported in the API Survey from 1978 to 1982 is 1,004,000 tons
annually (API Survey). The 308 Survey reported capacity expansion for the
uncoated freesheet paper product sector is thus lower than capacity expansion
reported by API.
Age and Productivity
The age structure in the uncoated freesheet product sector is mixed.
Mills producing uncoated book, excluding offset, and cover and text papers
are generally old, while those producing offset papers and chemical wood pulp
papers are typically young. Only a few mills, but a fairly high number of
new machines, have been recently added in the sector. Productivity growth in
this product sector has been very high, especially in the 1960s, and the
degree of technological obsolescence is high only in those grades with an
old age structure. (Discussions with DRI Pulp and Paper Service staff, August
2, 1979). Capital investment during the past five years by mills producing
in this product sector totals $2,766,964,000. Investment per unit capacity
equals $54,000, which is moderate compared to the industry as a whole. (308
Survey). (Note: High capital investment does not necessarily correlate with
low-cost production.)
Employment
Meta Systems estimates that the uncoated freesheet product sector
employed roughly 36,600 people in 1978. This represented approximately 14.6
percent of total pulp, paper, and paperboard mill employment. (Meta Systems
estimates based on E.G. Jordan data.)
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UNCOATED GROUNDWOOD PAPER
52
Product Sector
Definition of Product Sector
Uncoated groundwood paper in this report is defined as uncoated
papers, such as groundwood printing papers containing more than 25 percent
groundwood fiber in their furnish, excluding newsprint.
Firms in Product Sector
There are 17 U.S. firms that produce uncoated groundwood. The major
producers are:
Nekoosa Papers, Inc.
St. Regis Paper Co.
Weyerhaeuser Co.
Crown Zellerbach Corp.
Boise Cascade Corp.
Fraser Paper Ltd.
Georgia-Pacific Corp.
Blandin Paper Co.
Source: Meta Systems estimates based on Lockwood's, DRI estimates and
E.G. Jordan estimates.
Concentration
In 1978, the top five firms' capacity share was 67.2 percent and the
top eight firms' capacity share was 84.5 percent. This is thus a
concentrated product sector. (Meta Systems estimates based on Lockwood's,
DRI estimates, and E.G. Jordan estimates).
Total Capacity and Utilization Rate
U.S. capacity to produce uncoated groundwood paper is 3,572 tons per
day, or 1.77 percent of total U.S. paper, paperboard, and market pulp
production capacity (308 Survey). This represents roughly 49 percent of
total 1979 North American uncoated groundwood paper production. In 1979,
U.S. firms' capacity utilization rate was 104.8 percent (Pulp and Paper,
October 1979 estimates).
Vertical Integration
About 90 percent of the firms in this sector are backward integrated
to raw materials (DRI estimate). Ten mills or 45 percent of the mills in
this product sector include converting operations (308 Survey).
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53
Horizontal Integration
The 15 largest firms are horizontally integrated to other economic
production sectors as indicated by the following earnings percentages:
Firm
Nekoosa Papers, Inc.
St. Regis Paper Co.
Weyerhaeuser Co.
Crown Zellerbach Corp.
Boise Cascade Corp.
Eraser Paper Ltd.
Georgia-Pacific Corp.
Blandin Paper Co.
Appleton Papers Div. of NCR
Bowater, Inc.
Midtec Paper Corp.
Hennepin Paper Co.
Hearst Corp.
Inland Empire Paper Co.
Manistique Pulp & Paper Co.
Percent Earnings
in Paper and
Paperboard Sector
96%
82%
43%
55%
53%
80%
20%
44%
Publicly or
Privately
Owned
Public
Public
Public
Public
Public
Public
Public
Private
Public
Source: Paper Trade Journal, June 30, 1979, pp. 44-47.
Economic and Technological Trends
Uncoated groundwood paper producers lost market share in their major
market, the printing and publishing industry, between I960 and 1975. Since
1976, however, this trend has completely reversed, and uncoated groundwood
has begun regaining market share. Reasons for this trend include:
o the printed media advertising boom has increased consumer
acceptance of, and consequent demand for, printing on uncoated
groundwood papers;
o technology improvements, such as the introduction of super
calendered uncoated groundwood production have created
higher quality grades whose printing charactertistics allow
them to compete with freesheet grades;
o new printing technologies, more compatible with groundwood
sheets, have helped increase consumer acceptance of uncoated
groundwood;
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54
o there is a significant price differential between uncoated
groundwood grades and competitors; and
o there has been a shift from newsprint to higher quality
uncoated groundwood papers for advertising inserts in newspapers.
The trends toward greater market share and new market penetration by
the uncoated groundwood paper product sector should continue in the near
future. (DRI, Pulp and Paper Review, December 1977, pp. 15-16, and
August 1979, pp. 17-18; discussions with DRI Pulp and Paper Service staff;
Kline Guide, p. 76).
Mills
Number of Mills
The 17 firms in this product sector control 22 mills which produce
uncoated groundwood paper. These are listed below by production subcategory:
Number Percent of Mills in
of Mills This Product Sector Production Subcategory Name
* *% Fine Bleached Kraft & Soda
* *% Groundwood— Thermo-Mechanical
* *% Groundwood—Coarse,
Molded Newsprint
* *% Groundwood — Fine Papers
g 36% Misc. Integrated Mills
* *% Deink (Fine Papers)
* *% Misc. Secondary Fiber Mills
* *% Nonintegrated Fine Papers
Source: 308 Survey.
Size
The average mill capacity is 602 tons per day, with a standard
deviation of 508; the median capacity is 468 tons per day (308 Survey).
Location
Uncoated groundwood paper producing mills are located mainly in the
northeast and north central regions of the United States, with a breakdown
as follows:
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55
Region Number of Mills
Northeast 8 (36%)
Southeast * ( *%)
North Central 8 (36%)
Northwest * ( *%)
West and Southwest * ( *%)
22
Source: 308 Survey.
Indirect Dischargers
Fewer than five of the mills in the uncoated groundwood product sector
are indirect dischargers. Therefore, no regional breakdown is given.
Planned Capacity Expansion
Planned daily capacity reduction in the uncoated groundwood product
sector is expected to be 62 short tons per day. This represents a
reduction of capacity in 2 mills and an expansion of capacity in 3 mills.
This reduction will be a decrease of 1.7 percent in the capacity to
produce uncoated groundwood by all mills. A capital investment of
$20,294,000 is planned for the expansions included in this capacity change.
These data apply to projects which were under construction in 1978 or
budgeted and approved for expenditure. (308 Survey)
Assuming 357 operating days per year as listed in the American Paper
Institute (API) capacity survey, the planned daily capacity reduction
reported in response to the 308 Survey equals 300 tons annually. Capacity
expansion as reported in the API Survey from 1978 to 1982 is 102,000 tons
annually (API Survey). The 308 Survey reported capacity expansion for the
uncoated groundwood paper product sector is thus lower than capacity
expansion reported by API.
Age and Productivity
The age structure in the uncoated groundwood product sector is average,
not old or new. There have recently been very few new mills and only a
few new machines added. Productivity growth in this product sector is not
very high and compared to Canadian mills, the degree of technological
obsolescence is probably higher. (Discussions with DRI Pulp and Paper Service
staff, August 2, 1979). Capital investment during the past five years by
mills producing in this product sector totals $740,689,000. Investment
per unit capacity equals $45,000, which is moderate compared to the
industry as a whole. (308 Survey) (Note: High capital investment does
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56
not necessarily correlate with low-cost production.)
Employment
Meta Systems estimates that the uncoated groundwood product sector
employed roughly 4,300 people in 1978. This represented approximately 1.7
percent of total pulp, paper, and paperboard mill employment. [Meta Systems
estimates based on E.G. Jordan data.)
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THIN PAPERS
57
Product Sector
Definition of Product Sector
Thin papers in this report are defined as thin specialties paper includ-
ing tracing, onionskin, carbonizing, cigarette, Bible, and other similar
papers.
Firms in Product Sector
There are 18 U.S. firms that product thin papers. The major producers
are:
Olin Corp.
Kimberly-Clark Corp.
International Paper Co.
Dunn Paper, Div. of Dennison Mfg. Co.
Hammermill Paper Co.
Port Huron Paper Co.
James River Corp.
Burrows Paper Corp.
Source: Meta Systems estimates based on Lockwood's, DRI estimates, and
B.C. Jordan estimates.
Concentration
In 1978, the top five firms' capacity share was 60.0 percent and the top
eight firms' capacity share was 77.7 percent. This is thus a concentrated
product sector. (Meta Systems estimates based on Lockwood's, DRI estimates,
and E.G. Jordan estimates)..
Total Capacity and Utilization Rate
U.S. capacity to product thin papers is 1,716 tons per day, or 0.85 per-
cent of total U.S. paper, paperboard, and market pulp production capacity
(308 Survey). In 1978, U.S. firms' capacity utilization rate was 89 percent
(DRI, Pulp and Paper Review, March 1979, p. 15).
Vertical Integration
Most of the firms in this product sector are vertically integrated. (DRI
estimate) Vertically integrated here means integrated from raw materials
(wood, wastepaper, etc.). Ten mills or 48 percent of the mills in this
product sector include converting operations. (308 Survey)
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58
Horizontal Integration
The 15 largest firms are horizontally integrated to other economic pro-
duction sectors as indicated by the following earnings percentages:
Co.
Firm
Olin Corp.
Kimberly-Clark Corp.
International Paper Co.
Dunn Paper, Co.,
Div. of Dennison Mfg.
Hamtnermill Paper Co.
Port Huron Paper Co.
James River Corp.
Burrows Paper Corp.
The Dexter Corp.
Potlatch Corp.
Bergstrom Paper Co.
Minnesota Mining and Mfg. Co.,
Paper Printing Products Div.
Seaman Paper Co. of Mass.., Inc.
Sorg Paper Co.
Weyerhaeuser Co.
Percent Earnings
in Paper and
Paperboard Sector
92%
79%
93%
29%
43%
Publicly or
Privately
Owned
Public
Public
Public
Public
Public
Source: Paper Trade Journal, June 30, 1979, pp. 44-47
Economic and Technological Trends
Thin papers are used economy-wide, with growth cycles reflecting GNP
changes. One-time carbonizing paper, a high-growth sector in the early 1970's
has slowed its growth rate since 1974. This was caused largely by consumer
acceptance of carbonless papers. However, anticipated short-term relative
price increases for carbonless papers (through 1981) compared to those for
one-time carbonizing papers, should stimulate a rise in market share of the
latter during the next two years. Other thin papers (Bible, cigarette, etc.)
have exhibited somewhat the same growth behavior relative to the overall econ-
omy. Lower prices have helped these grades increase their market share since
1977, though the rate of increase will slow through 1980. (DRI, Pulp and
and Paper Review, March 1979, p. 15.)
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59
Mills
Number of Mills
The 18 firms in this product sector control 21 mills which produce thin
papers. These are listed below by production subcategory:
Number
of Mills
*
*
*
*
*
9
*
2T
Percent of Mills in
This Product Sector
*
*
43%
*
100%
Source: 308 Survey
Production Subcategory Name
Fine Bleached Kraft Soda
Groundwood — Fine Papers
Unbleached Kraft (Bag)
Misc. Integrated Mills
Tissue from Wastepaper
Misc. Secondary Fiber Mills
Nonintegrated Fine Papers
Nonintegrated Lightweight
Nonintegrated Lightweight —
Electrical Allowance
Misc. Nonintegrated Mills
Size
The average mill capacity is 272 tons per day, with a standard devia-
tion of 366; the median capacity is 96 tons per day (308 Survey).
Location
Thin papers producing mills are located mainly in the northeast and
north central regions of the United States, with a breakdown as follows:
Region
Northeast
Southeast
North Central
Northwest
West and Southwest
Number of Mills
9 (43%)
* ( *%)
7 (33%)
* ( *%)
* ( *%)
21
Source: 308 Survey
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60
Indirect Dischargers
Five mills or 24 percent of the mills in the thin papers product sector
are indirect dischargers. The percents of mills in each region which are
indirect dischargers are as follows:
Region % of Mills
Northeast
Southeast
North Central
Northwest
West and Southwest
Source: 308 Survey
Planned Capacity Expansion
Planned daily capacity expansion in the thin papers product_sector is
expected to be 19 short tons per day. This represents an expansion of capa-
city in three mills. This expansion will be an increase of 1.1 percent in
the capacity to produce thin papers by all mills. A capital investment of
$4%3l!oOO Is Planned for this expansion. These data apply to projects whach
were under construction in 1978 or budgeted and approved for expenditures.
