Pulp and Paper

Domtar Announces Temporary Idling of Paper Capacity to Address COVID-19 Related Business Impact

Domtar Kingsport MillApril 6, 2020 - Domtar Corporation today announced that it will temporarily idle the operations of its Kingsport, Tennessee mill and the A62 paper machine at its Ashdown, Arkansas mill for three months in response to the unforeseeable business conditions driven by the COVID-19 pandemic.

The temporary shutdown will reduce Domtar's uncoated freesheet paper production capacity by approximately 144,000 short tons over the three months' period. As a result, Domtar will lay off approximately 304 employees at its Kingsport mill and 142 employees at its Ashdown mill.

"The COVID-19 pandemic is having a negative impact on communication paper demand, with offices, businesses and schools still closed in a large part of our markets," said John D. Williams, President and Chief Executive Officer. "Given the evolving market conditions, we are taking the appropriate steps to optimize our operations, which will ensure that we remain an agile, reliable partner to our customers. We regret the impact these temporary shutdowns will have on our Kingsport and Ashdown employees and their families, and we are doing everything we can to support them during this time."

Domtar's other facilities remain fully operational, and continue to ship products to all states and provinces without disruption. Domtar is committed to operating its business as efficiently as possible in order to meet the needs of its customers, while maintaining the health and safety of its employees.

SOURCE: Domtar


Supply Chain Data: A Critical Business Component for Navigating Uncertainty

By Pete Coutu, Vice President of Sales at Forest2Market

March 31, 2020 - The sense of uncertainty that has gripped the entire globe over the last few months is unprecedented in modern history. But in the fight to contain the COVID-19 virus, drastic times call for drastic measures.

As a result, large American cities (and in some cases entire states) are on “lockdown” as people remain in their homes to avoid contact with others. The sense of panic has also led to a near shutdown of the most vibrant economy in history, and even the experts seem unsure about how to revive it when the dust settles.

While many businesses have been forced to close during the crisis, many others are considered by the U.S. Department of Homeland Security to be part of the “essential critical infrastructure workforce” in the nation’s response to solving the crisis. The wood productsaerial-photo-of-truck-carrying-timber-3374066 industry is one of these essential workforces, which means wood products manufacturers must navigate these uncertain times by paying very close attention to rapidly changing market signals.

With a watchful eye on market demand, inventories and fluctuating capacities, wood products manufacturers must sharpen their focus on supply chain management to maintain profitability during this time. In particular, there are three facts about wood supply chain management that are especially applicable right now:

  • An optimized supply chain produces competitively priced end products.
  • When a mill sources wood raw materials from an optimized supply chain, it gets better quality wood and lowers its total procurement costs.
  • Companies considered leaders in supply chain management in industrial products markets have Earnings before Interest and Taxes (EBIT) margins that are 114% higher than other companies in their peer groups.

How can wood products manufacturers maximize efficiencies, optimize their supply chains and better prepare for significant market uncertainty like we are experiencing now?

Incorporate flexibility

A nimble supply chain can scale to handle large volumes of wood raw materials, but it can also operate cost effectively with lower volumes when demand withers or at full capacity when demand is strong. The key to being able to achieve this level of flexibility lies in actively managing individual cost components within the supply chain, then optimizing the divide between fixed and variable operating costs.

For example, most wood procurement managers and their teams have already taken advantage of obvious cost savings opportunities by eliminating:

  • High cost sources of fiber
  • Low quality sources of fiber
  • Sources with high freight or difficult logistical challenges

Once this low-hanging fruit has been picked, however, there are always additional methods for improving supply chain efficiencies. Some of the more difficult questions to answer when it comes to extracting additional value from the wood supply chain include:

  • How does my raw material procurement system differ from the best performers in my peer group?
  • Am I focusing my procurement targets in the lowest cost areas of my procurement zone?
  • Are there areas where I outperform the market? Underperform the market?
  • Can I avoid spot market purchases and lower my costs in an up market?
  • Can I reduce capacity and maintain margins in a down market?

