Lost generation

Generation of tissue grades has been a focal point of the recovered paper industry since the onset of the coronavirus pandemic forced much of the workforce to leave office buildings in a fundamental shift to remote work. While grades such as old corrugated containers saw a sharp increase in volume as e-commerce took off, sorted office paper (SOP) generation, in particular, has done the opposite.

With fewer people consistently working in offices and with long periods of remote schooling, tissue-grade recyclers have struggled to gather supply despite high demand, resulting in even higher premiums. What will happen to tissue mills if generation continues to slow?

Looking back

During the 2022 Paper & Plastics Recycling Conference in Chicago Oct. 19-20, a panel of tissue-grade experts gathered to discuss the implications of the pandemic on their operations and how they have had to adjust to market fluctuations. The discussion, moderated by Kari Talvola, president and CEO of Fibre Trade Inc., Burlingame, California, included Kathy DeLano, vice president of sales at Texas Recycling in Dallas; Ysabelle Dupuis, supply and logistic director at Kruger Recycling in Quebec; and Ron Gable, senior vice president of performance and operations at Proshred Security and Redishred Capital Corp. in Ontario.

“It was definitely something that we had never seen before,” Dupuis said of the supply issues at Kruger mills. “I have to say that our biggest issue was that our mills kept on running because people kept on buying toilet paper—a lot of toilet paper—so we needed to provide materials. That was the hardest thing.”

DeLano said the paper packing side didn’t see a huge drop in generation in the early stages of the pandemic, but as printers started to lose workers, jobs were not being done, and scrap paper was becoming less and less available.

“At first, [printers] were getting their paper OK [because] mills were running off their inventory,” she said. “It’s like the last year or so, a lot of our printers have been on allocations from mills—they’re not getting paper as fast as they need it. They live by the sword. They wait for jobs to come in, and then they start ordering paper. Now, it can take them two to five months [to get that paper].

DeLano says her customers are “having a hard time getting paper in so they can print jobs [and] so we can collect the scrap [and] send it out to the mills. It’s a big, big cycle.”

The issue isn’t so much that generation has slowed; rather the pace with which supply has dried up. Gable suggested volume had been coming down since before the pandemic—a challenge those in the industry had started to confront. He said his on-site mobile paper shredding business saw a 40 percent drop in volume per stop from 2009 to 2019.

The combination of office buildings closing and paper generation coming from home offices seemingly diverted much of the high-grade supply to the residential recycling stream.

“It was easier to adapt to COVID than it has been to adapt to post-COVID because everybody was sort of on one boat together,” Gable said. “The one adaption that we did was we continued to emphasize the security side to companies: ‘Get your paper from those home offices back and let’s get it into the secure waste stream.”

Photo by Mark Campbell Productions

Changing with the times

The market fluctuations over the past two years forced many changes to operations, but the panelists agreed it provided opportunities for improvement, too, particularly when it comes to safety.

DeLano said Texas Recycling used to buy cardboard, cans, newspaper and metal, for instance, off the street through a buyback program and decided that because of the public exposure, that practice would shut down during the pandemic. As lockdown restrictions eased, the company limited what it would buy back to cardboard, newspaper and cans.

“In some ways that made us more efficient. We can use that labor in other parts of our plant and work on cross-training,” she said. “Then during COVID, we practiced all the safety protocols—we had masks, social distancing … we were considered an essential business, so we went to work every day, but we got through it. I think we did a pretty good job.”

Gable said he also was proud of how his company handled the situation, not just from the standpoint of securing enough paper supply but also in terms of how it took care of its employees. It was a difficult task for the mobile shredding business, which often goes to hospitals or elder care facilities.

“We had workers who would come to work, jump in their cab, drive to many different types of businesses and take the bin away, then the next day put on hazmat suits to go into the hospitals and some of the other care homes that our workers would go into,” he said. “We had to adjust for that.”

He added that, other than truck drivers who are not able to work remotely, the company encouraged its sales and administrative staff to work from home, which he said made the business more efficient.

