Monica Shaw is associate editor of Pulp & Paper magazine.

WHAT'S AHEAD

PULP & PAPER editors examine the development and mill use of a combined chlorine dioxide-ozone (D-Z) bleaching sequence designed to reduce bleach plant emissions and cut chemical costs.

POWER & ENERGY

An in-depth report details some typical power and recovery boiler operating problems and offers advice to operators and mill engineers on how to solve them.

MILL MAINTENANCE

A special tutorial article introduces the various types of electrical test procedures and discusses how they are used to identify motor defects.

From the EDITORS

'Twas the season for overindulgence

In Pulp & Paper's September 1997 issue (p. 51), we reported that, after years of overspending to increase production capacity during up-cycles, the paper industry is gradually turning away from its bingeing mentality toward a more judicious capital spending practice. According to the September report, paper companies have begun focusing their spending on strategic production increases and modernizations aimed at differentiated products rather than a glut of new capacity. These efforts, according to industry analysts, would create a leaner financial profile for paper companies.

But despite the apparent new efforts for "weight control" through better capacity management, a curious trend appeared in some of the responses to Pulp & Paper's 1997 mill manager's survey (P&P, December 1997, p. 77). Not surprisingly, when asked to identify the biggest challenge facing the North American industry in 1998, 26 percent of the mill managers chose pricing and market concerns while 17 percent chose overcapacity and expansion. Other responses included global competition (9 percent), profit margins (9 percent), and environmental compliance (9 percent). The curious aspect of the responses, however, dealt with the supposedly "dieting" mills' plans for capital expansion in light of these concerns.

SELF-CONTRADICTION. When asked whether a major capital project was planned for their mill, 70 percent of the responding mill managers said "yes." When asked to describe the focus of these projects, a gluttonous 28 percent cited production capacity increases, which tied with environmental compliance for the most common answer. Improved quality (20 percent), grade changes (13 percent), and cost reduction (13 percent) were listed by the more finicky respondents.

Even more confusing were some seemingly self-contradictory responses-potentially brought on by spending deprivation-from within the group. For example, one mill manager, who had cited "environmental upgrades and capacity expansion" as the focus of his mill's 1998 capital projects, at the same time listed "controlling growth to prevent overcapacity" as the biggest challenge facing the North American industry in the upcoming year.

Not all respondents from the 28 percent of premeditated bingers felt so deprived by a lack of spending. Many of this group did not cite capacity as North America's biggest challenge, but were instead fearful of poor profit margins, as was one manager whose mill was spending for "more tons per day" in order to "increase production and lower costs to make the mill more profitable." Apparently, a gnawing fear of one mill's profitability gave way to the need for capacity expansion to produce a quick, if unsustainable, boost for the sake of financial appearances.

Despite the contradictory responses from the bingeing group, it is important to recognize the majority of mills who either had no major expansion plans or were spending to de-bottleneck, comply with environmental regulations, or improve quality. From these mills came pleas for "self discipline regarding expansion plans." Another of these managers warned specifically against "overproduction of many grades to make a profit or break even."

'TWAS THE SEASON. With paper prices climbing slightly in the latter half of 1997, much as with the holiday season, it becomes more and more difficult for those with tendencies toward overindulgence. However, indiscriminately increasing capacity to take advantage of market upswings, as a dieter's history shows, can only lead to the dreaded cyclicality of the yo-yo effect.

In a quote from the September special report, Salomon Brothers' managing director for North American paper and forest products research group, Chip Dillon, commented that "... the only way you can tell whether a compulsive gambler has been reformed is by taking him to the race track and seeing if he can walk away. On the last up-cycle, the industry showed-collectively-that it had changed its investment practices-they 'walked away from the track.' This next cycle, I think that they'll do even better."

According to this issue's Outlook '98 report, which begins on page 47, the North American paper industry is beginning to gradually recover from one of the most volatile business cycles in its history. Prices for most grades appear to be on a slow rebound. At the same time, capital spending plans for both U.S. and Canada appear to be very cautious.

If paper prices continue to climb, just as holiday feasts cruelly tantalize famished weight watchers, let's hope the bingers can also resolve to push back from the table in 1998 to provide for a more healthy industry.