U.S. paper earnings improved in 2000

Most U.S. paper and forestry companies reported increased earnings from their primary pulp and paper operations during 2000, mainly due to higher average selling prices for virtually all paper products. But a sharp drop in demand for wood products and building materials, as well as non-operating charges for plant closings, production slowdowns, and job cuts, pulled earnings down at a number of companies. A Pulp & Paper Week survey of 28 paper companies showed net earnings (before nonrecurring charges or one-time gains) increased to $6.5 billion in 2000, a gain of 21.6% from $5.3 billion in 1999. Net sales increased to $136.6 billion from $119.4 billion, a 14.4% jump. The net profit margin for the 28 companies was 4.7%, compared with 4.5% in 1999. The full year results benefited from early gains during the first nine months of 2000, but by the fourth quarter many companies were reporting losses. The sudden price decline of coated free-sheet paper at year-end provided evidence of the industry's weakening condition. Higher energy costs in the fourth quarter, particularly natural gas, also cut into profits.

Willamette resistant to Weyco takeover

Willamette Industries Inc. remains committed to resisting a hostile takeover from Weyerhaeuser Co., which has offered $5.4 billion in cash for its smaller rival and agreed to assume $1.7 billion in debt. Recently Willamette sent a letter to Weyerhaeuser's board of directors expressing "disappointment" over Weyerhaeuser's continued pursuit of the deal. The Willamette letter accused Weyerhaeuser of trying to "coerce" its shareholders with a "low-ball offer." Willamette said that although it is not for sale, it is "willing to listen to any serious, legitimate proposal that may benefit our shareholders." Investors who have already tendered 51% of their shares to Weyerhaeuser's offer saw this as an opportunity for negotiations.

Appleton considers employee buyout

Appleton Papers Inc.-the world's largest producer of carbonless paper-said it is studying a buyout of the company by management and employees from its Anglo-French owner, Arjo Wiggins Appleton plc. The terms of the proposed sale have not been disclosed, but Appleton Papers' management is constructing an employee stock ownership plan (ESOP) that would place ownership in the hands of employees and senior executives. The proposed ESOP sale does not include the former Appleton Papers coated free-sheet paper mill in Combined Locks, Wis., which was spun off last year as Appleton Coated LLC, a separate company under Arjo Wiggins ownership.

L-P closes sale of Samoa pulp mill

Louisiana-Pacific Corp., which recently closed the sale of its Samoa, Calif., pulp mill to LaPointe Partners Inc., shuttered the 200,000-mtpy facility in January due to weak market conditions, a spokesman at L-P said. The shutdown began Jan. 25 and has already clipped about 16,500 mtons of both bleached softwood and hardwood kraft pulp out of its supply. The Samoa facility, which converted to producing 100% chlorine-free processing (TCF) in 1995, remained idle until early March. The mill also produces unbleached pulp. The deal, originally negotiated for $46 million in cash plus preferred stock worth about $33 million, was closed under new terms that give L-P a partial stake in Samoa.

G-P Brunswick mill switches to fluff pulp

Georgia-Pacific Corp. has ramped down bleached boxboard production at its Brunswick, Ga., mill in favor of running 100% fluff pulp. The mill can now make up to 830,000 mtpy of fluff pulp, making it North America's single largest fluff producing facility. A company source said G-P has transferred the boxboard production to its Crossett, Ark., mill.

Ponderosa Fibres to sell market pulp mill

Ponderosa Fibres of Washington L.P.'s deinked market pulp mill in Wallula, Wash., was put up for sale in early February because the mill's bondholders want to sell their stake, a mill official said. The 86,000-mtpy mill shut down for one to two months beginning Mar. 1 for market reasons.

IP takes downtime, idles Moss Point mill

International Paper Co. temporarily idled its Moss Point, Miss., bleached paperboard mill, mainly due to weak market conditions and rising energy costs. Production at the aging 87-year-old mill was stopped from Jan. 28 through the week of Feb. 25. Market conditions have also forced downtime at other IP facilities, including the Texarkana, Texas, and Franklin, Va., mills. Other locations are slowing down production. IP said it took about 75,000 tons of market-related downtime throughout its bleached board system during first quarter 2001. The company pulled 50,000 tons of production in the fourth quarter.

