Demand For Paper Mills Decline While Market For Tissue, Sanitary Paper Is Expected To Rise

Wisconsin has lost about one-third of its paper mills in the last two decades.

More companies are nearly bankrupt or are exploring the possibility of selling their mills.

This fall, Industrial Assets Corp., a Los Angeles-based used machinery dealer, bought the Appleton Coated paper mill in Combined Locks, Wisconsin. In addition, Verso Corp. formed a committee to explore the potential sale of some of its mills. The company operates mills in both Duluth and Stevens Point.

Jeff Landin, president of the Wisconsin Paper Council, said Wisconsin’s paper industry is doing well overall, but some mills are struggling.

“You’ve seen some of that in the Appleton Coated issue where they’ve gone through receivership, but it’s really a byproduct of what they produce. It’s the coated paper market that’s challenged,” he said.

But, Landin said tissue, packaging and specialty papers make up more than 90 percent of products in Wisconsin’s paper industry.

“Those markets are all growing,” he said. “For example, the tissue market where you make bath tissue, toilet tissue, Kleenexes, paper towels, electronic substitution cannot threaten those. You can’t take your iPad and blow your nose in it. It’s not going to work. Those sectors of the market are always going to grow. You’re always going to need those products.”

A May 2017 report by industry research firm IBISWorld projects demand for paper mills will decline in the next five years while demand for tissue or sanitary paper is expected to rise. Anya Cohen, an analyst with the firm, said a couple of factors are putting pressure on paper mills.

“The first is a decline in overseas demand for U.S.-made paper, and the other is lower demand for downstream industries in the United States as the world becomes increasingly digital and environmentally conscious,” she said.

The U.S. paper mill industry is expected to decline at annual rate of 2.5 percent through 2022. Revenues are expected to decline from $33.8-$33.6 billion. At the same time, the sanitary paper products manufacturing industry is expected to increase by 0.6 percent from $12 billion this year to $12.3 billion in 2022.
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