(308 Survey)
Assuming 338 operating days per year as listed in the American Paper
institute (API) capacity survey, the planned daily capacity expansion report-
ed S response to ?he 308 Survey equals 6,000 tons annually. Capacity reduc-
tion as reported in the API Survey from 1978 to 1982 is 27,000 tons annually.
(API Survey) The 308 Survey reported capacity expansion for the thin papers
product sector is thus higher than future capacity as reported by API.
Age and Productivity
The age structure in the thin papers product sector is old. There have
been no new mills and no new machines recently added, creating a high degree
f technological obsolescence. Productivity growth in this product sector is
low (I to 2 percent per year). (Discussions with DRI Pulp and Paper Service
Sff Augusf 2! 1979) . Capital investment during the past five years by
mil^'producing in this product sector totals $540,093,000. Investment per
nit edacity equals $95^000, which is very high compared to the industry as
a wnole (308 Survey) (Note: High capital investment does not necessarily
correlate with low-cost production).
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61
Employment
Meta Systems estimates that the thin papers product sector employed
roughly 2,900 people in 1978. This represented approximately 1.1 percent of
total pulp, papar, and paperboard mill employment. (Meta Systems estimate
based on E.G. Jordan data.)
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SOLID BLEACHED BRISTOLS
62
Product Sector
Definition of Product Sector
Solid bleached bristols in this report are defined as solid bleached
paper produced for such products as tabulating index, tag, file folder,
coated cover bristols, and uncoated bristols (e.g., index, printing, and
postcard).
Firms in Product Sector
There are 18 U.S. firms that produce solid bleached bristols. The
major producers are:
Scott Paper Co.
International Paper Co.
Federal Paper Board Co., Inc.
Union Camp Corp.
Potlatch Corp.
Watervliet Paper Co., Inc.
Bird & Son, Inc.
Diamond International Corp.
Wausau Paper Mills Co.
Source: Meta Systems estimates based on Lockwood's, DRI estimates and
B.C. Jordan estimates.
Concentration
In 1978, the top five firms' capacity share was 69.3 percent and the
top eight firms' capacity share was 81.0 percent. This is thus a
concentrated product sector. (Meta Systems estimates based on Lockwood's,
DRI estimates, and E.G. Jordan estimates).
Total Capacity and Utilization Rate
U.S. capacity to produce solid bleached bristols is 2,726* tons per
day, or 1.35 percent of total U.S. paper, paperboard, and market pulp
production capacity (308 Survey). In 1978, U.S. firms' capacity utilization
rate was 89 percent (DRI, Pulp and Paper Review, March 1979, p,. 14).
*0ne mill in this product sector did not report capacity data and was
not included in this total.
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63
Vertical Integration
Most of the firms in this product sector are vertically integrated
(DRI estimates). Vertically integrated here means integrated from raw
materials (wood, wastepaper, etc.) to converted product. Eleven mills,
or 50 percent of the mills in this product sector include converting
operations (308 Survey).
Horizontal Integration
The 15 largest firms are horizontally integrated to other economic
production sectors as indicated by the following earnings percentages:
Firm
Scott Paper Co.
International Paper Co.
Federal Paper Board Co., Inc.
Union Camp Corp.
Potlatch Corp.
Watervliet Paper Co., Inc.
Bird & Son, Inc.
Diamond International Corp.
Wausau Paper Mills Co.
Sorg Paper Co.
Boise Cascade Corp.
James River Corp.
Philip Morris Ind. Paper Group
Weyerhaeuser Co.
Hammermill Paper Co.
Percent Earnings
in Paper and
Paperboard Sector
92%
79%
98%
89%
64%
54%
53%
29%
5%
43%
93%
Publicly or
Privately
Owned
Public
Public
Public
Public
Public
Public
Public
Public
Public
Public
Public
Source: Paper Trade Journal, June 30, 1979, pp. 44-47.
Economic and Technological Trends
Demand has been essentially static since 1969 primarily because of
declining use of tabulating cards as business machines are designed for
greater use of tape input/output and larger internal memory banks and with
the increasing use of interactive computer systems. The continuation of
these trends will lead to declining demand. Demand for other grades, such
as tag and file folder, correlates well with GNP. However, the introduction
of electronic devices into the office will tend to damper growth in this
sector. (ADL, 1977, p. 63; discussions with DRI Pulp and Paper Service staff;
DRI, Pulp and Paper Review, August 1979, pp. 18-19).
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64
Mills
Number of Mills
The 18 firms in this product sector control 22 mills which produce
solid bleached bristols. These are listed below by production subcategory:
Number Percent of Mills in
of Mills This Product Sector Production Subcategory Name
* *% BCT Bleached Kraft
* *% Fine Bleached Kraft & Soda
* *% Semi-Chemical
* *% Papergrade Sulfite
6 27% Misc. Integrated Mills
* *% Misc. Secondary Fiber Mills
* *% Nonintegrated Fine Papers
* * Misc. Nonintegrated Mills
22 100%
Source: 308 Survey.
Size
The average mill capacity is 743 tons per day, with a standard
deviation of 601; the median capacity is 553 tons per day (308 Survey).
Location
Solid bleached bristols producing mills are located throughout the
United States, with a regional breakdown as follows:
Region . Number of Mills
Northeast " 6 (27%)
Southeast 7 (32%)
North Central 5 (23%)
Northwest * ( *%)
West and Southwest * ( *%)
22
Source: 308 Survey.
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65
Indirect Dischargers
Seven mills or 32 percent of the mills in the solid bleached bristols
product sector are indirect dischargers. The percents of mills in each
region which are indirect dischargers are as follows:
Region % of Mills
Northeast *
Southeast 0
North Central *
Northwest *
West and Southwest Confidential
Source: 308 Survey.
Planned Capacity Expansion
Capacity expansion is planned for only one mill in the solid bleached
bristols product sector. (308 Survey) For confidentiality reasons these
data are not provided. Capacity reduction as reported in the API Survey
from 1978 to 1982 is 213,000 tons annually (API Survey). Thus, the
308 Survey reported capacity expansion for the solid bleached bristols
product sector cannot be compared to future capacity as reported by API.
Age and Productivity
The age structure in the solid bleached bristols product sector is
old, since many machines have been shut down without replacements. Any
new machines which might be installed are expected to be located in the
South. Productivity growth in this product sector is low (1 to 2 percent
per year) and the degree of technological obsolescence is Moderate.
(Discussions with DRI Pulp and Paper Service staff, August 2, 1979).
Capital investment during the past five years by mills producing in this
produce sector totals $899,581,000. Investment per unit capacity equals
$55,000, which is moderately high compared to the industry as a whole.
(308 Survey) (Note: High capital investment does not necessarily
correlate with low-cost production.)
Employment
Meta Systems estimates that the solid bleached bristols product sector
employed roughly 4,000 people in 1978. This represented approximately
1.6 percent of total pulp, paper, and paperboard mill employment. (Meta
Systems estimate based on E.G. Jordan data.)
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COTTON FIBRE
66
Product Sector
Definition of Product Sector
Cotton fibre paper is defined in this report as papers containing 25
percent or more in their furnish of cotton, cotton rags, cotton waste,
linters, linter pulp, flax, or similar fibers.
Firms in Product Sector
There are 19 U.S. firms that produce cotton fibre paper. The major
producers are:
Crane & Co.
Hammermill Paper Co.
Mead Corp.
Spaulding Fibre Co.
Consolidated Papers Inc.
Continental Fibre Co.
Kimberly-Clark Corp.
Nekoosa Paper Co.
Rising Paper Co.
Simpson Paper Co.
Source: Meta Systems estimates based on Lockwood's, DRI estimates, and
B.C. Jordan estimates.
Concentration
In 1978, the top five firms' capacity share was 45.2 percent, and the
top eight firms' capacity share was 61.2 percent. This is thus a moderately
concentrated product sector. (Meta Systems estimates based on Lockwood's,
DRI estimates, and E.G. Jordan estimates.)
Total Capacity and Utilization Rate
U.S. capacity to produce cotton fibre paper is 552* tons per day, or
0.27 percent of total U.S. paper, paperboard, and market pulp production
capacity (308 Survey). In 1979, U.S. firms' capacity utilization rate was
83 percent (DRI, Pulp and Paper Review, March 1979, p. 16).
*One mill in this product sector did not report capacity data and was
not included in this total.
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67
Vertical Integration
Few of the firms in this sector are backward integrated to wood,
although all are integrated to cotton fibre (DRI estimates). Seventeen
mills, or 74 percent of the mills in this product sector, are forward inte-
grated and include converting operations (308 Survey).
Horizontal Integration
The 15 largest firms are horizontally integrated to other economic
production sectors, as indicated by the following earnings percentages:
Firm
Crane & Co.
Hammermill Paper Co.
Mead Corp.
Spaulding Fibre Co.
Consolidated Papers Inc.
Continental Fibre Co.
Kimberly-Clark Corp.
Nekoosa Paper Co.
Rising Paper Co.
Simpson Paper Co.
Harding-Jones Paper Co.
James River Corp.
Southworth Co.
Fletcher Paper Co.
Fox River Paper Corp.
Percent Earnings
in Paper and
Paperboard Sector
93%
44%
94%
92%
96%
29%
Publicly or
Privately
Owned
Public
Public
Public
Public
Public
Public
Source: Paper Trade Journal, June 30, 1979, pp. 44-47.
Economic and Technological Trends
Cotton -fibre papers face competition from chemical wood pulp papers,
and their demand varies in response to relative price changes. The long-
term trend has been a decline in cotton fibre's market share, due largely
to higher costs of cotton fibre production, and this trend is expected to
continue (DRI, Pulp and Paper Review, March 1979, p. 16).
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68
Mills
Number of Mills
The 19 firms in this product sector control 23 mills which produce
cotton fibre papers. These are listed below by production subcategory:
Number Percent of Mills in
of Mills This Product Sector Production Subcategory Name
8 35% Misc. Integrated Mills
9 39% Nonintegrated Fine Papers
* * Nonintegrated Fiber &
Nonwoven
* * Misc. Nonintegrated Mills
23 100%
Source: 308 Survey.
Size
The average mill capacity is 66 tons per day, with a standard devia-
tion of 64; the median capacity is 52 tons per day (308 Survey).
Location
Cotton fibre paper producing mills are located in the northeast and
north central parts of the United States as follows:
Region Number of Mills
Northeast 12 (52%)
Southeast * ( *%)
North Central * ( *%)
Northwest 0(0%)
West and Southwest 0 (0%)
23
Source: 308 Survey.
Indirect Dischargers
Sixteen mills, or 70 percent of the mills in the cotton fibre product
sector, are indirect dischargers. The percents of mills in each region
which are indirect dischargers are as follows:
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69
Region % of Mills
Northeast 75
Southeast *
North Central *
Northwest 0
West and Southwest 0
Source: 308 Survey
Planned Capacity Expansion
Planned daily capacity expansion in the cotton fibre product sector is
expected to be 10 short tons per day. This represents an expansion of
capacity in three mills. This expansion will be an increase of 1.8 percent
in the capacity to produce cotton fiber paper by all mills. A capital invest-
ment of $987,000 is planned for this expansion. These data apply to projects
which were under construction in 1978 or budgeted and approved for expandi-
ture. (308 Survey)
Assuming 309 operating days per year as listed in the American Paper
Institute (API) capacity survey, the planned daily capacity expansion reported
in response to the 308 Survey equals 3,000 tons annually. Capacity reduction
as reported in the API Survey from 1978 to 1982 is 2,000 tons annually (API
Survey). The 308 Survey reported capacity expansion for the cotton fibre
product sector is thus approximately equal to future capacity as reported
by API.
Age and Productivity
The age structure in the cotton fibre product sector is very old. There
have been no new mills or machines recently added. Productivity growth in
this product sector is low (1 to 2 percent per year), and the degree of tech-
nological obsolesence is high. (Discussions with DRI Pulp and Paper Service
staff, August 2, 1979.) Capital investment during the past five years by
mills producing in this product sector totals $52,787,000. Investment per
unit capacity equals $35,000, which is moderately low compared to the industry
as a whole. (308 Survey) (Note: High capital investmend does not necessar-
ily correlate with low-cost production.)
