Gaining Strength

The 2010 Paper Recycling Conference & Trade Show brought together more than 500 professionals in the recovered fiber industry, including paperstock dealers, recovered fiber consumers and government and waste management officials, to downtown Chicago in mid-June. While the recession has presented a number of challenges for the industry, from bankruptcy filings to higher freight rates to less access to capital, many attendees and speakers said they thought the worst was behind them, though they acknowledged that a number of challenges remained.

The conference, which took place at the Marriott Downtown Chicago Magnificent Mile from June 13 to 15, featured a number of prominent members of the industry as speakers, including various representatives from Waste Management as well as Susan Choi from America Chung Nam, Steve Silver of FutureMark Paper, John Sims of International Paper, Ranjit Baxi of J&H Sales International Ltd., Mark Hagood of Walmart and Dan Lanz of Metro Waste Paper Recovery.

This year’s conference offered three programming tracks—Commodities & Trading, Plant Operations and Collection & Municipal Markets—in addition to a series of plenary sessions. Sunday’s programming included sessions on plastics and used beverage containers (UBCs) and a management workshop on sales strategies that featured Nick Wildrick of Total Training Services, Spartanburg, S.C.

The success of many companies handling recovered fiber can be said to begin at the curb, where post-consumer material is collected for processing. However, the recession has cut into the dollars available to recycling coordinators for educational and promotional programs. This issue was addressed in a session titled “An Ongoing Education,” which was part of the Collection & Municipal Markets track. Panelists agreed that money spent on reminders and explanations to current and potential curbside participants paid off in increased collection volumes. That proven payoff could be why the private sector is stepping in to bridge the promotional gap.

EDUCATION MATTERS

Steve Thompson of the Curbside Value Partnership (CVP) subsidiary of Keep America Beautiful Inc. (KAB), Stamford, Conn., noted that the privately funded CVP has worked in cooperation with 23 community curbside programs since 2003 to increase their participation rates and collection volumes

On average, Thompson said, the promotional efforts spurred by CVP had yielded a 22 percent increase in collected volumes in those communities.

Thompson said CVP-funded campaigns, such as www.yougottabekidding.org in the Tampa Bay area in Florida, are designed not to “preach to the choir” but to reach constituencies with lower participation rates. Atul Nanda from RecycleBank’s Toronto area office provided an overview of how that company’s rewards programs has spurred greater collection in some 300 cities in the United States, Canada and the United Kingdom.

“North Americans love rewards programs,” said Nanda. A montage of video clips Nanda played included a quote from the mayor of Wilmington, Del., who remarked that the coupons and gift cards available through the RecycleBank program spurred residents of that city to go from a landfill diversion rate of almost 0 percent to 37 percent.

While Nanda said the rewards provide the incentive, he also said “none of the programs are going to work unless you have ongoing education” informing residents of the potential rewards and of how to take properly take part.

Presenter Rick Meyers, the city of Milwaukee’s recycling specialist, outlined how that city has worked with its recycling haulers and processors to keep educational programs intact.

The city has also worked with neighborhood groups and with Keep Milwaukee Beautiful (the regional KAB affiliate) to take advantage of a tie-in that residents see between recycling and keeping neighborhoods free of litter. “Stressing cleanliness as a tie-in was borne out by research and has been well received by people,” said Meyers.

Much of the fiber collected curbside could find its way overseas, as the world’s emerging economies promise to create ongoing demand for recovered fiber.

OVERSEAS DEMAND

Within an uncertain economic climate in North America, paper recyclers here can seemingly take comfort in ongoing global demand for the commodity they collect, process and ship out.

In his 2010 Paper Recycling Conference workshop “Fiber’s Future Intrigues: Scant Supply and Turbulent Pricing,” industry consultant Bill Moore of Moore & Associates, Atlanta, provided information on global demand as well as key supply factors.

Moore reviewed the recent price history of major scrap paper grades, including old newspapers (ONP) and old corrugated containers (OCC).

