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Published: Friday, 12/7/2012 - Updated: 1 year ago

Paper mills shut as electronic devices gain in popularity

MINNEAPOLIS STAR TRIBUNE
James Kent, controller at UPM Blandin, left, and Wayne Brandt of Minnesota Forest Industries tour the log yard at the UPM Blandin Paper Mill in Grand Rapids, Minn. With demand for paper products declining, manufacturers are looking for other uses of wood. James Kent, controller at UPM Blandin, left, and Wayne Brandt of Minnesota Forest Industries tour the log yard at the UPM Blandin Paper Mill in Grand Rapids, Minn. With demand for paper products declining, manufacturers are looking for other uses of wood.
MINNEAPOLIS STAR TRIBUNE Enlarge

GRAND RAPIDS, Minn. — Something stunning happens at 60 mph inside the UPM Blandin paper mill.

A thin layer of damp white pulp, flattened between forming fabric as it races through a gauntlet of heavy rollers, slips free from its forms.

It ripples like a bedsheet on a clothesline, but it holds together. The newborn paper shoots forward through heated rollers to be pressed and dried, then coated and polished before spooling onto a giant roll. More than 1,000 tons of shiny white paper for magazines and catalogs come off the line every day.

But this is yesterday’s miracle.

The North American paper industry is in rapid decline. Mills have cut thousands of jobs and are compete for a shrinking market. A mill in Sartell, Minn., that closed this year after a Memorial Day explosion was the latest to go dark.

“It’s kind of disheartening,” said Jim Skurla, an economist at the University of Minnesota-Duluth. “Paper’s never going to disappear, but it’s going to be smaller than it has been.”

River towns in the forest from eastern Washington to the coast of Maine have lost more than 100 paper mills in a wave of consolidation in little more than a decade — a trend most people in the industry expect to continue. Wisconsin has lost nine paper mills since 2005.

North American demand for three types of coated and supercalendared paper — shiny magazine and advertising paper — has fallen 21 percent in the last decade, according to the Pulp and Paper Products Council.

Kindles and iPads, email, PDFs, the decline of first-class mail, and waning newspaper and magazine circulations are all to blame. Analysts predict demand will fall at least another 18 percent by 2024.

The shift is forcing paper mills and mill towns to rethink their future. To survive, they will need to find new products to make out of wood.

“We’ve got to go somewhere,” said James Kent, the controller at UPM Blandin. “The world won’t need paper forever.”

Paper companies have tried to handle sinking demand for their product by cutting production.

Companies have closed 117 American mills since 2000, according to the Center for Paper Business and Industry Studies at Georgia Tech University. Some 223,000 industry jobs have gone away in that time.

But demand is falling too fast for the cutbacks and consolidation to keep up.

Verso Paper, which closed the mill in Sartell after an explosion that killed a man and caused $50 million in damage, has never turned a real profit.

Created in 2006 when the private equity firm Apollo Global Management broke off a division of International Paper, Verso has lost money every year but 2009. That year, it got $239 million in federal tax credits for using a paper-making by-product as an alternative fuel.

If not for the explosion, the mill would have kept running for a time, but it had already shut down two machines and cut 175 jobs in late 2011. Verso stock was trading at $1.12 a share when the explosion happened. When the mill closed permanently, leaving another 260 jobless, it was no surprise to the industry.



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