Employment
Meta Systems estimates that the cotton fibre product sector employed
roughly 1,900 people in 1978. This represented approximately 0.8 percent of
total pulp, paper, and paperboard mill employment. (Meta Systems estimates
based on E.G. Jordan data.)
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ALL OTHER PAPER
Product Sector
Definition of Product Sector
All other paper is defined in this report as the residual category for
all paper products not otherwise classified.
Firms in Product Sector
There are 18 U.S. firms that produce all other paper. The major pro-
ducers are:
Appleton Papers Division of NCR
Kimberly-Clark Corp.
Boise Cascade Corp.
Deerfield Specialty Papers, Inc.
Philip Morris Ind. Paper Group
Sorg Paper Co.
Weyerhaeuser Co.
Brown Co.
P.H. Glatfelter Co.
Scott Paper Co.
Source: Meta Systems estimates based on Lockwood's, DRI estimates, and
E.G. Jordan estimates.
Concentration
In 1978, the top five firms' capacity share was 45.5 percent, and the
top eight firms' capacity share was 66.4 percent. This is thus a moderately
concentrated product sector . (Meta Systems estimates based on Lockwood's,
DRI estimates, and E.G. Jordan estimates.)
Total Capacity and Utilization Rate
U.S. capacity to produce all other paper is 665* tons per day, or 0.33
percent of total U.S. paper, paperboard, and market pulp production capacity
(308 Survey). No capacity utilization rate data are available.
Vertical Integration
No information is available on the level of vertical integration of
firms in this sector. Eleven mills, or 50 percent of the mills in this
product sector, include converting operations (308 Survey).
*One mill in this product sector did not report capacity data and was
not included in this total.
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71
Horizontal Integration
The 15 largest firms are horizontally integrated to other economic
production sectors, as indicated by the following earnings percentages:
Firm
Appleton Papers Division of NCR
Kimberly-Clark Corp.
Boise Cascade Corp.
Deerfield Specialty Papers, Inc.
Philip Morris Ind. Paper Group
Sorg Paper Co.
Weyerhaeuser Co.
Brown Co.
P.H. Glatfelter Co.
Scott Paper Co.
Crown Zellerbach Corp.
Georgia-Pacific Corp.
James River Corp.
Knowlton Brothers
Monadnock Paper Mills, Inc.
Percent Earnings
in Paper and
Paperboard Sector
92%
53%
5%
43%
78%
100%
92%
55%
20%
29%
Publicly or
Privately
Owned
Public
Public
Public
Public
Public
Public
Public
Public
Public
Public
Source: Paper Trade Journal, June 30, 1979, pp. 44-47.
Economic and Technological Trends
Lack of available data prevents a discussion of economic and techno-
logical trends for this product sector.
Mills
Number of Mills
The 18 firms in this product sector control 22 mills which produce all
other paper. These are listed below by production subcategory:
Number
of Mills
Percent of Mills in
This Product Sector
*
*
*
*
Production Subcategory Name
BCT Bleached Kraft
Fine Bleached Kraft & Soda
Papergrade Sulfite
Misc. Integrated Mills
-------
Number
of Mills
Percent of Mills in
This Product Sector
*
*
22
100%
72
Production Subcategory Name
Paperboard from Wastepaper
Misc. Secondary Fiber Mills
Nonintegrated Fine Papers
Nonintegrated Filter &
Nonwoven
Nonintegrated Paperboard
Misc. Nonintegrated Mills
Source: 308 Survey.
Size
The average mill capacity is 236 tons per day, with a standard devia-
tion of 377; the median capacity is 75 tons per day (308 Survey).
Location
All other paper producing mills are located primarily in the Northeast,
with a regional breakdown as follows:
Region
Northeast
Southeast
North Central
Northwest
West and Southwest
Number of Mills
14 (64%)
* ( *%)
* ( *%)
0 ( 0%)
* ( *%)
22
Source: 308 Survey.
Indirect Dischargers
Eleven mills, or 50 percent of the mills in the all other paper grade
product sector, are indirect dischargers. The percents of mills in each
region which are indirect dischargers are given on the following page.
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73
Region % of Mills
Northeast *
Southeast 0
North Central *
Northwest 0
West and Southwest 0
Source: 308 Survey.
Planned Capacity Expansion
Planned daily capacity expansion in the all other paper product sector
is expected to be 33 short tons per day. This represents an expansion of
capacity in four mills. This expansion will be an increase of 5.0 percent
in production of all other paper by all mills. A capital investment of
$1,175,000 is planned for this expansion. These data apply to projects
which were under construction in 1978 or budgeted and approved for expendi-
ture . (308 Survey) American Paper Institute capacity expansion data are
unavailable for the all other paper product sector, and, therefore, no
comparison is possible.,
Age and Productivity
It is not possible to estimate the age structure in the all other paper
product sector, as no information is available on new mills or machinery.
Nor are data available concerning productivity growth and technological
obsolescence in the sector. Capital investment during the past five years
by mills producing in this product sector totals $620,265,000. Investment
per unit capacity equals $89,000, which is very high compared to the indus-
try as a whole. (308 Survey) (Note: High capital investment does not
necessarily correlate with low-cost production.)
Employment
Meta Systems estimates that the all other paper product sector employed
roughly 1,800 people in 1978. This represented approximately 0.7 percent
of total pulp, paper, and paperboard mill employment. (Meta Systems esti-
mates based on E.G. Jordan data.)
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UNBLEACHED KRAFT LINERBOARD
74
Product Sector
Definition of Product Sector
Unbleached Kraft linerboard is defined in this report as paperboard
made from a furnish containing not less than 80 percent wood pulp produced
by the Kraft process, manufactured for use as facing material when combining
paperboard for conversion into corrugated or solid fiber boxes. It includes
solid unbleached Kraft linerboard, both Fourdrinier and Cylinder, mottle
white linerboard, and clay coated unbleached Kraft linerboard.
Firms in Product Sector
There are 29 U.S. firms that produce unbleached Kraft linerboard. The
major producers are:
International Paper Co.
Weyerhaeuser Co.
Georgia Kraft Co.
St. Regis Paper Co.
Union Camp Corp.
Container Corp. of America
Owens-Illinois, Inc.
Continental Forest Industries
Nekoosa Papers, Inc.
Source: Meta Systems estimates based on Lockwood's, DRI estimates, and
E.G. Jordan estimates.
Concentration
In 1978, the top five firms' capacity share was 37.8 percent, and the
top eight firms' capacity share was 51.1 percent. This is thus an uncon-
centrated product sector. (Meta Systems estimates based on Lockwood's, DRI
estimates, and E.G. Jordan estimates). Because of barriers to entry, posed
primarily by the vertical integration requirements in Kraft linerboard pro-
duction, this sector will likely become more concentrated. New entrants
are unlikely except, through the acquisition of existing firms.
Total Capacity and Utilization Rate
U.S. capacity to produce unbleached Kraft linerboard is 42,424* tons per
day, or 20.98 percent of total U.S. paper, paperboard, and market pulp pro-
duction capacity (308 Survey). In 1979, U.S. firms' estimated capacity
utilization rate was 94.5 percent (Pulp and Paper, January 1979 estimate).
*One mill in this product sector did not report capacity data and was
not included in this total.
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75
Vertical Integration
Most firms in this product sector are backward integrated; that is, they
own timber lands and/or lease lands for timber-cutting purposes. About 75
percent of production volume is provided by forward integrated firms, using
at least 50 percent of their board production in their own converting opera-
tions. The only major nonforward integrated firm is Great Southern, part of
Great Northern Nekoosa. (Fibre Box Assn. and DRI estimates.) Four mills, or
8.3 percent of the mills in this product sector, include converting opera-
tions (308 Survey).
Horizontal Integration
The 15 largest firms are horizontally integrated to other economic pro-
duction sectors, as indicated by the following earnings percentages:
Firm
International Paper Co.
Weyerhaeuser Co.
Georgia Kraft Co.
St. Regis Paper Co.
Union Camp Corp.
Container Corp. of America
Owens-Illinois, Inc.
Continental Forest Industries
Nekoosa Papers, Inc.
Packaging Corp. of America
Westvaco Corp.
Champion International
Boise Cascade Corp.
Crown Zellerbach Corp.
St. Joe Paper Co.
Percent Earnings
in Paper and
Paperboard Sector
79%
43%
82%
89%
100%
19%
22%
96%
100%
90%
47%
53%
55%
Publicly or
Privately
Owned
Public
Public
Public
Public
Public
Public
Public
Public
Public
Public
Public
Public
Public
Source: Paper Trade Journal, June 30, 1979, pp. 44-47.
Economic and Technological Trends
Demand for Kraft linerboard relates directly to the shipping container
requirements of the full spectrum of American industry; thus, it is strongly
influenced by the main macroeconomic indicators, including the industrial
production index and GNP. The only real competitive threat to shipping
containers made from unbleached linerboard and corrugating medium comes
from the use of heavy-gauge shrink plastic film (film which can be wrapped
around a pallet of packages and then shrunk by heating to hold the load
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76
securely). The superior cost/performance characteristics of corrugated
containers, however, limit shrink film competition to very few applica-
tions. Other products have not encroached significantly into linerboard
markets. (ADL, 1977, p. 15)
Mills
Number of Mills
The 29 firms in this product sector control 48 mills which produce
unbleached Kraft linerboard. These are listed below by production subcate-
gory:
Number Percent of Mills in
of Mills This Product Sector Production Subcategory Name
17 35% Unbleached Kraft (Linerboard)
10 21% Unbleached Kraft & Semi-
Chemical
6 13% Unbleached Kraft (Bag)
15_ 31% Misc. Integrated Mills
48 100%
Source: 308 Survey.
Size
The average mill capacity is 1,342 tons per day, with a standard devia-
tion of 552; the median capacity is 1,255 tons per day (308 Survey).
Location
Unbleached Kraft linerboard producing mills are concentrated in the
southeastern United States as follows:
Region Number of Mills
Northeast 0(0%)
Southeast 34 (71%)
North Central 0(0%)
Northwest 9 (19%)
West and Southwest 5 (10%)
48
Source: 308 Survey.
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77
Indirect Dischargers
Fewer than five of the mills in the unbleached Kraft linerboard product
sector are indirect dischargers. The percents of mills in each region which
are indirect dischargers are as follows:
Region % of Mills
Northeast 0
Southeast *
North Central 0
Northwest 0
West and Southwest 0
Source: 308 Survey.
Planned Capacity Expansion
Planned daily capacity expansion in the unbleached Kraft linerboard
product sector is expected to be 3,874 short tons per day. This represents
an expansion of capacity in 17 mills. This expansion will be an increase of
9.1 percent in the capacity to produce unbleached Kraft linerboard by all
mills. A capital investment of $363,656,000 is planned for this expansion.
These data apply to projects which were under construction in 1978 or bud-
geted and approved for expenditure. (308 Survey)
Assuming 354 operating days per year as listed in the American Paper
Institute (API) capacity survey, the planned daily capacity expansion re-
ported in response to the 308 Survey equals 1,371,000 tons annually. Capac-
ity expansion as reported in the API Survey from 1978 to 1982 is 1,774,000
tons annually (API Survey). The 308 Survey reported capacity expansion for
the unbleached Kraft linerboard product sector is thus lower than capacity
expansion reported by API.
Age and Productivity
The age structure in the unbleached Kraft linerboard product sector is
quite young; over 50 percent of the mills date from the 1960s or more
recently. The percent of new machines is high, with more expected to be
coming on-stream in the next three years. The associated productivity
growth was very high (4 to 5 percent) in the 1960s and has slowed in the
1970s. There is no technological obsolescence in this sector; most mills
are large and efficient. (Discussions with DRI Pulp and Paper Service staff,
August 2, 1979). Capital investment during the past five years by mills
producing in this product sector totals $2,000,921,000. Investment per
unit capacity equals $31,000, which is low compared to the industry as a
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78
whole. (308 Survey) (Note: High capital investment does not necessarily
correlate with low-cost production.)
Employment
Meta Systems estimates that the unbleached Kraft linerboard product
sector employed roughly 27,300 people in 1978. This represented approxi-
mately 10.9 percent of total pulp, paper, and paperboard mill employment.
