Spokane Journal of Business

Guest Commentary: Future is suddenly looking bright for Northwest papermakers

On a roll …

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In recent years, papermakers in the Pacific Northwest have been losing ground. However, today there is a ray of hope. Surprisingly, that optimism results from the COVID-19 pandemic.

In the first days of the pandemic, grocers couldn’t keep toilet paper on store shelves even though paper mills were running 20% higher-than-normal capacity. Cardboard plants also were operating full bore making shipping boxes for medical supplies and personal protective gear.

As Amazon and online sales ramp up because stores and shopping malls are locked down, paper manufacturers see new opportunities and are again investing millions in new equipment.

“The pulp and paper industry in Washington had become a shadow of its former self as economic trends and changing business practices have combined to shrink demand for paper products,” noted Seattle business journalist Bill Virgin in January’s Seattle Business.

In the 1980s, the Pacific Northwest was a major hub for the forest products industry and the state’s map was dotted with mills producing a wide variety of paper. Today, production is confined largely to toilet paper, paper towels, facial tissue, linerboard, and cardboard.

The good news is 90% of our consumer paper is manufactured domestically, including at Georgia-Pacific plants in Camas, Washington, and Wauna, Oregon. GP spent millions to modernize the Wauna mill, which was built in the early 1960s to produce newsprint, business paper, and consumer products.

The larger part of the paper market is packaging, which is dominated by the world’s three largest paper producing countries: China, the U.S., and Japan. They account for more than half of the world’s output.

With the continued drop in demand for paper used in newspapers, magazines, and offices, paper machines are being converted to make packaging stock.

The shift started in 2017, when Packaging Corp. of America announced a $150 million conversion of a machine making office and printing papers to production of linerboard at its Wallula mill, near Pasco, Washington.

Longview, Washington-based North Pacific Paper Co. plans to convert one of its three machines to making heavy brown kraft paper most commonly seen in grocery bags, linerboard, and the corrugating medium that separates the inner and outer walls of boxes.

Norpac’s kraft paper is likely to be in strong demand because paper bag researchers estimate annual growth of more than 4% in paper grocery bags as more states ban single-use plastic bags. Also, the COVID-19 pandemic put a damper on reusable grocery sacks.

There is hope for a brighter future for Washington papermakers.

The key to keep investments flowing to Washington is making sure our mills are cost competitive. Adequate supplies of chips and quality recyclable paper, reasonable regulations that don’t jeopardize our environment or health and safety, and, above all, our desire to have those papermaking investments occur in our state are paramount.

Elected officials would be wise to look at factors influencing competitiveness now so papermakers can keep providing jobs and generating taxes and economic opportunities in Washington.

 

Don C. Brunell is a business analyst, writer, and retired as president of the Association of Washington Business. He now lives in Vancouver, Washington, and can be contacted at theBrunells@msn.com.

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