Paper360 - September/October 2016 - 64

with technology development of their own. The expiration of the TAD patents in the last 10 years made the technology available to other tissue producers and stimulated another round of technology development. Voith introduced its ATMOS process and Valmet its NTT process, both offering ways to create a structured sheet that changes the end-user experience. The new product qualities becoming available at lower prices have started big shifts in demand from lower-quality products toward higher quality ones. The turbulence has given rise to new companies and contributed to the fragmentation of the segment. Driven by technology change, it is not surprising to see tissue and towel segment behavior like that of the first or second stage of industrial development: M&A has not yet had a big impact on the sector because valuations are relatively robust and companies would rather grow organically than through acquisition. Customers willing to spend capital cause suppliers to invest in new technology, creating a virtuous cycle of development. INVESTMENT AND REINVESTMENT The facts reveal the results of the different stages of development for various kinds of corporate investment. New machines: While there has been an overall decline in tons produced in the US, there have been 101 new machines built since 1995 across all grades (Fig. 3a). Thirteen machines built in this time frame have since been idled, half of these in the Northeast (29 percent of the new machines built in the region). New-build investments in the southern US have far outpaced that of any other area, with tissue and towel machines being predominant across all areas. New tissue and towel machines that are still operating represent 13 percent of 2015 total capacity (Fig. 3b). Upgrades and conversions: US reinvestment in paper machines has been notable by its relative absence during the past 20 years. Of the 689 machines operating in 2015, only 327 have received upgrades or been converted during that time frame. (Actually, a total of 456 machines received upgrades or underwent conversion, but as many as 133 of them have since been shut down or dismantled.) The machines receiving the most upgrades/conversions are those now producing packaging grades. More than 40 percent of the machines in graphics grades that received upgrades likely did not recoup their investment as they have since been idled. Fig. 3a & 3b 64 Paper360º SEPTEMBER/OCTOBER 2016 Fig. 4 Fig. 5 WHICH REGIONS FARED BEST? Big evolutionary changes to industrial sectors can have an impact not only overall, but also in the regions that host their production. While all areas of the US have decreased in overall tons produced since 1995 (Fig. 4), the Midwest and Southeast have increased share positions at the expense of the Northeast and West. The drivers behind this phenomenon vary by grade and area: the shift in market shares can generally be attributed to the concentration of growing vs. declining grades in each region. This shift is further evidenced when comparing the number of operating paper machines in 1995 versus 2015 in Fig. 5. Despite declines in production volume within each region and the overall reduction in the number of operating machines, those machines that are operating in 2015 tend to be larger, with capacity rates averaging about 45 percent higher than the machines operating in 1995 (Fig. 4). It's easier to interpret the events and changes we see in the marketplace every day if we keep in mind larger patterns and trends that drive them. Fisher's models suggest how patterns we've seen in the past 20 years will evolve and how they'll affect producers and their suppliers. For example, we anticipate that 60 or so US machines making 2.3 million tons have a serious chance of closing or, at the very least, changing grades within the next five years. Those machines will affect $260 million per year in total spend on materials, chemicals, and fiber. At the same time, tissue and perhaps packaging will see new entrants, realignment of competitive positions, more new technology development, and other characteristics of earlier stages of industrial development. Cathy Greenleaf is senior consultant, Fisher International. This report was compiled using FisherSolveTM, a data and analytics resource for paper industry producers, suppliers, investors, and buyers making important capital and operating decisions. FisherSolve accurately describes the assets, capacity, and costs of every pulp and paper mill in the world making 50 tons/day or more. To learn more, please visit www.fisheri.com. www.tappi.org http://www.fisheri.com http://www.tappi.org

