That’s the path the pulp and paper industry has followed in digging itself out of the recession. One positive recovery indicator is activity of financial deals. PwC—formerly PricewaterhouseCoopers (www.pwc.com)—in its “Forest, Paper and Packaging Deals: Branching Out – 2010 Annual Review,” indicates 2010 North American activity was 47 percent higher than in 2009; and combined deal values rose from $1 billion to $3.2 billion. However, PwC notes that “in North America, a number of deals involved pulp and paper companies in or coming out of bankruptcy protection.”
Consolidation of companies continues. But PwC observes that in North America, “it is a continuing process against a background of stagnant or declining domestic markets.” The U.S./North American pulp-and-paper industry has been in a production-capacity decline for some 15 years now, confirms Patrick.
However, there is some good news for North American companies. According to PwC, they are more advanced than their European counterparts in taking steps to consolidate, reduce capacity and restructure in the face of declining demand.
PwC also notes that “downstream, companies are seeking to build global businesses and brands in high or value-added segments such as personal hygiene, tissue and consumer packaging”—all areas in which Patrick notes new technologies emerge. Those businesses concentrate in two principal sectors, he explains: hygienic (paper tissue, toweling and wipes) and packaging (consumer, pharmaceutical and food/drink) sectors. One example he gives is commercialization of intelligent personal-hygiene technologies. “Those have included development of tissue products, for example, that turn colors in the presence of certain viruses and bacteria; and tissues that contain antibacterial/antiviral/antifungal agents.”
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In intelligent pharmaceutical packaging, composites of specialized paperboards and foils/plastics now allow usage/dosage information to be conveyed, via electronic devices, to consumers and/or directly to pharmacists, doctors and guardians, Patrick explains. “These developments inform patients, particularly elderly and handicapped patients, of what, when and how much they are taking.” Simultaneously, these developments allow pharmacists and doctors to monitor, in real time, critical prescription cases, he adds.
In the consumer product packaging area, most recent paperboard/containerboard-based technologies track shipments in-route as well as maintain in-store inventories and simplify/speed up customer check-out, Patrick says. Similar incorporation of such technologies directly into paperboards used for food packaging, drink cartons and other consumer products allows more efficient, rapid and accurate check-out at retail outlets, he comments, “the cumbersome and slow barcode approach.”
Advances in containerboard/paperboard packaging technologies for food and produce focus on product safety. “They allow indication—that is, paperboards that change color, wrinkle, etc.—of contamination through seal breakage/leaks, moisture/heat penetration, loss of refrigeration, pH shifts and the like,” Patrick states.
Consumers benefit most
Who benefits most from the developments? Patrick thinks it’s mostly direct consumers—especially regarding personal-hygiene paper products, pharmaceutical packaging and consumer/food and drink products. However, new packaging technologies do benefit commercial activities along the entire supply chain, he adds, through reduced spoilage and damage.Patrick notes major trends affecting the pulp-and-paper and allied industries, including forest products as a whole, currently relate more to energy, transportation fuels and environmental issues, rather than directly to papermaking-manufacturing and product-converting technologies.
“Pulp and paper mills are in the unique position of being the number one consumer of cellulosic (woody-based) materials worldwide,” Patrick says. “Most pulp and paper companies, especially in the U.S. and Europe/Scandinavia, have integrated bio-energy plans in place or under development that include bio-refinery construction and operation.” The National Renewable Energy Laboratory (NREL, www.nrel.gov), in Golden, Colo., defines a bio-refinery as a facility that integrates biomass—any plant-derived organic matter—conversion processes and equipment to produce fuels, power and chemicals from biomass. NREL notes the bio-refinery concept is analogous to today’s petroleum refineries.
With all these new technologies and with momentum gaining in financial deals, how does 2011 look for pulp and paper? That depends on whether the company is integrated or non-integrated, PwC suggests. “The former have come out of the [economic] downturn with strong balance sheets, benefiting at the upstream end from higher commodity prices. But non-integrateds have suffered a squeeze from raw material price increases and that squeeze is set to continue.” More digging out may ensue.C. Kenna Amos, firstname.lastname@example.org, is an Automation World Contributing Editor.
Technical Association of the Pulp and Paper Industry (www.tappi.org)
PwC—formerly PricewaterhouseCoopers (www.pwc.com)
The National Renewable Energy Laboratory (www.nrel.gov)