In order to answer these questions, organizations need to maintain a solid understanding of their own data, as well as the transactional data that is reflective of the actual market. In stressed markets — like the one we currently find ourselves navigating — access to real market data becomes increasingly valuable.

Transactional data allows you to identify inefficiencies and develop fact-based solutions for optimizing your supply chain. This data becomes a powerful decision-making tool, one that can help you plan strategically, develop operational blueprints and proceed tactically even amid extreme levels of uncertainty.

In a manufacturing process where upwards of 70% of the finished product cost can be attributed to raw material costs, constant attention to the details involved in procuring those raw materials is imperative. We believe that business intelligence is the best investment you can make in capital intensive industries, particularly in uncertain times.

About Forest2Market, Inc.

Forest2Market provides pricing data, supply chain expertise and strategic consulting services to participants in the global wood and fiber supply chain. The Forest2Market's unique databases contain more than 400 million rows of transaction data; they are the foundation for all analytics available in the firm's business intelligence platform, SilvaStat360, as well as client resource studies and consulting engagements. To learn more, visit www.forest2market.com

SOURCE: Forest2Market


Finnish Forest Industries Federation Says Potential 14-Day Labor Strike Could Cost Pulp and Paper Mills Nearly EUR 640 Million

Editor's note: The following press release was translated from Finnish to English through a translation program. The original release was published only in Finnish by the Finnish Forest Industries Federation.

Jan. 20, 2020 (Press Release) - The Finnish Forest Industries Federation considers it highly likely that the strike threatening the mechanical forest industry's sawmills and plywood mills within a week will materialize. Negotiations on new terms and conditions of employment with the threatening strike industry have hardly progressed.

"The [Paperiliito (Paper Union)] does not seem interested in genuine negotiations and agreement. It strives for a consistent package solution across all export sectors, and does not realize that the federation round is intended to agree on industry-specific terms of employment," estimates Jyrki Hollmén, Director of Labor Market at the Finnish Forest Industries Federation.

The Finnish Forest Industries Federation has a negotiating relationship with the Paper Workers' Union, which represents workers in the paper, board and pulp industry. Negotiations have also taken place over the weekend and will resume on Monday (Jan. 20). On Tuesday, the parties will meet with the national mediator.

"There is no solution yet, and very damaging strikes are threatening the industry. There are a lot of open things on the table," Hollmén continues.

The global competitiveness of the paper, board and pulp industries and their potential for improving productivity should be supported by wage moderation, working time solutions and the launch of a comprehensive reform aimed at simplifying working time and pay patterns. The additional costs of collective bargaining for downtime and outsourcing should be made similar to other export industries.

At least hundreds of millions lost

If all the strikes announced by the Industrial Union and Trade Union Pro start [Jan. 27], the damage could be huge. The entire forest industry would be paralyzed for two weeks, as the strikes would affect 110 mills and companies.

Strikes would result in widespread loss of production and longer-term competitive disadvantages. Losses in production would be the result of factory closures and production cuts, longer-term competitive disadvantages due to supply problems, loss of customer confidence and potential customer losses, and, more broadly, strengthening Finland's reputation as a strike-sensitive and labor-unstable country.

Loss of production in the entire forest industry could amount to almost EUR 1 billion over a 14-day strike. Strikes in the mechanical forest industry could lead to an estimated loss of EUR 270 million and the paper, board and pulp mills to almost EUR 640 million. The estimates are based on Statistics Finland's data on the value of gross industry output in 2018, when the economic cycle was good.

A paralysis of forest industry exports for 14 days would mean that Finland could lose up to EUR 500 million in export earnings. Paper and board products are Finland's most important export product, and the value of forest industry exports, according to Customs statistics, is over EUR 13 billion annually.

Strikes would also result in tax losses for society as a whole. The lost direct tax revenue from the forest industry in two weeks is approximately EUR 47 million. Further losses would come from other parts of the value chain, as strikes would affect the entire forest sector from the timber trade to transportation.