Table of Contents for the Digital Edition of Paper360 - September/October 2016

Setpoint
Over the Wire
Agenda 2020 Launches ‘Roadmaps’ to Efficiency, Sustainability, and New Product Goals
RBI: Transforming to Meet the Industry’s Research Needs
Paper Schools: Forging the Future
PPI Top 100
RISI’s Latin American CEO of the Year
Automation Upgrade Helps Sappi Gratkorn Perform
Innovative Direct Drive in a Turnkey-rebuilt Project
Klingele Papierwerke Saves Money, ‘Foils’ Stickies
TAPPI Journal Summaries
Life Cycle of the US Paper Industry
TAPPI News
ASPI News
Index of Advertisers
Paper360 - September/October 2016 - bellyband1
Paper360 - September/October 2016 - bellyband2
Paper360 - September/October 2016 - cover1
Paper360 - September/October 2016 - cover2
Paper360 - September/October 2016 - 3
Paper360 - September/October 2016 - 4
Paper360 - September/October 2016 - 5
Paper360 - September/October 2016 - Setpoint
Paper360 - September/October 2016 - 7
Paper360 - September/October 2016 - Over the Wire
Paper360 - September/October 2016 - 9
Paper360 - September/October 2016 - 10
Paper360 - September/October 2016 - 11
Paper360 - September/October 2016 - 12
Paper360 - September/October 2016 - 13
Paper360 - September/October 2016 - Agenda 2020 Launches ‘Roadmaps’ to Efficiency, Sustainability, and New Product Goals
Paper360 - September/October 2016 - 15
Paper360 - September/October 2016 - 16
Paper360 - September/October 2016 - 17
Paper360 - September/October 2016 - 18
Paper360 - September/October 2016 - 19
Paper360 - September/October 2016 - RBI: Transforming to Meet the Industry’s Research Needs
Paper360 - September/October 2016 - 21
Paper360 - September/October 2016 - 22
Paper360 - September/October 2016 - 23
Paper360 - September/October 2016 - Paper Schools: Forging the Future
Paper360 - September/October 2016 - 25
Paper360 - September/October 2016 - 26
Paper360 - September/October 2016 - 27
Paper360 - September/October 2016 - 28
Paper360 - September/October 2016 - PPI Top 100
Paper360 - September/October 2016 - 30
Paper360 - September/October 2016 - 31
Paper360 - September/October 2016 - 32
Paper360 - September/October 2016 - 33
Paper360 - September/October 2016 - 34
Paper360 - September/October 2016 - 35
Paper360 - September/October 2016 - 36
Paper360 - September/October 2016 - 37
Paper360 - September/October 2016 - RISI’s Latin American CEO of the Year
Paper360 - September/October 2016 - 39
Paper360 - September/October 2016 - 40
Paper360 - September/October 2016 - 41
Paper360 - September/October 2016 - 42
Paper360 - September/October 2016 - 43
Paper360 - September/October 2016 - 44
Paper360 - September/October 2016 - 45
Paper360 - September/October 2016 - Automation Upgrade Helps Sappi Gratkorn Perform
Paper360 - September/October 2016 - 47
Paper360 - September/October 2016 - 48
Paper360 - September/October 2016 - 49
Paper360 - September/October 2016 - Innovative Direct Drive in a Turnkey-rebuilt Project
Paper360 - September/October 2016 - 51
Paper360 - September/October 2016 - 52
Paper360 - September/October 2016 - 53
Paper360 - September/October 2016 - Klingele Papierwerke Saves Money, ‘Foils’ Stickies
Paper360 - September/October 2016 - 55
Paper360 - September/October 2016 - 56
Paper360 - September/October 2016 - 57
Paper360 - September/October 2016 - TAPPI Journal Summaries
Paper360 - September/October 2016 - 59
Paper360 - September/October 2016 - 60
Paper360 - September/October 2016 - 61
Paper360 - September/October 2016 - Life Cycle of the US Paper Industry
Paper360 - September/October 2016 - 63
Paper360 - September/October 2016 - 64
Paper360 - September/October 2016 - 65
Paper360 - September/October 2016 - TAPPI News
Paper360 - September/October 2016 - 67
Paper360 - September/October 2016 - ASPI News
Paper360 - September/October 2016 - 69
Paper360 - September/October 2016 - Index of Advertisers
Paper360 - September/October 2016 - cover3
Paper360 - September/October 2016 - cover4
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