(Meta Systems estimates based on E.G. Jordan data.)
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BLEACHED KRAFT LINERBOARD
Product Sector
Definition of Product Sector
Bleached Kraft linerboard is defined in this report as paperboard
made from a furnish containing not less than 80 percent bleached virgin
chemical wood pulp, manufactured for use as display stands and advertising
board, and for converting into cigarette and similar types of boxes.
Firms in Product Sector
There are six U.S. firms that produce bleached Kraft linerboard. The
major producers are:
Temple Eastex, Inc.
Scott Paper Co.
International Paper Co.
Longview Fibre Co.
St. Regis Paper Co.
Oilman Paper Co.
Source: Meta Systems estimates based on Lockwood's, DRI estimates,
and E.G. Jordan estimates.
Concentration
In 1978, the top five firms' capacity share was 98.3 percent and the
top six firms' capacity share was 100 percent. This is thus a highly
concentrated product sector. (Meta Systems estimates based on Lockwood's,
DRI estimates, and E.G. Jordan estimates).
Total Capacity and Utilization Rate
U.S. capacity to produce bleached Kraft linerboard is 315 tons per day,
or 0.16 percent of total U.S. paper, paperboard, and market pulp production
capacity (308 Survey). The 1979 capacity utilization rate for U.S. firms
producing bleached Kraft linerboard is estimated at 103.5 percent (DRI,
Pulp and Paper Review, August 1979, pp. 53-54, estimate).
Vertical Integration
Most firms in this product sector are backward integrated, that is,
they own timberlands and/or lease lands for timber cutting purposes. About
75 percent of production volume is produced by forward integrated firms,
using at least 50 percent of their board production in their own converting
operations. (Fibre Box Assn. and DRI estimates). Two mills, or 33.3 percent
of the mills in this product sector include converting operations (308
Survey).
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80
Horizontal Integration
The six largest firms are horizontally integrated to other economic
production sectors as indicated by the following earnings percentages:
Firm
Temple Eastex, Inc.
Scott Paper Co.
International Paper Co.
Longview Fibre Co.
St. Regis Paper Co.
Gilman Paper Co.
Percent Earnings
in Paper and
Paperboard Sector
92%
79%
83%
82%
Publicly or
Privately
Owned
Public
Public
Public
Public
Source: Paper Trade Journal, June 30, 1979, pp. 44-47.
Economic and Technological Trends
Bleached Kraft linerboard is a very small sector of the paperboard
industry, it is a higher quality linerboard than unbleached. Forecasts are
for bleached linerboard to remain at roughly .8 percent of total linerboard
production (DRI discussions).
Mills
Number of Mills
The six firms in this product sector control six mills which produce
bleached Kraft linerboard. These are listed below by production subcategory:
Number
of Mills
Percent of Mills in
This Product Sector
*%
*%
*%
Production Subcategory Name
Market Bleached Kraft
BCT Bleached Kraft
Misc. Integrated Mills
100%
Source: 308 Survey.
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81
Size
The average mill capacity is 1,660 tons per day, with a standard
deviation of 522; the median capacity is 1,613 tons per day (308 Survey).
Location
Bleached Kraft linerboard producing mills are located mainly in the
Southeast, with a regional breakdown as follows:
Region Number of Mills
Northeast 0 (0%)
Southeast * (*%)
North Central 0 (0%)
Northwest * (*%)
West and Southwest * (*%)_
6
Source: 308 Survey.
Indirect Dischargers
No mills in the bleached Kraft linerboard product sector are indirect
dischargers (308 Survey).
Planned Capacity Expansion
The bleached Kraft linerboard product sector includes only one mill
with plans for capacity expansion. This information is therefore confiden-
tial (308 Survey). Capacity expansion as reported in the API Survey from
1978 to 1982 is 17,000 tons annually (API Survey). Thus the 308 Survey
reported capacity expansion for the bleached Kraft linerboard product
sector cannot be compared to capacity expansion reported by API.
Age and Productivity
The age structure in the bleached Kraft linerboard product sector is
quite new with most mills dated from the 1960s or more recently and a high
percentage of new machines. Productivity growth in this product sector is
moderate (3 percent per year) and the degree of technical obsolescence is
moderate. (Discussions with DRI Pulp and Paper Service staff, August 2, 1979.
Capital investment during the past five years by mills producing in this
product sector totals $318,717,000. Investment per unit capacity equals
$32,000, which is low compared to the industry as a whole. (308 Survey)
(Note: High capital investment does not necessarily correlate with low-cost
production.)
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Employment
Meta Systems estimates that the bleached Kraft linerboard product sector
employed roughly 350 people in 1978. This represented approximately 0.1 per-
cent of total pulp, paper, and paperboard mill employment. (Meta Systems
estimates based on E.G. Jordan data.)
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BLEACHED FOLDINGBOARD
83
Product Sector
Definition of Product Sector
Bleached foldingboard is defined in this report as paperboard made from
a furnish containing not less than 80 percent virgin bleached chemical wood
pulp, for conversion into folding cartons, such as containers for ice cream,
butter, oleomargarine, bakery products, frozen foods, cosmetics, and drugs.
Firms in Product Sector
There are 13 U.S. firms that produce bleached foldingboard. The
major producers are:
International Paper Co.
Continental Forest Industries
Potlatch Corp.
Federal Paper Board Co., Inc.
Container Corp. of America
Weyerhaeuser Co.
Union Camp Corp.
Oilman Paper Co.
Source: Meta Systems estimates based on Lockwood's, DRI estimates,
and E.G. Jordan estimates.
Concentration
In 1978, the top five firms' capacity share was 70.6 percent and the
top eight firms' capacity share was 86.3 percent. This is thus a
concentrated product sector. (Meta Systems estimates based on Lockwood's,
DRI estimates, and E.G. Jordan estimates).
Total Capacity and Utilization Rate
U.S. capacity to produce bleached foldingboard is 6,510* tons per day,
or 3.22 percent of total U.S. paper, paperboard, and market pulp production
capacity (308 Survey). The 1979 capacity utilization rate for U.S. firms
producing bleached foldingboard was 92.5 percent (DRI, Pulp and Paper
Review, pp. 64-65 estimate).
*Two mills in this product sector did not report capacity data and were
not included in this total.
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84
Vertical Integration
Most firms in this product sector are backward integrated, that is,
they own timberlands and/or lease lands for timber cutting purposes.
Seventy-five to 80 percent by production volume of this sector is forward
integrated to converting of boxboard to foldingboard. A forward integrated
firm is here defined as a firm which owns a converting operation. The firm
may not convert all of its production. (Fibre Box Assn. and DRI estimates).
Nine mills or 53 percent of the mills in this product sector include
converting operations (308 Survey).
Horizontal Integration
The 13 largest firms are horizontally integrated to other economic
production sectors as indicated by the following earnings percentages:
Percent Earnings Publicly or
in Paper and Privately
Firm Paperboard Sector Owned
International Paper Co. 79% Public
Continental Forest Industries 22% Public
Potlatch Corp. 64% Public
Federal Paper Board Co., Inc. 98% Pxiblic
Container Corp. of America 100% Public
Weyerhaeuser Co. 43% Public
Union Camp Corp. 89% Public
Gilman Paper Co.
Fiberboard Corp.
Scott Paper Co. 92% Public
Westvaco Corp. 90% Public
Temple Eastex, Inc.
Crown Zellerbach Corp. 55% Public
Source: Paper Trade Journal, June 30, 1979, pp. 44-47.
Economic and Technological Trends
Foldingboard is used almost exclusively in the manufacture of folding
cartons, of which the three most important bleached kinds are medical,
wet food, and beverage packaging. Long-term demand for medical foldingboard
has been increasing due to:
o long-term increases in demands for health care and medical products;
o movement toward unit dose packaging by hospitals and retail
pharmacies;
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85
o penetration into new markets such as disposable sanitary products;
and
o an increase in consumption of over-the-counter drugs.
Wet food packaging cartons face severe competition from plastics films
and pouches, especially in the frozen vegetable sector, and from hard
thermoplastics in the butter and margarine packaging sectors. Plastic
container and flexible packaging pose competition to several bleached
foldingboard markets. Also, declining basis weights for board require more
square feet of packaging per ton. Continued slow growth in this sector is
expected. (DRI, Pulp and Paper Review, December 1977, pp. 93-101).
Mills
Number of Mills
The 13 firms in this product sector producing bleached foldingboard
control 17 mills. These are listed below by production subcategory:
Number Percent of Mills in
of Mills This Product Sector Production Subcategory Name
* *% Market Bleached Kraft
* *% BCT Bleached Kraft
7 41% Misc. Integrated Mills
* *% Paperboard from Wastepaper
* *% Nonintegrated Fine Papers
17 100%
Source: 308 Survey.
Size
The average mill capacity is 1,172 tons per day, with a standard
deviation of 430; the median capacity is 1,264 tons per day (308 Survey).
Location
Bleached foldingboard producing mills are located mainly in the
Southeast, with a regional breakdown as follows:
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86
Region Number of Mills
Northeast * ( *%)
Southeast 11 (65%)
North Central * ( *%)
Northwest * ( *%)
West and Southwest * ( *%)
17
Source: 308 Survey.
Indirect Dischargers
Fewer than five of the mills in the bleached foldingboard product
sector are indirect dischargers. Because so few mills in this sector are
indirect dischargers, the location information remains confidential
(308 Survey).
Planned Capacity Expansion
Planned daily capacity expansion in the bleached foldingboard product
sector is expected to be 162 short tons per day. This represents an
expansion of capacity in four mills. This expansion will be an increase
of 2.5 percent in the capacity to produce bleached foldingboard by all mills.
A capital investment of $28,600,000 is planned for this expansion. These
data apply to projects which were under construction in 1978 or budgeted
and approved for expenditure. (308 Survey)
Assuming 357 operating days per year as listed in the American Paper
Institute (API) capacity survey, the planned daily capacity expansion
reported in response to the 308 Survey equals 58,000 tons annually. Capacity
expansion as reported in the API Survey from 1978 to 1982 is 223,000 tons
annually (API Survey). The 308 Survey reported capacity expansion for the
bleached foldingboard product sector is thus lower than capacity expansion
reported by API.
Age and Productivity
The age structure in the bleached foldingboard product sector is
fairly new. 1960s-vintage mills predominate and there have recently been
quite a few new machines added. Productivity growth in this product sector
is moderate (3 percent per year), and the degree of technological
obsolescence is moderate. (Discussions with DRI Pulp and Paper Service staff,
August 2, 1979). Capital investment during the past five years by mills
producing in this product sector totals $1,157,009,000. Investment per
unit capacity equals $58,000, which is moderately high compared to the
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87
industry as a whole. (308 Survey) (Note: High capital investment does not
necessarily correlate with low-cost production.)
Employment
Meta Systems estimates that the bleached foldingboard product sector
employed roughly 6,000 people in 1978. This represented approximately 2.4
percent of total pulp, paper, and paperboard mill employment. Meta Systems
estimates based on E.G. Jordan estimates.)
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SOLID BLEACHED BOARD
88
Product Sector
Definition of Product Sector
Solid bleached board is defined in this report as paperboard made from
a furnish containing not less than 80 percent virgin bleached chemical wood
pulp, for conversion into milk carton, heavyweight cup and round nested food
container, plate, dish and tray, and into packaging for moist, liquid, and
oily foods, for blister packs, tubes and other products not classified else-
where, and for industrial products not classified under bleached bristol and
for export.
Frims in Product Sector
There are 17 U.S. firms that produce solid bleached board. The major
producers are:
Westvaco Corp.
International Paper Co.
Champion International
Temple Eastex, Inc.
Gulf States Paper Corp.
Container Corp. of America
Georgia-Pacific Corp.
American Can Co.
Source: Meta Systems estimates based on Lockwood's, DRI estimates, and
E.G. Jordan estimates.)
Concentration
In 1978, the top five firms' capacity share was 58.8 percent and the top
eight firms' capacity share was 79.2 percent. This is thus a concentrated
product sector. (Meta Systems estimates based on Lockwood's, DRI estimates
and E.G. Jordan estimates.)
