Reduced capital spending has impacted the U.S. paper industry’s ability to effectively compete on a long-term, global scale

Most U.S. Paper Machines Need Significant Technology Upgrades

One example of a state-of-the-art U.S. paper machine is Willamette’s new uncoated free-sheet machine in Hawesville, Ky., which features the world’s first twin shoe press for fine paper production.

CAPITAL SPENDING ISSUES. The Asian economic crisis, along with an associated reduction in the demand for consumer goods, has depressed the demand for paper products in recent years. Because of this, paper producers have recently suffered from inadequate financial returns, resulting in a global slowdown in pulp and paper capacity expansion.

With limited capital available for investment, a significant reduction in spending for technological upgrades of existing facilities has occurred. In the U.S., dealing with mandated Cluster Rule implementation has placed a further strain on the use of limited capital. After addressing the Cluster Rule, utilization of remaining capital has generally been concentrated on projects geared to reduce manufacturing costs as a means to improve financial performance in a depressed market environment.

The recent low volume of capital spending activity follows an almost unprecedented period of global pulp and paper capacity growth. There was especially rapid growth of bleached hardwood pulp capacity and of fine paper capacity in Southeast Asia, of fine paper capacity in mainland China, and of fine paper and recycled containerboard in the U.S. Several major projects that started before the onset of the Asian economic crisis came online during the subsequent period of economic downturn, and a few more projects are now nearing completion.

On a global basis, the spurt of capacity growth followed by economic downturn created over-capacity for hardwood pulp and some grades of paper. This exacerbated the global problem with depressed pulp and paper pricing.

In addition to the global factors challenging existing U.S. mills., pulp and paper capacity, both foreign and domestic, added since 1990 has utilized the latest available process technology and control systems. This state-of-the-art technology provides the new capacity with the ability to achieve a combination of good operating efficiency and very high product quality. Much of the new capacity also employs very large-capacity unit processes to achieve excellent economy of scale. In addition, the quality of product from these new machines is markedly superior to many older operating systems. At the same time, the new systems operate with excellent unit consumption of fiber, chemicals, energy, and labor. Relative to the new installations, many existing facilities face a competitive disadvantage in both product quality and direct operating cost.

FIGURE 1: Containerboard and printing and writing grades represent the majority (65%) of total U.S. paper and paperboard production.

U.S. PAPER PRODUCERS FACE REBUILD CHALLENGE. Figure 1 shows the distribution of U.S. paper production by major category, and Table 1 groups this production by paper machine annual capacity. Containerboard and printing and writing grades represent approximately 37% and 28%, respectively, of production for a combined 65% of total U.S. paper and paperboard production. This article will address the paper machine rebuild challenge facing the U.S. within these two major categories.

In each category, it is appropriate to first consider the standard of measurement for comparing older, existing facilities with the leading state-of-the-art producers. The outline description of what is “state-of-the-art” for the categories discussed is a compilation of what is currently recommended by the three major paper machine suppliers, what is actually installed internationally on the most recent high-tech machines, and what is targeted by industry leaders. Table 2 provides a list of the world’s largest, new, high-tech paper machines for various paper grades.

While this article does not address the specific benefits from each of the state-of-the-art technologies considered, it does assume that these technologies are geared toward the more general benefits of improved sheet formation, uniform weight and moisture profile, increased strength, improved printability, improved overall sheet uniformity, and reduced steam usage. The benefits are real, the benefits are substantial, and conventional logic says there is opportunity to capitalize on these benefits in the marketplace.

CONTAINERBOARD MACHINE REBUILDS. Containerboard grades are considered under the individual categories of linerboard and corrugating medium.

LINERBOARD. There are 87 major linerboard machines in the U.S., and U.S. production of linerboard amounted to approximately 30 million tons in 1997. State-of-the-art linerboard machines include all or most of the following characteristics:

• Separate refining of different fiber supplies

• Precision stock blending

• Dilution control headbox

• Upward dewatering or top wire forming

• Shoe press or tandem shoe presses

• Single tier drying or partial single tier drying

• Ropeless sheet threading

• Hot or soft nip calendering

• Operating speeds of more than 3,000 fpm

Approximately 7% of existing linerboard machines closely match the technical outline for state-of-the-art. Almost another 18% include state-of-the-art forming and pressing. This combined, but small, group of 25% of linerboard machines enjoys a distinct marketplace advantage (Figure 2), producing the majority of high performance linerboard in the U.S.