Westvaco announces price increase

Westvaco Corp. announced a $60/ton price increase for all grades of bleached paperboard produced at its U.S. mills. The proposed increase was effective with shipments on or after Mar. 1. International Paper Co., the largest U.S. producer of bleached paperboard, previously proposed a $60/ton increase for bleached packaging board effective with shipments on or after Feb. 16, citing rising energy costs, as well as higher prices for chemicals and coatings, as reasons for the price increase proposal.

Communications shipments up in 2000

Total North American shipments of communication papers grew on a year-over-year basis by 0.8% last year compared with 1999, despite a slow second half of the year, according to statistics from the Pulp and Paper Products Council (PPPC). The sector that experienced the strongest growth was uncoated mechanical grades, which grew 8.6% in 2000. Conversely, shipments of coated woodfree papers declined by nearly 4% last year, totaling 4.8 million mtons compared to about 5 million mtons in 1999. The coated woodfree market was primarily affected by a substantial rise in imports from South Korea, Thailand, and Western Europe. Shipments of coated mechanical grades grew 3.6% for the year to 5.1 million mtons compared to 4.9 million mtons in 1999. The majority of the growth came from strong magazine advertising spending in North America.

Containerboard prices hold after fall

After falling for the first time in two years in January, 42-lb unbleached kraft linerboard prices in the U.S. East held up without any across-the-board changes in February, buyers and sellers said. Discounting accumulated on the open market since November 2000, causing a $15/ton adjustment on 42-lb kraft linerboard, which put the U.S. East price at $455-$465/ton in February. Semichemi-cal medium prices in the East for 26-lb remained at $420-$430/ton, but buyers said price pressure continued from recycled medium with low U.S. old corrugated container (OCC) prices at f.o.b. seller's dock $40/ton. February was a weak business month for corrugated, with every independent and integrated producer contacted (representing 38% of total U.S. box business) reporting less volume on average-week basis compared with February 2000 volume. Producers continued to aggressively shut machines down to try to keep supply basically in line with the weak demand domestically and on almost all export markets.

Box, containerboard shipments fall

U.S. box volume last year declined 0.5% on average-week basis compared with 1999 and totaled 401.3 billion ft2, according to the Fibre Box Assn. (FBA). On an actual shipment basis, box volume last year was down 0.9% and 3.76 billion ft2 compared with 1999's actual shipments of 405.08 billion ft2. There was one less shipping day last year compared with 1999. Containerboard consumption at the box plants declined 0.6% and 191,200 tons, totaling 30.54 million tons compared with 30.73 million tons in 1999, FBA said. In total, first quarter market-related downtime was estimated at 389,000 tons, with an estimated 239,400 of market-related downtime in January alone.

Abitibi to sell newsprint mill

Abitibi-Consolidated Inc. has signed an agreement with the Canadian Competi-tion Bureau to sell its Port Alfred newsprint mill in La Baie, Que. Abitibi-Consolidated has been negotiating with the bureau since its $7 billion acquisition of Donohue Inc. last year. The market value of the Port Alfred mill is not being revealed by Abitibi, but a North American industry analyst said the mill could be sold for between US$200 million and US$300 million. The competition bureau ruled that Abitibi-Consolidated's market share of 30% is too high. Potential buyers for the mill could include Enron Corp., which is currently involved in buying Daishowa Paper Manufacturing Corp.'s Quebec City newsprint mill, Stora Enso North America, and Tembec Inc., according to an analyst.

Fraser closes mill, moves production

Fraser Papers Inc. closed its West Carrollton, Ohio, uncoated free-sheet mill on Mar. 9 and moved production to its Park Falls, Wis., mill. Closure of the West Carrollton mill resulted in the elimination of 105,000 tpy and the loss of 305 jobs. The 130,000-tpy Park Falls facility has four paper machines, and is highly integrated with a sulfite pulp mill and deinking facility on-site. A company executive said increasing market competition and rising energy costs led to the decision to close the mill.

New tissue machine planned in Florida

Unicell Paper Mills Inc. has begun construction on a planned 29,000-tpy tissue machine project in Sanford, Fla. The project cost is an estimated $35 million. The mill will be located about 30 miles southwest of Daytona Beach, roughly between Orlando and Daytona Beach in eastern Florida. Unicell Paper Mills, under the Sharma Group of Companies, plans machine start-up in January 2002 on a 15-acre site. Plans call for installing a 2.7-m-wide Crescent Former machine capable of running 1,500 m/min. The machine will run virgin or deinked pulp, the company said in a release. With the planned new machine, Unicell plans to produce a full range of tissue grades, meet the need for parent rolls of U.S. and Canadian converters, and export some of the output.