Total Capacity and Utilization Rate
U.S. capacity to produce solid bleached board is 5,425* tons per day, or
2.68 percent of total U.S. paper, paperboard, and market pulp production
capacity. (308 Survey) The 1979 capacity utilization rate for U.S. firms
producing bleached paperboard (including foldingboard, milk carton, liner-
board, etc.) was 89.9 percent. (Pulp and Paper, August 1979, estimate).
*One mill in this product sector did not report capacity data and was not
included in this total.
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89
Vertical Integration
Most firms in this product sector are backward integrated, that is,
they own timberlands and/or lease lands for timber cutting purposes.
Seventy-five to 80 percent by production volume of this sector is forward
integrated to converting. A forward integrated firm is here defined as a
firm which owns a converting operation. The firm may not convert all of
its production. (Fibre Box Assn. and DRI estimates) Seven mills or 37
percent of the mills in this product sector include converting operations
(308 Survey).
Horizontal Integration
The 15 largest firms are horizontally integrated to other economic
production sectors as indicated by the following earnings percentages:
Percent Earnings Publicly or
in Paper and Privately
Firm Paperboard Sector Owned
Westvaco Corp. 90% Public
International Paper Co. 79% Public
Champion International 47% Public
Temple Eastex, Inc.
Gulf States Paper Corp.
Container Corp. of America 100% Public
Georgia-Pacific Corp. 20% Public
American Can Co. 9% Public
Potlatch Corp. 64% Public
Weyerhaeuser Co. 43% Public
Union Camp Corp. 89% Public
Federal Paper Board Co., Inc. 98% Public
Gilman Paper Co.
St. Regis Paper Co. 82% Public
Scott Paper Co. 92% Public
Source: Paper Trade Journal, June 30, 1979, pp. 44-47.
Economic and Technological Trends
The recycled milk carton market ended in 1973 with passage of laws
prohibiting use of waste material for milk cartons. As with several
other paperboard sectors, virgin fiber milk carton faces severe competition
from plastics. The historical milk packaging trend has been from glass to
paperboard and now to plastic. Also there is a trend toward sales of
larger sizes of milk containers which lowers the paperboard requirement
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90
per unit of milk. Overall demand for solid bleached milk carton has
declined since about 1970.
Two other trends are noteworthy in this sector. One is the major
competition from plastics for the drinking cup market. The other is the
substitutability of molded pulp products, such as trays, for several solid
bleached all other products. (DRI estimates)
Mills
Number of Mills
The 17 firms in this product sector control 19 mills which produce
solid bleached board. These are listed below by production subcategory.
subcategory:
Number Percent of Mills in
of Mills This Product Sector Production Subcategory Name
* *% Market Bleached Kraft
* *% BCT Bleached Kraft
10 53% Misc. Integrated Mills
* *% Paperboard from Wastepaper
19 100%
Source: 308 Survey
Size
The average mill capacity is 1,314 tons per day, with a standard
deviation of 473; the median capacity is 1,400 tons per day (308 Survey).
Location
A majority of solid bleached board producing mills are located in the
Southeast, with a regional breakdown as follows:
Region Number of Mills
Northeast * ( *%)
Southeast 13 (68%)
North Central 0(0%)
Northwest * ( *%)
West and Southwest * ( *%)
19
Source: 308 Survey.
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91
Indirect Dischargers
Fewer than five of the mills in the solid bleached board product sector
are indirect dischargers. (308 Survey) For the purposes of confidentiality,
no location statistics can be provided.
Planned Capacity Expansion
Planned daily capacity expansion in the solid bleached board product
sector is expected to be 121 short tons per day. This represents an expansion
of capacity in three mills. This expansion will be an increase of 2.2 percent
in the capacity to produce solid bleached board by all mills. A capital
investment of $23,300,000 is planned for this expansion. These data apply to
projects which were under construction in 1978 or budgeted and approved for
expenditure. (308 Survey)
Assuming 356 operating days per year as listed in the American Paper
Institute (API) capacity survey, the planned daily capacity expansion
reported in response to the 308 Survey equals 43,000 tons annually. Capacity
expansion as reported in the API Survey from 1978 to 1982 is 58,000 tons
annually (API Survey). The 308 Survey reported capacity expansion for
the solid bleached board product sector is thus slightly lower than capacity
expansion reported by API.
Age and Productivity
The age structure in the solid bleached board sector is fairly new.
There were many new mills built in the 1960s and quite a few new machines
recently added. Productivity growth in this product sector is moderate (3
percent per year) and the degree of technical obsolescence is also moderate.
(Discussions with DRI Pulp and Paper Service staff, August 2, 1979.) Capital
investment during the past five years by mills producing in this product
sector totals $1,379,255,000. Investment per unit capacity equals $53,000,
which is moderate compared to the industry as a whole. (308 Survey) (Note:
High capital investment does not necessarily correlate with low-cost
production.)
Employment
Meta Systems estimates that the solid bleached board product sector
employed roughly 5,100 people in 1978. This represented approximately 2.0
percent of the total pulp, paper, and paperboard mill employment. (Meta
Systems estimates based on E.G. Jordan data.)
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SEMI-CHEMICAL CORRUGATING MEDIUM
92
Product Sector
Definition of Product Sector
Semi-chemical corrugating medium in this report is defined as paper-
board made from a furnish containing not less than 75 percent virgin wood
pulp, the predominant portion of which is produced by a semi-chemical
process, used as the fluting material when combining paperboard for
conversion into corrugated boxes.
Firms in Product Sector
There are 29 U.S. firms that produce semi-chemical corrugating medium.
The major producers are:
Owens-Illinois, Inc.
International Paper Co.
Weyerhaeuser Co.
Champion International
Mead Corp.
Menasha Corp.
Packaging Corp. of America
Stone Container Corp.
Source: Meta Systems estimates based on Lockwood's, DRI estimates,
and E.G. Jordan estimates.
Concentration
In 1978, the top five firms' capacity share was 36.4 percent and the
top eight firms' capacity share was 50.5 percent. This is thus an
unconcentrated product sector. (Meta Systems estimates baed on Lockwood's,
DRI estimates, and E.G. Jordan estimates).
Total Capacity and Utilization Rate
U.S. capacity to produce semi-chemical corrugating medium is 13,756*
tons per day or 6.80 percent of total U.S. paper, paperboard, and market
pulp production capacity (308 Survey). In 1979, U.S. firms' capacity
utilization rate for semi-chemical corrugating medium was 88.8 percent
(Pulp and Paper, June 1979 estimate).
*One mill in this product sector did not report capacity data and was
not included in this total.
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Vertical Integration
Most of the firms in this product sector are backward integrated, that
is, they own or lease timber lands. About 75 percent of production volume
is from firms that are forward integrated to converting of corrugated
containers. (Fibre Box Assn. and DRI estimates). Two mills or 5 percent
of the mills in this product sector include converting operations (308
Survey).
Horizontal Integration
The 15 largest firms are horizontally integrated to other economic
production sectors as indicated by the following earnings percentages:
Firm
Owens-Illinois, Inc.
International Paper Co.
Weyerhaeuser Co.
Champion International
Mead Corp.
Menasha Corp.
Packaging Corp. of America
Stone Container Corp.
Western Kraft Paper Group,
Willamette Industries, Inc.
Inland Container Corp.
Continental Forest Industries
Virginia Fibre Corp.
Union Camp Corp.
Nekoosa Papers, Inc.
Sonoco Products Co.
Percent Earnings
in Paper and
Paperboard Sector
19%
79%
43%
47%
44%
100%
97%
53%
22%
89%
96%
35%
Publicly or
Privately
Owned
Public
Public
Public
Public
Public
Public
Public
Public
Public
Public
Public
Public
Source: Paper Trade Journal, June 30, 1979, pp. 44-47.
Economic and Technological Trends
Corrugated containers in which semi-chemical corrugating medium is a
central ingredient have become established as an essential low-cost
packaging material with few substitutes. Demand for corrugated containers
is directly related to the shipping container requirements of the full
spectrum of American industry; thus, it is strongly influenced by the main
macroeconomic indicators including the industrial production index and
GNP. (ADL, 1977, p. 15)
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94
Mills
Number of Mills
The 29 firms in this product sector control 37 mills which produce
semi-chemical corrugating medium. These are listed below by production
subcategory:
Number of
of Mills
18
10
*
*
Percent of Mills in
This Product Sector
49%
27%
*%
*%
Production Subcategory Name
Semi-Chemical
Unbleached Kraft and
Semi-Chemical
Papergrade Sulfite
Misc. Integrated Mills
37
100%
Source: 308 Survey.
Size
The average mill capacity is 1,050 tons per day, with a standard
deviation of 730; the median capacity is 858 tons per day (308 Survey).
Location
Many semi-chemical corrugating medium producing mills are located in
the Southeast with others throughout the United States, as follows:
Region
Northeast
Southeast
North Central
Northwest
West and Southwest
Number of Mills
* ( *%)
18 (49%)
9 (24%)
7 (19%)
* ( *%)
37
Source: 308 Survey.
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95
Indirect Dischargers
Fewer than five of the mills in the semi-chemical corrugating medium
product sector are indirect dischargers. The percents of mills in each
region which are indirect dischargers are as follows:
Region % of Mills
Northeast 0
Southeast *
North Central *
Northwest 0
West and Southwest 0
Source: 308 Survey.
Planned Capacity Expansion
Planned daily capacity expansion in the semi-chemical corrugating
medium product sector is expected to be 362 short tons per day. This
represents an expansion of capacity in four mills. This expansion will be
an increase of 2.6 percent in the capacity to produce semi-chemical
corrugating medium by all mills. A capital investment of $18,886,000 is
planned for this expansion. These data apply to projects which were under
construction in 1978 or budgeted and approved for expenditure. {308 Survey)
Assuming 353 operating days per year as listed in the American Paper
Institute (API) capacity survey, the planned daily capacity expansion
reported in response to the 308 Survey equals 128,000 tons annually.
Capacity expansion as reported in the API Survey from 1978 to 1982 is
524,000 tons annually (API Survey). The 308 Survey reported capacity
expansion for the semi-chemical corrugating medium product sector is thus
lower than capacity expansion reported by API.
Age and Productivity
The age structure in the semi-chemical corrugating medium product
sector is new since many mills were added in the 1960s and there is a
high proportion of new machines. Productivity growth in this product
sector was high (4 percent per year) in the 1960s and slowed in the 1970s.
The degree of technological obsolescence is very low. (Discussions with
DRI Pulp and Paper Service staff, August 2, 1979). Capital investment
during the past five years by mills producing in this product sector
totals $1,734,363,000. Investment per unit capacity equals $45,000, which
is moderate compared to the industry as a whole. (308 Survey) (Note: High
capital investment does not necessarily correlate with low-cost production.)
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96
Employment
Meta Systems estimates that the semi-chemical corrugating product sector
employed roughly 7,700 people in 1978. This represented approximately 3.1
percent of total pulp, paper, and paperboard mill employment. (Meta Systems
estimates based on E.G. Jordan data.)
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RECYCLED LINERBOARD 97
Product Sector
Definition of Product Sector
Recycled linerboard in this report is defined as paperboard manufactured
from a combination of recycled fibers from various grades of paper stock
and containing less than 80 percent virgin Kraft wood pulp. It is used as
facing material when combining paperboard for conversion into corrugated or
solid fiber boxes and is often called "test" linerboard.
Firms in Product Sector
There are 20 U.S. firms that produce recycled linerboard. The major
producers are:
Whippany Paper Board Co., Inc.
Container Corp. of America
Clevepak Corp.
Menominee Paper Co., Inc.
Sweetwater Paper Board Co.
Grief Board Corp.
Inland Container Corp.
Packaging Corp. of America
Time Container Corp.
Source: Meta Systems estimates based on Lockwood's, DRI estimates and
E.G. Jordan estimates.
Concentration
In 1978, the top five firms' capacity share was 51.6 percent and the
top eight firms' capacity share was 65.2 percent. This is thus a moderately
concentrated product sector, (Meta Systems estimates b*s«d on Lockwood's,
DRI estimates, and E.G. Jordan estimates.)
Total Capacity and Utilization Rate
U.S. capacity to produce recycled linerboard is 3,053 tons per day or
1.51 percent of total U.S. paper, paperboard, and market pulp production
capacity (308 Survey). The 1979 capacity utilization rate was estimated
at 74.5 percent (DRI, Pulp and Paper Review, August 1979, pp. 53-54
estimate).