With irresponsible strikes, trade unions take control of all Finns — and especially their own members.

"After such losses, it is certain that the salary increase reserve will only decrease. In addition, strikes that drastically affect profitability, significantly weaken the ability to maintain industrial jobs in Finland," Hollmén says.

The Finnish Forest Industries Federation (FFIF) is a lobbying organization made up of 77 member companies that operate in the pulp, paper, paperboard, and packaging industries as well as in the wood products industry in Finland. Its goal is to ensure that Finland offers a competitive and innovative operating environment for forest industry production, employment, and investments. To learn more, visit: www.forestindustries.fi

SOURCE: Finnish Forest Industries Federation


UPM Says "Full Speed Ahead" for USD 3 Billion Pulp Mill Project in Uruguay

Jan. 13, 2020 - UPM on July 23, 2019 announced its decision to build a 2.1 million tonnes per year greenfield eucalyptus pulp mill near Paso de los Toros in central Uruguay. Besides the mill, the total investment of USD 3 billion also includes a pulp terminal in the port of Montevideo as well as investments in local facilities in Paso de los Toros.

In December, UPM published the following update on the progress of construction activities associated with the mill project:

In Uruguay the month of December is generally one of the busiest times in the year. Not just because of the approaching year end, but it's also the last month before the summer holiday season. The last few months have also been very exciting for us — since the investment decision in July we have moved full speed ahead to start preparatory work for our new state-of-the-art pulp mill in Paso de los Toros. In addition to the new mill, this project includes building a pulp terminal at the Montevideo port as well as other related facilities, such as permanent and temporary apartments and houses for construction employees, and infrastructure.

There are currently over 700 people working on the mill site preparation, housing construction in the outskirts of Paso de los Toros as well as on pulp terminal construction and dredging at the port. Half of the workers in Paso de los Toros and Durazno are from the region.

Several Initiatives Ongoing

Besides construction, several initiatives have been started in line with the regional development plan. These include both professional and complementary training, support for entrepreneurship as well as awareness building — for example on road safety.

The government-led Río Negro Initiative aimed at improving the conditions of the Rio Negro river has also established a technical office in Paso de los Toros. UPM is contributing USD 10.5 million to this initiative and improvement of the sanitation system of Paso de los Toros and Pueblo Centenario.

Active engagement

Throughout all this we have continued active communication and engagement with the local community and stakeholders.

In November we opened a new UPM office in Paso de los Toros. This serves as an information point and many people have already visited to learn about the project, UPM in Uruguay and the training and work opportunities that the project will bring as it proceeds.

[During the first week in December] UPM President and CEO Jussi Pesonen visited us here in Uruguay. He, as well as other UPM executives, often visit Uruguay to meet with the local team and stakeholders. This is natural given the importance of our current operations and the investment — USD 3 billion — which is the largest the company has ever made. On this visit Jussi Pesonen also met with the country's newly elected leader Luis Lacalle Pou in Montevideo to greet and congratulate the new President.

On Thursday, 12 December, we held a local information meeting to share progress with everyone in Paso de los Toros. Just like previous information meetings, we had a full house and active participation.

We continue to engage and share information through information meetings and on our project website at www.upm.uy/en/growth as we proceed. Knowing the importance of this project to UPM and my home country, and the positive impact that the Fray Bentos mill continues to have on the local community, it is both humbling and exciting to be part of this investment and share its progress!


Investments in Tissue Production in Brazil’s Northeast

The project to serve the sanitary paper market also includes the production of finished products at the Mucuri and Imperatriz units
Investments in Tissue Production in Brazil’s Northeast

This week, Suzano announced investments to acquire equipment for converting tissue paper, also known as sanitary paper, into finished products. The mill in Imperatriz will be the first one in the state of Maranhão to manufacture products such as toilet paper, tissues, napkins and more. Meanwhile, at the mill in Mucuri, Bahia, the investment involves the construction of a second conversion line.

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