Canada pushing for free trade agreement

Canada's International Trade Minister said recently that the contentious Canada-U.S. Softwood Lumber Agree-ment (SLA) would not be renewed after it expired at the end of March. U.S. exports account for just over 50% of total Canadian production. The Canadian government disagrees with the U.S. contention that Canada is subsidizing stumpage fees. U.S. forestry interests, meanwhile, loudly criticize low stumpage prices in Canada as unfair subsidies and have long argued that countervailing duties should be imposed. Many U.S. homebuilders, however, advocate free trade. It was concern over U.S. sanctions that prompted Canada to first agree to the SLA in 1996, rather than insist on completely free trade under the North American Free Trade Agreement.

IP to close lumber operations in Maine

International Paper Co. (IP) plans to permanently close its Passadumkeag and Costigan, Maine, lumber operations by mid-April, with a chipper operation to continue at the Costigan site for an indefinite period of time. This shutdown is due to market conditions with lumber prices at their lowest level in more than a decade, as well as an increasing pressure from imports, the company said. The announcement follows IP's move to close its Washington, Ga., lumber mill. By closing these operations, IP reduces its lumber production by 13%, or about 350 mmbf.

Strike averted at Willamette mill

Willamette Industries Inc. averted a strike at its largest linerboard mill by providing 401(k) benefits to the employees at the Campti, La., plant. The strike was planned for Feb. 4, but was averted, according to a local official of the union representing mill workers, Paper, Allied-Industrial, Chemical and Energy Workers International Union (PACE). Willamette resolved negotiations with union employees by offering the 401(k) benefits, paying 50 cents per employee-contributed dollar for the first $500. Previous-ly, the union had signed a five-year contract that excluded the 401(k) plan but left open the possibility for bringing up the issue again in contract negotiations. The new agreement is effective for the contract's remaining three years.

Eastern mill workers try to save jobs, mill

Workers at Eastern Pulp and Paper Corp.'s fine paper mill in Brewer, Maine, voted to accept contract concessions designed to help the financially troubled mill cut costs. The concessions involve reduced wages and require employees pay a larger portion of health insurance costs. The proposal-which was previously rejected-was accepted after workers were told by the company that it faced bankruptcy and would have to begin laying off workers to keep the mill open. Workers at Eastern's mill in Lincoln, Maine, will vote on a similar proposal.

Badger requests worker concessions

Badger Paper Mills Inc. has requested concessions from its union and non-union employees. These include a wage freeze for the full year 2001; production scheduling and staffing changes; pay in lieu of paid vacation time off; and employee participation in medical and dental insurance costs. The company said it has been hurt by rising costs and deteriorating margins for its fine papers and flexible packaging materials. Badger lost $1.24 million on sales of $56 million for the first nine months of 2000.

Rhinelander workers approve contract

Workers at Wausau-Mosinee Paper Corp.'s Rhinelander mill approved a five-year contract that includes a 3% pay increase per year and improves pension benefits, according to a report in the Milwaukee Journal Sentinel. A total of 64% of 441 union workers in two locals of the PACT Union voted for the new contract. The 165,000-tpy labels and specialty packaging Rhinelander mill is Wausau-Mosinee's second largest mill.

Willamette to begin environmental efforts

Willamette's board of directors approved doing two environmental projects at the Port Wentworth mill. A non-condensable gas collection and incineration system will be installed to collect and burn odors and comply with Cluster Rules. An electrostatic precipitator will replace a lime kiln scrubber and help meet federal maximum achievable control technology II standards.

EPA raises recycled-content standards

The U.S. Environmental Protection Agency (EPA) announced that, effective Jan. 19, 2001, it raised the recycled-content standard for the publication and copier paper it uses to 100% recycled content with 50% postconsumer fiber. Also, process chlorine-free paper will be used, when available. The previous postconsumer level was 30% and lacked a preference for process chlorine-free. The new standards currently apply only to EPA headquarters because of the difficulty in some areas obtaining this type of paper. However, the agency said it is working to identify manufacturers nation-wide and expects EPA regional offices can to comply no later than Oct. 1, 2001.