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98
Vertical Integration
Pulp sources for firms in this product sector are wastepaper; all
firms are integrated backward to wastepaper pulping. About 75 percent of
production volume is produced by forward integrated firms using at least
80 percent of their board production in their own converting operations
(Fibre Box Assn. and DRI estimates). Six mills, or 24 percent of the mills
in this product sector include converting operations (308 Survey).
Horizontal Integration
The 15 largest firms are horizontally integrated to other economic
production sectors as indicated by the following earnings percentages:
Firm
Whippany Paper Board Co., Inc.
Container Corp. of America
Clevepak Corp.
Menominee Paper Co., Inc.
Sweetwater Paper Board Co.
Grief Board Corp.
Inland Container Corp.
Packaging Corp. of America
Time Container Corp.
Consolidated Papers, Inc.
Union Camp Corp.
Connelly Containers, Inc.
Menasha Corp.
Pacific Coast Packaging Corp.
Crown Zellerbach Corp.
Percent Earnings
in Paper and
Paperboard Sector
100%
92%
100%
11%
79%
89%
55%
Publicly or
Privately
Owned
Public
Public
Public
Public
Public
Public
Public
Source: Paper Trade Journal, June 30, 1979, pp. 44-47.
Economic and Technological Trends
As with unbleached Kraft linerboard, recycled linerboard cis a key
component in paperboard boxes faces an increasingly mature market;
production increases and capacity expansions will depend more on increases
in existing markets than on expansion into new areas. In addition, plastics
penetration threatens traditional paperboard box markets. Nonetheless,
recycled linerboard's near future appears auspicious. A trend toward
recycling paperboard is resulting in increased amounts of recycled pulp
in "solid" linerboard production. This will likely continue. Several
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99
recent incremental expansions at unbleached Kraft linerboard mills have
emphasized recycled pulp use, partly because this requires smaller capital
investment and pollution control expenditures. (Secondary fiber systems
have smaller waste loads per ton of capacity than does virgin fiber.) The
recycled pulping process also requires less energy than virgin fiber, but
this can be negated partially or wholly by the problems and costs of
removing foreign particles and chemicals, such as adhesives.
Thus, within the paperboard box market sector, recycled linerboards1
role will gain in importance as demand for recycled linerboard increases
faster than the overall containerboard sector. (Discussions with DRI
Pulp and Paper Service staff; DRI, Pulp and Paper Review, August 1979,
pp. 48-50.)
Mills
Number of Mills
The 20 firms in this product sector control 25 mills which produce
recycled linerboard. These are listed below by production subcategory:
Number Percent of Mills in
of Mills This Product Sector Production Subcategory Name
* *% Paperboard from Wastepaper
* *% Misc. Secondary Fiber Mills
25
Source: 308 Survey.
Size
The average mill capacity is 215 tons per day, with a standard
deviation of 202; the median capacity is 140 tons per day (308 Survey).
Location
Recycled linerboard producing mills are located throughout the United
States with a regional breakdown as follows:
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100
Region
Number of Mills
Northeast 7 (28%)
Southeast * ( *%)
North Central 8 (32%)
Northwest * ( *%)
West and Southwest * ( **)
25
Source: 308 Survey.
Indirect Dischargers
Thirteen mills or 52 percent of the mills in the recycled linerboard
product sector are indirect dischargers. The percents of mills in each
region which are indirect dischargers are as follows:
Region
% of Mills
Northeast *
Southeast *
North Central *
Northwest *
West and Southwest *
Source: 308 Survey.
Planned Capacity Expansion
Planned daily capacity expansion in the recycled linerboard product
sector is expected to be 88 short tons per day. This represents an
expansion of capacity in six mills. This expansion will be an increase
of 2 9 percent in the capacity to produce recycled linerboard by all
mills. A capital investment of $3,128,000 is planned for this expansion.
These data apply to projects which were under construction in 1978 or
budgeted and approved for expenditure . (308 Survey) Assuming 338 operating
days per year as listed in the American Paper Institute (API) capacity
survey, the planned daily capacity expansion reported in response to
the 308 Survey equals 30,000 tons annually. Capacity expansion as reported
in the API Survey from 1978 to 1982 is 52,000 tons annually (API Survey).
The 308 Survey reported capacity expansion for the recycled linerboard
product sector is thus slightly lower than capacity expansion reported
by API.
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101
Age and Productivity
The age structure in the recycled linerboard product sector is generally
old. There have been few new mills or machines recently added. Productivity
growth in this product sector is low (1 to 2 percent per year) and the
degree of technological obsolescence is high. (Discussions with DRI Pulp and
Paper Service staff, August 2, 1979.) Capital investment during the past
five years by mills producing in this product sector totals $173,764,000.
Investment per unit capacity equals $32,000, which is low compared to the
industry as a whole. (308 Survey) (Note: High capital investment does
not necessarily correlate with low-cost production.)
Employment
Meta Systems estimates that the recycled linerboard product sector
employed roughly 2,400 people in 1978. This represented approximately 1.0
percent of total pulp, paper, and paperboard mill employment. (Meta Systems
estimates based on E.G. Jordan data.)
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RECYCLED CORRUGATING MEDIUM
102
Product Sector
Definition of Product Sector
Recycled corrugating medium in this report is defined as paperboard pro-
duced from a furnish containing less than 75 percent virgin wood pulp and
from a combination of recycled fibers, which is used as the fluting material
when combining paperboard for conversion into corrugated boxes and often
called "bogus" medium. The recycled corrugating medium product sector also
includes container ship and filler board, recycled paperboard used as a filler
for solid fiberboard and as a facing for interior packing products.
Firms in Product Sector
There are 20 U.S. firms that produce recycled corrugating medium. The
major producers are:
Container Corp. of America
Alton Box Board Co.
St. Regis Paper Co.
Inland Container Corp.
Whippany Paper Board Co., Inc.
Mead Corp.
Newark Boxboard Co.
Cornwall Paper Mills Co.
Source: Meta Systems estimates based on Lockwood' s, DRI eistimates, a.
E.G. Jordan estimates.
Concentration
In 1978, the top five firms' capacity share was 59.5 percent and the top
eight firms' capacity share was 76.7 percent. This is thus a moderately con-
centrated product sector (Meta Systems estimates based on Lockwood's, DRI
estimates, and E.G. Jordan estimates).
Total Capacity and Utilization Rate
U.S. capacity to produce recycled corrugating medium is 3,900* tons per
day or 1.93 percent of total U.S. paper, paperboard, and market pulp produc-
tion capacity (308 Survey). In 1979, U.S. firms' capacity utilization rate
was 93.1 percent (Pulp and Paper, June 1979 estimate).
*One mill in this product sector did not report capacity data and was not
included in this total.
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Vertical Integration Rate
103
Firms in this sector are integrated to their pulping source which is
wastepaper. About 50 percent of the firms are forward integrated to convert-
ing (Fibre Box Assn. and DRI estimates). Seven mills, or 26 percent of the
mills in this product sector include converting operations (308 Survey).
Horizontal Integration
The 15 largest firms are horizontally integrated to other economic pro-
duction sectors as indicated by the following earnings percentages:
Percent Earnings Publicly or
in Paper and Privately
Firm Paperboard Sector Owned
Container Corp. of America 100% Public
Alton Box Board Co. 92% Public
St. Regis Paper Co. 82% Public
Inland Container Corp. — —
Whippany Paper Board Co., Inc.
Mead Corp. 44% Public
Newark Boxboard Co.
Cornwall Paper Mills Co.
Crown Zellerbach Corp. 55% Public
Western Kraft Paper Group,
Willamette Industries, Inc. 53% Public
Clevepak Corp. 92% Public
Millen Industries
Crown Paper Board Co., Inc.
Prairie State Paper Mills,
Div. of Chippewa Paper Prod. Co.
Union Camp Corp. 89% Public
Source: Paper Trade Journal, June 30, 1979, pp. 44-47.
Economic and Technological Trends
Recycled corrugating medium's economic position is a cross between that
of recycled linerboard and that of semi-chemical corrugating medium. Like
recycled linerboard, recycled corrugating medium will benefit from any
national paperboard recycling trends. This type of future movement has par-
ticular potential due to the relative ease of collecting containerboard for
recycling at, for example, supermarkets where a few people can collect large
numbers of boxes. Also, low pollution control expenditures for secondary
fiber systems add to recycled corrugating medium's future attractiveness.
At the same time, however, demand for corrugating medium will not increase
as rapidly in the near future as in the recent past, since the containerboard
market is close to mature. Growth in demand for recycled corrugating medium,
therefore, is likely to exceed GNP growth, but not by much. (Discussions with
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1D4
DRI Pulp and Paper Service staff; DRI, Pulp and Paper Review, August 1979,
p. 50.
Mills
Number of Mills
The 20 firms in this product sector control 27 mills which produce recy-
cled corrugating medium. These are listed below by production subcategory:
Number Percent of Mills in
of Mills This Product Sector Production Subcategory Name
* * Semi-Chemical
* * Misc. Integrated Mills
22 81% Paperboard from Wastepaper
* * Misc. Secondary Fiber Mills
27 100%
Source: 308 Survey
Size
The average mill capacity is 323 tons per day, with a standard deviation
of 312; the median capacity is 189 tons per day (308 Survey).
Location
Many recycled corrugating medium producing mills are located in the
north central part of the United States, with a regional breakdown as follows:
Region Number of Mills
Northeast 7 (26%)
Southeast * ( *%)
North Central 12 (44%)
Northwest 0(0%)
West and Southwest * ( *%)
27
Souce: 308 Survey
Indirect Dischargers
Fourteen mills or 52 percent of the mills in the recycled corrugating
medium product sector are indirect dischargers. The percentage of mills in
each region which are indirect dischargers are as follows:
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105
Region % of Mills
Northeast 71
Southeast *
North Central *
Northwest 0
West and Southwest *
Source: 308 Survey
Planned Capacity Expansion
Planned daily capacity expansion in the recycled corrugating medium pro-
duct sector is expected to be 118 short tons per day. This represents an
expansion of capacity in four mills. This expansion will be an increase of
three percent in the capacity to produce recycled corrugating medium by all
mills. A capital investment of $5,632,000 is planned for this expansion.
These data apply to projects which were under construction in 1978 or
budgeted and approved for expenditure. (308 Survey)
Assuming 332 operating days per year as listed in the American Paper
Institute (API) capacity survey, the planned daily capacity expansion
reported in response to the 308 Survey equals 39,000 tons annually. Capacity
expansion as reported in the API Survey from 1978 to 1982 is 195,000 annually.
(API Survey) The 308 Survey reported capacity expansion for the recycled
corrugating medium product sector is thus lower than capacity expansion
reported by API.
Age and Productivity
The age structure in the recycled corrugating medium product sector is
intermediate with some new mills and machines recently added. Associated
productivity growth in this product sector is not high (2 to 3 percent per
year) and some degree of technological obsolescence exists (discussions with
DRI Pulp and Paper Service staff, August 2, 1979). Capital investment during
the past five years by mills producing in this product sector totals
$171,483,000. Investment per unit capacity equals $20,000, which is low com-
pared to the industry as a whole (308 Survey). (Note: High capital invest-
ment does not necessarily correlate with low-cost production.)
Employment
Meta Systems estimates that the recycled corrugating medium product
sector employed roughly 2,600 people in 1978. This represented approximately
1.0 percent of total pulp, paper, and paperboard mill employment. (Meta
Systems estimates based on E.G. Jordan data.)
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RECYCLED FOLDINGBOARD 2.06
Product Sector
Definition of Product Sector
Recycled foldingboard in this report is defined as paperboard manufac-
tured from a combination of recycled fibers from various paper stock grades,
with bending quality for conversion into folding cartons (including unlined
chipboard, Kraft lined, white lined, and clay coated) with nonbending spec-
ifications for conversion into rigid or set-up boxes (including plain chip-
board, newlined, white vat lined).
Firms in Product Sector
There are 48 U.S. firms that produce recycled foldingboard. The major
producers are:
Federal Paper Board Co., Inc.
Newark Boxboard Co.
Packaging Corp. of America
Container Corp. of America
Brown Co.
Simkins Industries, Incl.
St. Regis Paper Co.
Champion International
Source: Meta Systems estimates based on Lockwood's, DRI estimates, and
E.G. Jordan estimates.