Although ONP’s pricing is less volatile than OCC, it has provided headaches for mills and recyclers on the supply side. “ONP has been chronically supply-short in the last five to 10 years,” Moore said.

He pointed to mixed paper as a grade that has risen in prominence in the past 10 years, in part because of the chronic under-supply of ONP. “Prior to 2000, recyclers really didn’t go out of their way to make mixed paper,” said Moore, who noted that the grade could trade for as low as $13 to $20 per ton in the late 1990s. “But now,” added Moore, “it’s all that’s left to recover, and Chinese mills have been buying it.”

Moore also predicted relative recovered paper price stability—with an upward trend—from 2010 to 2015. Regarding OCC, Moore commented, “We think the market’s going to be stable at around $120 for the next year.”

Future supply and the health of various paper industry segments were up for discussion during the conference’s second plenary session, “The State of the Paper Industry.”

FIBER’S FATE

Mark Fitzgerald of Editor & Publisher, Chicago; John Sims of International Paper, Memphis, Tenn.; and David Knight of SCA Tissue, Bristol, Vt., were among the speakers at the session providing an encouraging outlook for the industry.

Fitzgerald, who serves as editor of Editor & Publisher, Chicago, said ad revenue for newspapers declined in 2009, sliding by 27.2 percent. Additionally, ad revenue was below $25 billion in 2009, the first time it’s fallen below that level since 1985. “And that’s not accounting for inflation, incidentally,” he added.

However, the drop in circulation was having the largest influence on the decline in newsprint, Fitzgerald said. Newspapers had a household penetration of 120 to 130 percent through the early 1950s, on average, he noted. Household penetration didn’t drop below 100 percent until the early 1970s and then declined more rapidly. “In 1990 it was down to about 67 percent penetration,” Fitzgerald said. “Now it hovers around 40 percent in most big city markets,” which, he added, were the biggest consumers of newsprint.

Magazines also have been affected in the last year, with smaller folios and a smaller subscriber base, he said. “In 2009 alone, we have lost 360 magazines—that’s a big number. It included some really big and historic magazines that have survived these economic cycles for decades.” He mentioned titles like Gourmet, Portfolio and his own magazine, Editor & Publisher, which was purchased by The Duncan McIntosh Co. and never missed an issue.

“Despite all I’ve said here today, I think newspapers and magazines will stay in print for the foreseeable future,” Fitzgerald said. He added that newspapers were a victim of the cyclical economy more so than of their secular challenges.

Sims, who serves as vice president of finance and strategy for International Paper, began his presentation by commenting on the importance of recovered fiber to the company. “International Paper manages over 6.5 million tons of recovered paper in North America. Four million of those go into our paper processing, so it is a very important part of the business from a supply chain perspective as a fiber resource,” he said. (An edited version of Sims’ presentation is available starting on page 42.)

Knight, recovered fiber director for SCA Tissue, said the away-from-home tissue business declined 8 to 9 percent by volume as a result of the recession. “The away-from-home tissue business is largely where the recycled content comes into play,” he said.

Despite this decline, the tissue segment was exhibiting more growth than other paper industry sectors, he said. “Most of the paper industry has been downsizing and reorganizing. The tissue business keeps growing,” Knight added.

Environmental sustainability presented a growing challenge to the tissue industry, Knight said, as recovered fiber costs increased and supply of recovered fiber decreased and more chemicals and water were needed to clean the material.

“As the volumes of material decrease, we have to look at news ways of getting that fiber,” he said. “Mostly that involves collecting it in a dirtier form, a more contaminated or a mixed form. We need to have the technology to clean that up and be able to make the same brightness and softness that we’ve always made.”

In 2011, the Paper Recycling Conference will move to the fall. The conference will take place from Oct. 23 to 25 at the Marriott Downtown Chicago Magnificent Mile. More information will be available at www.paperrecyclingconference.com.