Harold M. Cody is Editorial Director of Pulp & Paper Magazine.

MILL MANAGERS REPORT

P&P's exclusive survey assesses trends in labor relations, technology, mill operations, safety, staff planning and management.

PROCESS/AUTOMATION CONTROL

Profile of information technology recently implemented by Gulf States Paper Corp., at the Demopolis, Alabama bleached pulp and paperboard mill. New DCS system, paper machine cross-direction (CD) profiling system, and management information system tied in with production data.

FINISHING AND CONVERTING

P&P examines the latest developments in hot soft-calendering, shoe calendering, multi-roll calenders and roll covers.

Here We Go Again (or, Now What Do We Do?)

Despite months of hopeful thinking by industry forecasters, managers and executives, the full impact of the problems in the global economy are hitting the paper industry. U.S. forest products exports are way down while imports of products such as printing papers are way up. We all hoped it would be better but it seems we're going to go through some weak times in the coming months. Didn't we just go through a downturn a little while ago?

The problems that began with the Asian economic disaster are now spreading not only to areas such as Russia, but threaten more critical markets for North American mills, in areas such as Latin America. If the malaise spreads to Latin America the impact will be even more severe. Where does this leave us?

The bad news first: Most forecasts for next year call for anemic economic growth in many regions, and the possibility of a world recession has inched closer. If the U.S. economy, strong at home, can weather the storm of international financial markets, then a global downturn might be avoided. But who knows? In turn, the negative impacts of all of this had, by late in the third quarter, led to a major downgrade in most forecasts of the prospects for global forest products. Key industry benchmark grades such as linerboard and market pulp look to be in for competitive periods that are not as good as hoped for just months ago.

To try to stay abreast of these developments, and to gain insight into what next year offers, readers can look forward to our traditional Industry Outlook provided in our January issue. This outlook, done for over 25 years now by Pulp & Paper, is by far the industry's best market and business outlook. Our staff of editors pulls together the opinions of many of the industry's most respected forecasters and analysts. It's a must read for every industry manager, not just marketing or planning staff, but mill operational and technical staffs.

How Do We Weather the Storm? So what does all of this mean to mill personnel? Of course the most direct impact is that mills might be taking extended downtime in coming months, particularly this fall, and maybe in traditionally weak months during the winter.

However, beyond this, the current market weakness tends to highlight in rather black and white terms the global nature of the business. How does the North American industry go forward and compete from here? We'll address this via an upcoming series of articles that seeks to answer the simple question, generally titled, "What's wrong with the paper industry?" It will examine how the industry in North America is responding to these trends and will be of interest to not only management, but to operations and production staff. Weaker markets abroad mean more competitive markets at home. This impacts mill operations. Of course even more importantly it impacts bottom line results and returns for shareholders.

Mill Based Competitive Responses? How do mills respond to these trends? A key response of course is it to continue to improve operations in order to control, i.e., cut costs, while continuing to develop new products and serve the needs of customers. The use of quick payback projects, that return money to the bottom line with minimal capital investment, are expected to continue to receive priority. Big projects might be put on the back burner.

However, mills in the U.S. and Canada must continue to improve to remain competitive. This requires investment. Everyone is running around saying "we're not investing" (implying they're not over-investing). However, the option if we don't is to simply let others take away the market. The challenges posed by global producers with extremely low cost mills (such as covered in the last two issues) are formidable. But the huge asset base in North America will continue to be a major producing region. While marginal, high cost mills will likely be-or need to be-shut down, others need to continue to upgrade. Pulp and Paper is always on the look out for mill level examples of ways to improve operations. If your mill has completed a project that improves throughput, increases uptime, cuts costs, or results in better quality or new products for your customers, we'd like to hear about them. Please forward such examples to us for review, and we'll share some of them with your peers. It's a good way to highlight the successes of mill staff in meeting today's challenges.