Remote work certainly isn’t a positive dynamic as it pertains to supply security as many in the high-grades sector tend to agree, but Dupuis said fostering community among the Kruger workforce did save a lot of supply to its mills, which was critical as the pandemic progressed.

“Keeping a team strong, healthy and making sure that you still build that group sense where they want to keep working every day, there was emphasis put on that, but maybe not enough,” she said. “We saw a lot of companies having staff leaving for other jobs, so my key takeaway was [not taking] for granted your staff coming to work 8 [a.m.] to 5 [p.m.] and thinking ‘It’s work. They’re going to have to do it.’ It has to be a community. It has to feel that it’s being held together.”

Dupuis added, “It just brings that team together where then it was easier to make sure that we could supply our mills because everybody worked together to get it done. … I think I will keep on maintaining that in the years to come.”

The impact on quality

While high grade supply remains a concern, so does the quality of the material coming in, and both Dupuis and DeLano reported instances of lower-quality paper.

“If you look at the sorted office paper, it’s more colorful,” Dupuis said. “There’s more mixed into it. You’ll find more coated paper sometimes in your SOP. I think it’s a real reality now.”

“A lot of our customers have a hard time finding paperboard [and] glossy stock, so they’re kind of getting paper from whatever crevice they can find it,” DeLano said.

“We saw a lot more thermal mechanical pulp paper,” she continued. “It’s less expensive paper for the printers to buy, but it’s also a little less valuable. As a recycler, we saw a huge increase in that.”

DeLano said some mills still are accepting lower-quality material from recyclers, especially as they try to replenish their stocks.

“We just have to know which mills to send it to,” she said. “It still can go into a tissue grade, it’s just not their favorite thing to use because a lot of that stuff just goes down the drain and in the pulper, but it is usable. As mills try to catch up and replenish their stock, they’re taking material that maybe they wouldn’t have taken before.”

Using lower-quality recovered fiber requires mills to use expensive chemicals and starches to make that paper work in their formulas.

Dupuis said she anticipates many mills going back to their traditional formulas as supply tightness eases but added that mill groups, including Kruger, are looking into using substitute grades on an ongoing basis to avoid complications if a similar supply crunch happens again.

“At a certain point, if you needed X amount of tons, you didn’t have a choice but to be a bit more lenient than where you were before,” Dupuis said. “We’ve all been in this industry for too long to know that there’s always something that’s going to come back where there’s not going to be enough material or there’s going to be too much. With high grades, it’s never going to be too much, it’s always going to be not enough—that’s pretty much where we will have to maintain our view.”

“We’ve made a lot of very aggressive changes,” Gable said, “but I think that’s what it’s going to take for the next year or so across the industry is trial and error and creativity.”

Photo by Mark Campbell Productions

What’s next?

Remote work isn’t going away, and with many people spending less money on travel and entertainment because of the state of the U.S. economy and rising inflation in the fourth quarter, the panelists said the high grades market only will continue to suffer as seen in the diminished away-from-home tissue sector.

“It’s not when generation will be down—it’s now. It’s happening now,” Dupuis said. “It’s a known fact the high grades should be called the dying grades. It’s something that slowly is becoming less available. … Are we ready to have brown paper towel at home? We’re not there yet, but it’s something that has to come.

Gable wasn’t quite as cynical, noting that in 1992 when he got into the shredding business, there was talk of paperless offices even then. However, 30 years later, he suggested that offices have more printers than ever before. That doesn’t mean generation of high grades isn’t slowing down; rather, the grade isn’t dead just yet.

“We’re still generating paper,” Gable said. “I think we’ve gone through a rapid slowdown and, adjusting to post-COVID, we still have yet to see. My expectation is that we’re planning for us to be at the high [price cycle], but we don’t plan for the low to be anywhere near where it was.”

The author is managing editor of Recycling Today and can be reached at mmcnees@gie.net.