Concentration
In 1978, the top five firms' capacity share was 37.6 percent and the top
eight firms' capacity share was 50.6 percent. This is thus an unconcentrated
product sector. (Meta Systems estimates based on Lockwood's, DRI estimates,
and E.G. Jordan estimates).
Total Capacity and Utilization Rate
U.S. capacity to produce recycled foldingboard is 10,037* tons per day,
or 4.96 percent of total U.S. paper, paperboard, and market pulp production
capacity (308 Survey). The 1979 capacity utilization rate for recycled
foldingboard was 89.6 percent and for set-up board was 76.4 percent (DRI,
Pulp and Paper Review, August 1979, pp. 63-65, estimates).
*Five mills in this product sector did not report capacity data and were
not included in this total.
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107
Vertical Integration
Pulp sources for firms in this product sector are wastepaper and all
firms are integrated backward to wastepaper pulping. About 70 percent by
production volume of this sector is forward integrated to converting of box-
board to foldingboard. A forward integrated firm here is defined as a firm
which owns a converting operation. The firm may not convert all of its pro-
duction. (Fibre Box Assn., and DRI estimates.) Twenty-one mills or 28 percent
of the mills in this product sector include converting operations 008 Survey).
Horizontal Integration
The 15 largest firms are horizontally integrated to other economic pro-
duction sectors as indicated by the following earnings percentages:
Firm
Federal Paper Board Co., Inc.
Newark Boxboard Co.
Packaging Corp. of America
Container Corp. of America
Brown Co.
Simkins Industries, Inc.
St. Regis Paper Co.
Champion International
Whippany Paper Board Co., Inc.
Consolidated Packaging Corp.
Chesapeake Paperboard Co.
Rock-Tenn. Co.
Columbia Corp.
Quaker Oats Co.
White Pidgeon Paper Co.,
Div. of Artistic Carton Co.
Percent Earnings
in Paper and
Paperboard Sector
98%
100%
100%
78%
82%
47%
94%
Publicly or
Privately
Owned
Public
Public
Public
Public
Public
Public
Public
Source: Paper Trade Journal, June 30, 1979, pp. 44-47.
Economic and Technological Trends
Recycled foldingboard enjoys few of the advantages over virgin folding-
board that recycled linerboard and corrugated medium have over their virgin
products. Foldingboard1s large variety of specific end uses do not allow for
its easy collection (e.g., at grocery stores) for recycling. Also, many of
foldingboard1s fastest growing end uses — such as food wrappings or medicin-
al containers — are markets with strong consumer preferences for cleanliness
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108
and brightness, qualities less prevalent in recycled than in virgin folding-
board.* Further, the encroachment of plastics into the food and nondurable
packaging sector has been particularly important. For all these reasons, the
recycled foldingboard product sector has a less promising economic future than
other recycled paperboard sectors. (Discussions with DRI Pulp and Paper
Service staff; DRI, Pulp and Paper Review, August 1979, pp. 58-60.)
Mills
Number of Mills
The 48 firms in this product sector control 75 mills which produce recy-
cled foldingboard. These are listed below by production subcategory:
Number fercent of Mills in
of Mills This Product Sector Production Subcategory Name
* * Semi-Chemical
* * Paper Grade Sulfite
* * Misc. Integrated Mills
* * Paperboard from Wastepaper
* * Misc. Secondary Fiber Mills
* * Nonintegrated Fine Papers
75 100%
Source: 308 Survey
Size
The average mill capacity is 222 tons per day, with a standard deviation
of 178; the median capacity is 160 tons per day (308 Survey).
Location
A high proportion of recycled foldingboard producing mills are located
in the northeast and north central United States, with a regional breakdown
as follows:
*ln fact, government regulations severaly restrain recycled foldingboard1s
use in food markets.
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109
Region Number of Mills
Northeast 28 (37%)
Southeast 13 (17%)
North Central 24 (32%)
Northwest * ( *%)
West and Southwest * ( *%)
75
Source: 308 Survey
Indirect Dischargers
Forty-five mills or 57 percent of the mills in the recycled foldingboard
product sector are indirect dischargers. The percents of mills in each
region which are indirect dischargers are as follows:
Region % of Mills
Northeast 57
Southeast *
North Central 63
Northwest *
West and Southwest 100
Source: 308 Survey
Planned Capacity Expansion
Planned daily capacity expansion in the recycled foldingboard product
sector is expected to be 540 short tons per day. The represents an expansion
of capacity in 14 mills. This expansion will be an increase of 5.4 percent
in the capacity to produce recycled foldingboard by all mills. A capital
investment of $28,925,000 is planned for this expansion. These data apply
to projects which were under construction in 1978 or budgeted for expendi-
ture (308 Survey).
Assuming 326 operating days per year as listed in the American Paper
Institute (API) capacity survey, the planned daily capacity expansion as
reported in response to the 308 Survey equals 176,000 tons annually.
Capacity expansion as reported in the API Survey from 1978 to 1982 is 141,000
tons annually (API Survey). The 308 Survey reported capacity expansion for
the recycled foldingboard product sector is thus higher than capacity expan-
sion reported by API.
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110
Age and Productivity
The age structure in the recycled foldingboard product sector is gener-
ally old. There have been few new mills or machines recently added, although
some machines have been rebuilt. Productivity growth in this product sector
is low (I to 2 percent per year) and the degree of technological obsolescence
is moderate. (Discussions with DRI Pulp and Paper Service staff, Ausust 2,
1979). Capital investment during the past five years by mills producing in
this product sector totals $236,065,000. Investment per unit capacity equals
$14,000, which is very low compared to the industry as a whole. (308 Survey)
(Note: High capital investment does not necessarily correlate with low-cost
production).
Employment
Meta Systems estimates that the recycled foldingboard product sector
employed roughly 11,400 people in 1978. This represented approximately 4.5
percent of total pulp, paper, and paperboard mill employment. (Meta Systems
estimates based on E.G. Jordan data.)
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CONSTRUCTION PAPER AND BOARD
Product Sector
Definition of Product Sector
Construction paper and board in this report is defined as paper and
board for use as sheathing paper, felts (roofing felts, floor covering,
automotive felts, deadening, industrial, pipe covering, refrigerator),
asbestos paper and asbestos filled paper, and flexible wood fiber insulation.
This sector also includes insulating board — a fibrous-felted homogeneous
panel made by inter-felting of the fibers (e.g., interior building board,
wallboard, sound deadening board, acoustical tile, exterior sheathing board,
roof insulation board, trailer board, etc.); hard pressed board — vegetable
fiber hardboard with a density 31 pounds or over per cubic foot, treated
or tempered or not treated or tempered; and wet machine board — binders
board, shoe board (e.g., counter board, heel board, innersole, etc.),
automotive board, chair seat backing, coaster board, luggage, mill board,
panel board, table top board, etc.
Firms in Product Sector
There are 44 U.S. firms that produce construction paper and board.
The major producers are:
GAF Corp.
Lloyd A. Fry Roofing Co.
Celotex Corp.
Bird & Son, Inc.
Certain-Teed Products Corp.
Flintkote Co.
Johns-Manville Corp.
National Gypsum Co.
Source: Meta Systems estimates based on Lockwood's, DRI estimates, and
E.G. Jordan estimates.
Concentration
In 1978, the top five firms' capacity share was 52.3 percent and the
top eight firms' capacity share was 66.0 percent. This is thus a moderately
concentrated product sector (Meta Systems estimates based on Lockwood's,
DRI estimates, and E.G. Jordan estimates).
Total Capacity and Utilization Rate
U.S. capacity to produce construction paper and board is 10,682 tons
per day or 5.28 percent of total U.S. paper, paperboard, and market pulp
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112
production capacity (308 Survey). The capacity utilization rate for 1979
is estimated at 76 percent (Pulp and Paper, November 1979 and Meta Systems
estimate).
Vertical Integration
Firms producing construction paper and board are typically vertically
integrated backward (about 70 percent) to wood or recycled pulp and forward
(about 50 percent) to conversion and wholesale distribution of final
products (DM estimates). Thirty-three mills, or 33 percent of the mills
in this product sector include converting operations (308 Survey).
Horizontal Integration
The 15 largest firms are horizontally integrated to other economic
production sectors as indicated by the following earnings percentages:
Firm
GAF Corp.
Lloyd A. Fry Roofing Co.
Celotex Corp.
Bird & Son, Inc.
Certain-Teed Products Corp.
Flintkote Co.
Johns-Manville Corp.
National Gypsum Co.
Homasote Co.
Tamko Asphalt Products, Inc.
Boise Cascade Corp.
Armstrong Cork Co.
Congoleum Corp.
The Davey Co.
Nicolet Industries, Inc.
Percent Earnings
in Paper and
Paperboard Sector
Publicly or
Privately
Owned
80%
53%
Public
Public
Source: Paper Trade Journal, June 30, 1979, pp. 44-47.
Economic and Technological Trends
Like all building materials, the demand for construction paper
subdivides into new construction and replacement (or remodeling) components.
The replacement market is a large component because roofing shingles, which
require relatively frequent replacement, are the largest end use. Also,
floor underlayment and sheathing papers are required for many remodeling
projects. Thus, the construction paper and board market does not experience
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113
as severe year-to-year fluctuations in demand as do most other commodity
construction materials.
There are no significant direct product substitutes for construction
paper and board. However, shifts in other construction materials use have
had some impacts, such as the substitution for wooden floors of vinyl tile
and wall-to-wall carpeting, which reduced the consumption of underlayment
paper (ADL, 1977, p. 42).
Mills
Number of Mills
The 44 firms in this product sector control 99 mills which produce
construction paper and board. These are listed below by production
subcategory:
Number Percent of Mills in
of Mills This Product Sector Production Subcategory Name
* *% Misc. Integrated Mills
29 29% Paperboard from Wastepaper
61 62% Builders Paper and Roofing
Felt
* *% Misc. Secondary Fiber Mills
* *% Nonintegrated Paperboard
* *% Misc. Nonintegrated Mills
99™ 100%
Source: 308 Survey.
Size
The average mill capacity is 135 tons per day, with a standard
deviation of 104; the median capacity is 101 tons per day (308 Survey).
Location
Construction paper and board producing mills are located throughout
the United States, with a regional breakdown as follows:
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114
Region Number of Mills
Northeast 25 (25%)
Southeast 22 (22%)
North Central 29 (29%)
Northwest * ( *%)
West and Southwest * ( *%)
99
Source: 308 Survey.
Indirect Dischargers
Fifty-four mills or 55 percent of the mills in the construction paper
and board product sector are indirect dischargers. The percent of mills
in each region which are indirect dischargers are as follows:
Region % of Mills
Northeast 52
Southeast *
North Central 55
Northwest *
West and Southwest 60
Source: 308 Survey.
Planned Capacity Expansion
Planned daily capacity expansion in the construction paper and board
product sector is expected to be 329 short tons per day. This represents
an expansion of capacity in 12 mills. This expansion will be an increase
of 3.1 percent in the capacity to produce construction paper and board by
all mills. A capital investment of $9,493,000 dollars is planned for this
expansion. These data apply to projects which were under construction
in 1978 or budgeted and approved for expenditure . (308 Survey)
Assuming 324 operating days per year as listed in the American Paper
Institute (API) capacity survey, the planned daily capacity expansion
reported in response to the 308 Survey equals 107,000 tons annually.
Capacity expansion as reported in the API Survey from 1978 to 1982 is
751,000 tons annually (API Survey). The 308 Survey reported capacity
expansion for the construction paper and board product sector is thus
lower than capacity expansion reported by API.
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115
Age and Productivity
The age structure in the construction paper and board product sector
varies depending on the product produced. There have recently been few
new mills added. Productivity growth in this product sector is moderate
(3 percent per year), and the degree of technological obsolescence varies
with specific process and product. (Discussions with DRI Pulp and Paper
Service staff, August 2, 1979). Capital investment during the past five
years by mills producing in this product sector totals $134,750,000.
Investment per unit capacity equals $10,000, which is very low compared to
the industry as a whole. (308 Survey) (Note: High capital investment does
not necessarily correlate with low-cost production.)
Employment
Meta Systems estimates that the construction paper and board product
sector employed roughly 9,500 people in 1978. This represented approximately
3.8 percent of total pulp, paper, and paperboard mill employment. (Meta
Systems estimates based on E.G. Jordan data.)