IP plans timberland sale for $500 million

International Paper Co. (IP) said it reached an agreement to sell 265,000 acres of forestland in Washington state for more than $500 million to Rainer Timber Co. LLC. Rainer is a newly-formed company managed by The Campbell Group of Portland, Ore. IP plans to use the money from the planned sale for reducing debt. The land being sold is located in Pierce and Klickitat counties. Rainer Timber plans to continue harvesting the Washington state forestland for domestic and export business. Separately, Pope Resources said it entered a definitive agreement to acquire 44,500 acres of industrial timberland in southwest Washington state for $54 million from Plum Creek Timber Co. The Plum Creek property contains more than 200 mmbf of standing timber inventory.

Durango's Pipsa-Mex plans added capacity

Corporation Durango in Mexico expects to soon startup an expanded 90,000 mtpy deinking plant (DIP) at its reorganized Tres Valles mill and to upgrade the DIP line later this year at the Pronal newsprint mill in San Luis Potosi. Both mills are run by Pipsa-Mex, a Durango subsidiary. Along with the deinking plant expansion, the Tres Valles mill production will change from newsprint to un-coated woodfree and specialty papers. The mill's capacity is about 261,000 mtpy. The new deinking line supplied by Andritz-Ahlstrom will run mixed office waste. Andritz-Ahlstrom also will upgrade the DIP line at Pronal to 144,000 mpty by the end of this year.

The first three e-mails below were written to George Gates in response to his column, "Gonna Lay Down My Sword and Shield," in the February 2001 issue of Pulp & Paper.

I was very pleased to finally see an article on labor-management relations (or lack thereof) in P&P. As one of my heroes, Tom Peters, once said: "People don't join unions for the hell of it. They join unions because management is acting like a bunch of jerks." Some things never change. I've been in the industry 32 years. As long as paper CEOs and their immediate underlings continue to pocket millions in salaries and perks, while demanding layoffs and wage/benefit concessions from their workforces, nothing will change. As long as they continue to spout pretty promises of "trust, dignity, respect, etc." and continue to treat people as merely another non-fiber variable cost, nothing will change.
It's been that way for decades. It's still that way today, which justifies a Maine newspaper's observation that "the paper industry is best known for small towns, bad odor, and rotten labor-management relations."
But thanks for the article. You raised some valid issues.
Jerry Ritter
Weyerhaeuser Corp.
Local 677, Assn. of Western
Pulp & Paper Workers

I enjoyed your article. I have been working in Human Resources here at Fraser Papers Inc.'s Madawaska, Maine, operation for almost 23 years. We have done some pretty successful muddling with union/management cooperation over the past 10 to 15 years. I could identify with all of your observations and was remembering the struggle to get past the speeches and trust issues. I have to read articles like yours and think back a few years to realize how far we have come. One needs to do this on occasion when the going gets tough. It really is a lot better-we have more efficient and productive meetings focusing on issues instead of people. However, it is always easy to slip back into some of the old, less-productive ways of thinking.
Dick Marston
Fraser Papers Inc.

I know it is a rough world out there, but with the closures, sell-offs, etc., it is hard for an employee to "trust" management in a lot of cases. As the old saying goes, "When it happens to your neighbor it is a recession, but when it happens to you it is a depression!"
The attached [article on downsizing at Smart Papers LLC in Hamilton, Ohio] is an example of a company trying to make a mill profitable, but I don't believe that it will make the employees trustworthy, loyal, etc., which is what the mill needs to survive and profit.
The paper industry has lost a lot of expertise through early retirement packages, mergers, and closures that may not be in its best interest in the long run. The problem is that the short run (stock prices) is the name of the game. I don't think that the swords and shields are going to be laid down very soon.
Parker L. Phillips
Associated Machine Design Inc.,
Green Bay, Wis.

Editor's note: Mr. Ritter, Mr. Marston, and Mr. Phillips would like to note that their comments are personal and do not necessarily reflect those of their individual companies.

Someone's asleep at the wheel...
In your December edition of Pulp & Paper magazine, Ed Glass writes a good article on recycle paper contaminants. I'm particularly impressed that he's picked up on the fact that PSA consumption is increasing. Let me assure you that, as an ex-recycle superintendent and now recycle papermaker, there are no contaminants that are in the same league as PSAs. Their cohesiveness, extrudability, and resistance to caustic soda have earned them the title of "Mutant Ninja Stickies." I would suggest that our industry would benefit from a campaign against PSAs on the environmental grounds of doing our best to increase recycling.
So, now I must ask why you are jumping on the PSA bandwagon with your Chicago tape and label promotion?
Tom Fulton
Abitibi-Consolidated

Editor's note: Mr. Fulton's ending comment refers to a regional insert advertisement from a tag and label supplier that some readers would not have received.