2007 Paper Recycling Supplement - On The Horizon

While China continues to play a dominant role in the areas of recovered fiber consumption and production of new paper and board products, the North American paper industry has been quietly trying to hold its own.

For instance, in 2003 the American Forest & Paper Association (AF&PA), the trade association of the forest, pulp, paper, paperboard and wood products industry, set a goal to increase the fiber recovery rate to 55 percent in an effort to meet the growing demand for secondary fiber, helping to ensure that U.S. mills are able to secure adequate volumes of recovered fiber in light of growing export demand. The association also has launched other initiatives to strengthen the North American paper industry.

Because the AF&PA represents the interests of more than 175 companies and related trade associations, Recycling Today Internet and Senior Editor Dan Sandoval posed some questions to the association’s President and CEO Donna Harman regarding the mid-term outlook for the North American paper industry.

A: Let me begin by saying that while the paper industry faces challenges, we can also point to many successes, particularly with respect to our recovered fiber goal. In 2003, AF&PA set the goal of achieving a 55 percent recovery rate by 2012 and we are already nearly there. In 2006, we hit the highest number ever—53.4 percent recovery rate of all paper consumed in America—up 7.4 percent from the 46 percent recovered in 2000. So, the education measures and on-the-ground programs that we have, and working with various partners that run these programs, are effective.

We also have great successes with productivity, safety and our environmental record. The American worker is the best worker in the world, and workers in the U.S. paper industry are some of the most experienced and dedicated professionals—productivity, or output per worker, at U.S. paper and paperboard mills has increased by 60 percent since 1997. Despite this increased output, safety has improved. Pulp and paper mills total case illness and injury incidence rates were reduced by 11 percent between 2002 and 2004 and have decreased by 71 percent since 1992, according to AF&PA statistics.

Honoring our commitment to the environment also helps maintain a competitive edge. Between 2000 and 2004, fossil fuel use per ton of product was reduced by 11 percent at U.S. pulp and paper mills, and AF&PA member companies reduced their direct greenhouse gas (GHG) emissions 16 percent. This translates to a 12 percent reduction in intensity of direct emissions. We are proud of our record and the ongoing commitment of our member companies to reduce their emissions intensity by 12 percent by 2012 under the Department of Energy’s Climate VISION program.

While domestic paper and paperboard consumption grew an average of 2.3 percent and 2.4 percent per year during the 1980s and 1990s, on the "challenge" side of the ledger U.S. consumption of paper and paperboard declined approximately 5 percent between 1999 and 2006.

For some grades, such as newsprint and uncoated free sheet, electronic substitution may have played a role in the recent declines, and countries such as China are increasing domestic production of the packaging for the goods that they export to us. That is why we need to continue to work to ensure that U.S. mills are able to secure sufficient recovered fiber in the face of rapidly expanding export demand.

A: We believe in free but fair trade when it comes to recovered paper or any other product.

One way to ensure the sufficiency of recovered paper supplies is to increase recovery. Based on extensive AF&PA recovery statistics, prime targets for increasing paper recovery include schools, offices and communities. That is why one of the major projects AF&PA has undertaken in the last two years been to partner with education leader Scholastic to reach teachers, students and their families with messages related to increased recovery.

The results thus far are very positive. AF&PA and Scholastic have created a standards-based classroom poster, teacher guide and take-home activity. First distributed in 2006 to 60,000 third- through sixth-grade educators, it was then updated to include new recovery data and distributed to an additional 60,000 educators in 2007. The program has now reached more than 3.6 million teachers, students and their families. Furthering the reach of the materials, AF&PA has made a version of the curriculum available at www.paperrecycles.org.

A: Innovation is a top priority for the North American pulp and paper industry—and it needs to be in order to keep up with global trends in the 21st Century.

The Agenda 2020 Technology Alliance, a special project of AF&PA, was created specifically as an industry-led partnership with government and academia that is dedicated to reinventing the forest products industry through innovation in processes, materials and markets.

These innovations are aimed at three necessary ingredients for creating a healthy future for the U.S.-based forest products industry:

Where circumstances allow, existing mills will be capable of evolving into integrated "biorefineries" that are energy self-sufficient and produce a slate of biomass-derived products—including traditional wood and paper products, wholesale electricity, fuels and chemicals—using manufacturing by-products, forest residues and/or agriculture residues as feedstock.

Product innovations include handled grocery bags to encourage re-use, re-sealable caps on gable-topped milk/juice cartons and paper specially designed for digital printing applications and home photography enthusiasts.

A: We have strong relationships with our counterpart Canadian association. We share information and work together on a number of joint projects. We also have several overlapping member companies, which is helpful for coordination on public policy in North America.

In addition, AF&PA was instrumental in the formation of the International Council of Forest and Paper Associations (ICFPA) in 2002 and AF&PA’s president served as ICFPA’s first president.

ICFPA is a worldwide network of forest and paper industry associations from both developed and developing countries. It promotes cooperation in areas of common interest to its members and serves as the industry’s advocate at the international level.

In recent years, ICFPA issued a common statement against illegal logging and helped develop tools for calculating greenhouse gas emissions from pulp and paper mills.

A: We believe that there is additional recovery potential with respect to office papers and mixed papers found in the home. However, recovery rates for old corrugated containers (OCC) and old newsprint range above the 70 percent mark, so in those areas it may be difficult to achieve increases.

The recent climate change debate has renewed interest in residential recycling. This is an area I believe we can take advantage of to grow our recovery rate in communities that already have curbside collection by encouraging them to maximize service capabilities. We also have opportunities in rural areas that currently have limited recycling capabilities.

A: Many of the closed mills were older and less competitive, so on some level there has been a natural ebb and flow for these businesses.

The future number of mills will depend on demand for pulp, paper and paperboard, as well as their continuing ability to contain manufacturing costs in the face of challenges such as rising energy costs. Yet, this can turn around. There are reports of U.S. companies investing in new mill technology for uncoated free sheet production. So, I think we are seeing the normal fluctuations any types of business will experience over time and changing trade dynamics.

A: The three- to five-year outlook for the U.S. paper industry appears reasonably bright. The dollar’s international trading value has already helped to boost exports and that trend is likely to persist as the dollar continues to ease. Recent statistics already show that during the first half of 2007, U.S. exports of paper, paperboard and covered products rose 7.5 percent versus a year ago while imports declined 8.5 percent.

This trend is also helping to stabilize, and may ultimately reverse, the sharp deterioration seen in the U.S. merchandise trade deficit during the past decade. An improved trade picture with respect to manufactured goods will spur domestic box and carton demand.

In addition, catalog sales have been growing during the past five years, and that upward trend is likely to continue since catalogs and the Internet have an economic synergism as readers see items they like in catalogs and then order them online. While electronic communications may have had some affect on paper consumption in corporate offices, paper consumption has risen in home offices.

Although print newspapers have been losing some ground to electronic news, many Americans will not be comfortable giving up their morning papers. I think eventually we may see a slowing of this trend as newspapers remain the medium of choice for core readers. All things considered, the next five years are likely to be better than the past five.