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MOLDED PULP PRODUCTS ... ,
lib
Product Sector
Definition of Product Sector
Molded pulp products are defined in this report as all kinds of pressed
and molded goods made from various furnishes. Molded pulp products include
egg packages, plates, food trays, bottle protectors, and papier-mache
articles.
Firms in Product Sector
There are five U.S. firms that produce molded pulp products. The major
producers are:
Diamond International Corp.
Keyes Fibre Co.
Packaging Corp. of America
Formart Containers, Inc.
Owens-Illinois, Inc.
Source: Meta Systems estimates based on Lockwood's, DRI estimates and
E.G. Jordan estimates.
Concentration
In 1978, the top five firms' capacity share was 100 percent. This is
thus a highly concentrated product sector (Meta Systems estimates based on
Lockwood's, DRI estimates, and E.G. Jordan estimates).
Total Capacity and Utilization Rate
U.S. capacity to produce molded pulp products is 1,033 tons per day,
or 0.51 percent of total U.S. paper, paperboard, and market pulp production
capacity (308 Survey). Capacity utilization rate data are riot available.
Vertical Integration
Most of the firms in this sector are vertically integrated. (DRI
estimates) Vertically integrated here means integrated from raw materials
(wood, wastepaper, etc.) to converted product.
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117
Horizontal Integration
The five largest firms are horizontally integrated to other economic
production sectors as indicated by the following earnings percentages:
Firm
Diamond International Corp.
Keyes Fiber Co.
Packaging Corp. of America
Formart Containers, Inc.
Owens-Illinois, Inc.
Percent Earnings
in Paper and
Paperboard Sector
54%
100%
19%
Publicly or
Privately
Owned
Public
Public
Public
Source: Paper TradeJournal, June 30, 1979, pp. 44-47.
Economic and Technological Trends
Molded pulp products can be made into a wide variety of shapes and
sizes, and have a high resistance to liquids. This property is particularly
important in meat packaging, where excess juices will ordinarily disintegrate
a package.
In the late 1960s, molded pulp products began to lose their share of
packaging markets to competitive plastic products. Producers are more
than compensating for these losses now, however, by expanding into
disposable tableware (ADL, 1977).
Mills
Number of Mills
The five firms in this product sector control 14 mills which produce
molded pulp products. These are listed below by production subcategory:
Number
of Mills
*
7
Percent of Mills in
This Product Sector
*%
*%
*%
50%
14
100%
Production Subcategory Name
Groundwood — Coarse,
Molded, Newsprint
Misc. Integrated Mills
Paperboard from Wastepaper
Wastepaper Molded Products
Source: 308 Survey.
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118
Size
The average mill capacity is 82 tons per day, with a standard deviation
of 54; and the median capacity is 69 tons per day (308 Survey).
Location
Molded pulp products producing mills are located throughout the United
States, many in the northeast, with a regional breakdown as follows:
Region Number of Mills
Northeast 6 (43%)
Southeast * ( **)
North Central * ( *%)
Northwest * ( *%)
West and Southwest * ( *%)
14
Source: 308 Survey.
Indirect Dischargers
Eight mills or 57 percent of the mills in the molded pulp products
product sector are indirect dischargers. The percents of mills in each
region which are indirect dischargers are as follows:
Region % of Mills
Northeast *%
Southeast **
North Central *%
Northwest 0*
West and Southwest *%
Source: 308 Survey.
Planned Capacity Expansion
Planned daily capacity expansion in the molded pulp products product
sector is expected to be 54 short tons per day. This represents an
expansion of capacity in three mills. This expansion will be an increase
of 5.2 percent in the capacity to produce molded pulp products by all
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119
mills. A capital investment of $7,332,000 is planned for this expansion.
These data apply to projects which were under construction in 1978 or
budgeted and approved for expenditure. (308 Survey) American Paper
Institute capacity expansion data are unavailable for the molded pulp
products product sector and therefore no comparison is possible.
Age and Productivity
Data on the age structure in the molded pulp products product sector
are not available. Associated productivity growth and technological
obsolescence information are also not available. Capital investment
during the past five years by mills producing in this product sector
totals $31,875,000. Investment per unit capacity equals $28,000, which
is low compared to the industry as a whole. (308 Survey) (Note: High
capital investment does not necessarily correlate with low-cost production.)
Employment
Meta Systems estimates that the molded pulp products product sector
employed roughly 2,700 people in 1978. This represented approximately
1.1 percent of total pulp, paper, and paperboard mill employment. (Meta
Systems estimates based on E.G. Jordan data.)
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ALL OTHER PAPERBOARD
Product Sector
Definition of Product Sector
All other paperboard is defined in this report as the residual category
for all unbleached Kraft paperboard (including unbleached Kraft foldingboard),
all semi-chemical paperboard, and all recycled paperboard for end uses not
elsewhere classified. It includes matchbook board, gypsum wallboard facing,
recycled paperboard manufactured for use as a liner on gypsum board, and
paperboard for uses such as tube, can, drum, file folder, tag, etc.
Firms in Product Sector
There are 38 U.S. firms that produce all other paperboard. The major
producers are:
Sonoco Products Co.
U.S. Gypsum Co.
National Gypsum Co.
Olin Kraft, Inc.
Georgia Kraft Co.
Georgia-Pacific Corp.
Celotex Corp.
Packaging Corp. of America
Source: Meta Systems estimates based on Lockwood's, DRI estimates and
E.G. Jordan estimates.
Concentration
In 1978, the top five firms' capacity share was 57.2 percent and the
top eight firms' capacity share was 71.9 percent. This is thus a
concentrated product sector. (Meta Systems estimates based on Lockwood's,
DRI estimates, and B.C. Jordan estimates.)
Total Capacity and Utilization Rate
U.S. capacity to produce all other paperboard is 8,137* tons per day,
or 4.02 percent of total U.S. paper, paperboard, and market pulp production
capacity (308 Survey). The 1979 capacity utilization rate for recycled
boxboard and paperboard which includes the main components of all other
paperboard (gypsum liner, cone, tube, can, and drum) as well as folding
boxboard, set-up boxboard, recycled corrugating medium, and recycled
*Four mills in this product sector did not report capacity data and were
not included in this total.
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121
linerboard, is estimated at 83.3 percent (Pulp and Paper, July 1979). 1979
capacity utilization for unbleached foldingboard was 81.2 percent. (DRI
Pulp and Paper Review, August 1979, pp. 64-65 estimate.)
Vertical Integration
Many firms in this product sector use wastepaper as a pulp source and
are integrated to wastepaper pulping. Most unbleached board mills also are
backward-integrated, i.e., they own timber lands and/or lease lands for
cutting timber. Approximately 67 percent of production by volume is
provided by firms that are forward integrated to converting (Fibre Box Assn.
and DRI estimates). Twenty-one mills, or 31 percent of the mills in this
product sector include converting operations (308 Survey).
Horizontal Integration
The 15 largest firms are horizontally integrated to other economic
production sectors as indicated by the following earnings percentages:
Firm
Sonoco Products Co.
U.S. Gypsum Co.
National Gypsum Co.
Olin Kraft,' Inc.
Georgia Kraft Co.
Georgia-Pacific Corp.
Celotex Corp.
Packaging Corp. of America
Flintkote Co.
Alton Box Board Co.
Clevepak Corp.
Mead Corp.
Union Camp Corp.
Stone Container Corp.
Container Corp. of America
Percent Earnings
in Paper and
Paperboard Sector
35%
80%
20%
100%
92%
92%
44%
89%
97%
100%
Publicly or
Privately
Owned
Public
Public
Public
Public
Public
Public
Public
Public
Public
Public
Source: Paper Trade Journal, June 30, 1979, pp. 44-47.
Economic and Technological Trends
The most important paperboard product included in all other paperboard
is gypsum wallboard facing, which is the liner material used to make gypsum
wallboard. Gypsum wallboard (which is made exclusively with a recycled
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122
paperboard liner material) is a well-entrenched construction product used
for both new construction and remodelling. As a result, its demand does
not fluctuate as sharply as the building cycle. It does face substitution
by a variety of other interior wall panelling materials, but this trend has
had relatively minor impact thus far.
The next most important product is unbleached foldingboard. Recent
technology changes have allowed the production of lighter weight foldingboard.
Foldingboard is used almost exclusively in the manufacture of folding cartons.
The chief use of unbleached Kraft folding cartons is for beverage carriers.
Unbleached Kraft foldingboard is losing market share here due to the beverage
industry's shift toward larger glass containers and an increased proportion
of canned (as opposed to bottled) beer. Also, the trend toward plastic
beverage packagings rather than paperboard cartons hurts the unbleached Kraft
foldingboard product sector. However, penetration into other end-use
markets will more than offset any share loss in beverage carriers. (KRI,
Pulp and Paper Review, April 1978, p. 81.)
Tube, can, and drum stock is a smaller volume product. It consists of
paperboard that is wound into spiral cans that range from small orange juice
cans to large drums for commodities such as chemicals. Unbleached Kraft
paper and paperboard compete strongly in this market.
Plastics have not had an important substitution impact in the major
markets of all other paperboard, except unbleached Kraft foldingboard
(ADL, 1977).
Mills
Number of Mills
The 38 firms in this product sector control 68 mills which produce all
other paperboard. These are listed below by production subcategory:
Number Percent of Mills in
of Mills This Product Sector Production Subcategory Name
* *% Unbleached Kraft & Semi-
Chemical
* *% Papergrade Sulfite
* *% Unbleached Kraft (Bag)
6 9% Misc. Integrated Mills
48 71% Paperboard from Wastepaper
* *% Wastepaper Molded Products
* *% Misc. Secondary Fiber Mills
* *% Nonintegrated Paperboard
* *% Misc. Nonintegrated Mills
IsT 100%
Source: 308 Survey.
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123
Size
The average mill capacity is 339 tons per day, with a standard
deviation of 405; the median capacity is 150 tons per day (308 Survey).
Location
All other paperboard producing mills are concentrated in the eastern,
southern,and central parts of the United States, as follows:
Region Number of Mills
Northeast 25 (37%)
Southeast 16 (24%)
North Central 18 (26%)
Northwest * ( *%)
West and Southwest * ( *%)
68
Source: 308 Survey.
Indirect Dischargers
Twenty-seven mills, or 40 percent of the mills in the all other
paperboard product sector are indirect dischargers. The percents of mills
in each region which are indirect dischargers are as follows:
Region % of Mills
Northeast 32
Southeast *
North Central 61
Northwest 0
West and Southwest *
Source: 308 Survey.
Planned Capacity Expansion
Planned daily capacity expansion in the all other paperboard product
sector is expected to be 149 short tons per day. This represents an
expansion of capacity in 12 mills. This expansion will be an increase
of 1.8 percent in the capacity to produce all other paperboard by all mills.
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A capital investment of $11,998,000 is planned for this expansion. These
data apply to projects which were under construction in 1978 or budgeted
and approved for expenditure (308 Survey).
Assuming 343 operating days per year as listed in the American Paper
Institute (API) capacity survey, the planned daily capacity expansion
reported in response to the 308 Survey equals 51,000 tons annually.
Capacity expansion as reported in the API Survey from 1978 to 1982 is
376,000 tons annually (API Survey). The 308 Survey reported capacity
expansion for the all other paperboard product sector is thus lower than
capacity expansion reported by API.
Age and Productivity
Most mills in the all other paperboard product sector were constructed
in the 1950's to the 1960's. There have recently been only a few new mills
coming on-stream and a moderate number of new machines added. Productivity
growth in this product sector is moderate (3 percent per year). The
degree of technological obsolescence is low. (Discussions with DRI Pulp
and Paper Service staff, August 2, 1979.) Capital investment during the
past five years by mills producing in this product sector totals
$721,869,000. Investment per unit capacity equals $33,000, which is
moderately low compared to the industry as a whole. (308 Survey) (Note:
High capital investment does not necessarily correlate with low-cost
production.)
Employment
Meta Systems estimates that the all other paperboard product sector
employed roughly 6,450 people in 1978. This represented approximately
2.6 percent of total pulp, paper, and paperboard mill employment. (Meta
Systems estimates based on B.C. Jordan data.)
•U.S. GOVEHNMEHT PRINTING OFFICE: 1980-0-33^-91(3/7022
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