November 29, 2012

As society sheds paper, an industry shrinks

With 117 mill shutdowns since 2000 and many more expected, companies try other products.

Star Tribune

As society sheds paper, an industry shrinks
click image to enlarge

Finished paper is stored in rolls at the UPM Blandin paper mill in Grand Rapids, Minn. Demand for paper has been falling for years, and analysts predict another 18 percent dropoff by 2024. In Maine, the industry employs roughly 7,400 people, about half the number of a decade ago.

Richard Sennott/Minneapolis Star Tribune/MCT

GRAND RAPIDS, Minn. - Something stunning happens at 60 mph inside the UPM Blandin paper mill.

A thin layer of damp white pulp, flattened between forming fabric as it races through a gauntlet of heavy rollers, slips free from its forms.

It ripples like a bedsheet on a clothesline, but it holds together. The newborn paper shoots forward through heated rollers to be pressed and dried, then coated and polished before spooling onto a giant roll. More than 1,000 tons of shiny white paper for magazines and catalogs come off the line every day.

But this is yesterday's miracle.

The North American paper industry is in rapid decline. Mills have cut thousands of workers and are competing for a shrinking market. A mill in Sartell, Minn., that closed this year after a Memorial Day explosion was the latest to go dark.

"It's kind of disheartening," said Jim Skurla, an economist at the University of Minnesota-Duluth. "Paper's never going to disappear, but it's going to be smaller than it has been."

In little more than a decade, river towns in the forest from eastern Washington to the coast of Maine have lost more than a hundred paper mills in a wave of consolidation. Most people in the industry expect the trend to continue. Wisconsin has lost nine paper mills since 2005.

North American demand for three types of coated and supercalendared paper -- shiny magazine and advertising paper -- has fallen 21 percent in the past decade, according to the Pulp and Paper Products Council.

Kindles and iPads, e-mail, PDFs, the decline of first-class mail, and waning newspaper and magazine circulations are all to blame. Analysts predict demand will fall at least another 18 percent by 2024.

The shift is forcing paper mills and mill towns to rethink their future. To survive, they will need to find new products to make out of wood.

"We've got to go somewhere," said James Kent, the controller at UPM Blandin. "The world won't need paper forever."

Mill jobs pay well -- averaging over $20 per hour -- and the mills support networks of suppliers, contractors and loggers, indirectly accounting for 20,000 jobs in Minnesota.

The mill in Grand Rapids opened in 1902 along a stretch of the Mississippi River that gave the city of 10,000 its name.

Almost all the trees it converts to paper are cut in Minnesota forests. Loggers truck the timber to the mill, where it gets stacked up to three stories high in a wood yard that's five football fields long. On the other end of the mill is a warehouse of metal shelves holding giant rolls of paper in brown wrapping.

About 450 people work at the mill, but most of the human labor happens at the beginning, at the end and in making sure the machinery in the middle doesn't break.

From the moment the logs are dropped into a de-barking machine to the end of the line, the fiber moves by conveyor belt and pipe. The wood is chipped, ground, beaten and refined before it flows out to be flattened, pressed and dried as paper. Workers monitor the process from computers in glassed-in control rooms, sheltered from the roar and heat.

Paper companies have tried to handle sinking demand for their product by cutting production. Companies have closed 117 American mills since 2000, according to the Center for Paper Business and Industry Studies at Georgia Tech University. Some 223,000 industry jobs have gone away in that time.

But demand is falling too fast for the cutbacks and consolidation to keep up.

Verso Paper, which closed the mill in Sartell after an explosion that killed a man and caused $50 million in damage, has never turned a real profit.

(Continued on page 2)

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