FIGURE 2: Very few U.S. linerboard, corrugating medium, and uncoated free-sheet machines possess state-of-the-art characteristics.

Corrugated boxes created from the linerboard produced by state-of-the-art machines achieve target box strength with significantly lower weight per square foot, and these boxes have generally superior printing characteristics. The paper producer internally converts most of this superior product into boxes in order to maximize the marketplace advantage and its associated economic advantage.

It follows that 75% of linerboard machines operating in the U.S. today are lagging behind these advanced machines. In the long term, the industry cannot be commercially healthy under these circumstances. For a variety of reasons, some of these linerboard machines cannot be rebuilt to become commercially viable for the long term. In fact, a few of these machines are sitting idle today as the result of poor economic performance, and several more should join them for the long term health of the linerboard industry.

However, it is estimated that about 50 existing linerboard machines are realistic candidates for technological upgrades that would allow them to compete in the global marketplace for the long term. These machines must be rebuilt to achieve the crucial objectives of market stability and reasonable return to shareholders.

Corrugating medium. There are 60 major corrugating medium machines in the U.S., and U.S. corrugating medium production amounted to approximately 13 million tons in 1997. State-of-the-art corrugating medium machines include all or most of the following characteristics:

• Separate refining of different fiber supplies

• Precision stock blending

• Dilution control headbox

• Shoe press

• Single tier drying or partial single tier drying

• Ropeless threading

• Operating speeds of more than 3,000 fpm

The situation with corrugating medium machines is quite similar to that with linerboard machines. Of the 60 major corrugating medium machines, about 5% closely match the technical outline for state-of-the-art, and almost another 15% have high intensity presses. This 20% of existing corrugating medium machines enjoy the same basic marketplace and economic advantages of the leading linerboard machines (Figure 2), with the same internal use and benefit summary.

Of the 48 major medium machines that do not fall within the group identified here as state-of-the-art, it is estimated that about 40 are realistic candidates for technological upgrades that will allow them to become truly competitive for the long term. As with linerboard machines, these machines must be upgraded to provide opportunity to achieve reasonable return to shareholders and market stability.

FINE PAPER MACHINES. Fifty percent of U.S. production of printing and writing grades is uncoated free-sheet (UCFS), and about half of the remaining production is base stock for coated grades. Base stock for coating is produced on paper machines that share many similarities with UCFS machines, and paper machine configurations for most of the other printing and writing grades are not very different from UCFS. For this article, UCFS will represent printing and writing grades.

U.S. production of UCFS and UCFS-like coating base stock amounted to approximately 18 million tons in 1997. State-of-the-art UCFS machines include all or most of the following characteristics:

• Precision stock blending

• Dilution control headbox

• Gap forming

• Shoe press or dual shoe presses

• Single tier drying

• Ropeless threading

• Metering size press (with pigmented pre-coat capability)

• Soft nip calendering

• Operating speeds of more than 4,250 fpm

The situation with UCFS paper machines is even less positive than that of linerboard and corrugating medium machines. Very few existing U.S. machines—only about 3%—for UCFS production closely match the technical outline for state-of-the-art (Figure 2), and not many other existing UCFS machines are even equipped with substantial components of the state-of-the-art configuration.

To compound the issue, in the case of fine paper, there is significant potential for high quality imported paper to erode the market share of domestic producers. Thus far, the U.S. has held a dominant position in linerboard by being a source of high quality long fiber, a position that is threatened in the long term as Brazil and other nations become proficient at growing southern pine in half the time required in the U.S. However, UCFS grades produced in the U.S. do not even currently hold a fiber advantage over their imported counterparts.

For UCFS grades, South America and Southeast Asia have established the capability to provide excellent fiber from fast growing eucalyptus and acacia, and many of these external producers are determined to penetrate the huge U.S. market. Southeast Asia has made large investments in state-of-the-art UCFS production units, and it is conceivable that this will continue as the area’s financial instability subsides. It is also foreseeable that Brazil will travel the same path.

The market for UCFS grades has truly become global. It is no longer a supposition of what might happen, since substantial quantities of imported cut-size sheets and stationery products are in U.S. retail outlets today. So, U.S. producers of UCFS grades must compete with the world, not just with the neighbors down the street. Because of this, major rebuilds that incorporate advanced technology are a necessity for UCFS machines in the U.S. if the industry is to survive in both the domestic and the international marketplace.

Nickey Rudd is vice president and manager of technology and development for BE&KEngineering Co. in Birmingham, Ala.