{"id":14238,"date":"2023-01-27T20:20:29","date_gmt":"2023-01-27T20:20:29","guid":{"rendered":"https:\/\/www.smithcorona.com\/blog\/?p=14238"},"modified":"2023-12-15T14:50:09","modified_gmt":"2023-12-15T14:50:09","slug":"why-the-paper-industry-isnt-attractive-to-investors","status":"publish","type":"post","link":"https:\/\/www.smithcorona.com\/blog\/why-the-paper-industry-isnt-attractive-to-investors\/","title":{"rendered":"Why the Paper Industry Isn&#8217;t Attractive (to Investors)"},"content":{"rendered":"<p><div class=\"fusion-fullwidth fullwidth-box fusion-builder-row-1 fusion-flex-container has-pattern-background has-mask-background nonhundred-percent-fullwidth non-hundred-percent-height-scrolling\" style=\"background-color: rgba(255,255,255,0);background-position: center center;background-repeat: no-repeat;border-width: 0px 0px 0px 0px;border-color:#eae9e9;border-style:solid;\" ><div class=\"fusion-builder-row fusion-row fusion-flex-align-items-flex-start\" style=\"max-width:1144px;margin-left: calc(-4% \/ 2 );margin-right: calc(-4% \/ 2 );\"><div class=\"fusion-layout-column fusion_builder_column fusion-builder-column-0 fusion_builder_column_1_1 1_1 fusion-flex-column\"><div class=\"fusion-column-wrapper fusion-flex-justify-content-flex-start fusion-content-layout-column\" style=\"background-position:left top;background-repeat:no-repeat;-webkit-background-size:cover;-moz-background-size:cover;-o-background-size:cover;background-size:cover;padding: 0px 0px 0px 0px;\"><div class=\"fusion-text fusion-text-1\"><p><span style=\"font-weight: 400;\">There\u2019s been a steady decline in the paper industry that we\u2019ve all had front row seats to for years now. The play \u201cDeath of a Salesman\u201d doesn\u2019t quite compare to the \u201cDeath of Print.\u201d<\/span><\/p>\n<p><span style=\"font-weight: 400;\">To be more specific, printing and writing paper like magazines and newspapers. Unfortunately, labels get looped into this group, too.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/span><\/p>\n<\/div><div ><span class=\" fusion-imageframe imageframe-none imageframe-1 hover-type-none\"><img width=\"760\" height=\"460\" src=\"https:\/\/www.smithcorona.com\/blog\/wp-content\/uploads\/2023\/01\/Paper_Industry_Isnt_Attractive_Feature.png\" alt class=\"img-responsive wp-image-14253\" srcset=\"https:\/\/www.smithcorona.com\/blog\/wp-content\/uploads\/2023\/01\/Paper_Industry_Isnt_Attractive_Feature-200x121.png 200w, https:\/\/www.smithcorona.com\/blog\/wp-content\/uploads\/2023\/01\/Paper_Industry_Isnt_Attractive_Feature-400x242.png 400w, https:\/\/www.smithcorona.com\/blog\/wp-content\/uploads\/2023\/01\/Paper_Industry_Isnt_Attractive_Feature-600x363.png 600w, https:\/\/www.smithcorona.com\/blog\/wp-content\/uploads\/2023\/01\/Paper_Industry_Isnt_Attractive_Feature.png 760w\" sizes=\"(max-width: 1064px) 100vw, (max-width: 640px) 100vw, 760px\" \/><\/span><\/div><div class=\"fusion-text fusion-text-2\"><p><span style=\"font-weight: 400;\">Each year it seems we see little money being invested back into the paper industry, and the effects are evident with paper mills:\u00a0<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Changing hands often (can you remember who owns what?)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Frequently closing (more devastating than surprising)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Removing thousands of tons of materials from the market (not like there\u2019s any supply issues happening)<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">It\u2019s as though there\u2019s a big sign running across the industry saying, \u201cWarning! Finance at your own risk!\u201d\u00a0<\/span><\/p>\n<p><b>But why is that?\u00a0<\/b><\/p>\n<p><span style=\"font-weight: 400;\">Why exactly don\u2019t we see investments funneled back into the paper industry to keep mills that produce labels running?<\/span><\/p>\n<p><span style=\"font-weight: 400;\">It seems that this issue comes in different variations with one simple, key point: <\/span><b>the paper industry isn\u2019t attractive enough for investors.<\/b><\/p>\n<\/div><\/div><style type=\"text\/css\">.fusion-body .fusion-builder-column-0{width:100% !important;margin-top : 0px;margin-bottom : 20px;}.fusion-builder-column-0 > .fusion-column-wrapper {padding-top : 0px !important;padding-right : 0px !important;margin-right : 1.92%;padding-bottom : 0px !important;padding-left : 0px !important;margin-left : 1.92%;}@media only screen and (max-width:1064px) {.fusion-body .fusion-builder-column-0{width:100% !important;order : 0;}.fusion-builder-column-0 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}@media only screen and (max-width:640px) {.fusion-body .fusion-builder-column-0{width:100% !important;order : 0;}.fusion-builder-column-0 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}<\/style><\/div><\/div><style type=\"text\/css\">.fusion-body .fusion-flex-container.fusion-builder-row-1{ padding-top : 0px;margin-top : 0px;padding-right : 0px;padding-bottom : 0px;margin-bottom : 0px;padding-left : 0px;}<\/style><\/div><div class=\"fusion-fullwidth fullwidth-box fusion-builder-row-2 fusion-flex-container has-pattern-background has-mask-background nonhundred-percent-fullwidth non-hundred-percent-height-scrolling\" style=\"background-color: rgba(255,255,255,0);background-position: center center;background-repeat: no-repeat;border-width: 0px 0px 0px 0px;border-color:#eae9e9;border-style:solid;\" ><div class=\"fusion-builder-row fusion-row fusion-flex-align-items-flex-start\" style=\"max-width:1144px;margin-left: calc(-4% \/ 2 );margin-right: calc(-4% \/ 2 );\"><div class=\"fusion-layout-column fusion_builder_column fusion-builder-column-1 fusion_builder_column_1_1 1_1 fusion-flex-column\"><div class=\"fusion-column-wrapper fusion-flex-justify-content-flex-start fusion-content-layout-column\" style=\"background-position:left top;background-repeat:no-repeat;-webkit-background-size:cover;-moz-background-size:cover;-o-background-size:cover;background-size:cover;padding: 0px 0px 0px 0px;\"><style type=\"text\/css\">@media only screen and (max-width:1064px) {.fusion-title.fusion-title-1{margin-top:5px!important; margin-right:0px!important;margin-bottom:10px!important;margin-left:0px!important;}}@media only screen and (max-width:640px) {.fusion-title.fusion-title-1{margin-top:0px!important; margin-right:0px!important;margin-bottom:20px!important; margin-left:0px!important;}}<\/style><div class=\"fusion-title title fusion-title-1 fusion-sep-none fusion-title-text fusion-title-size-two\" style=\"margin-top:5px;margin-right:0px;margin-bottom:10px;margin-left:0px;\"><h2 class=\"title-heading-left\" style=\"margin:0;\"><b>Not Lacking in Lack of Investments<\/b><\/h2><\/div><div class=\"fusion-text fusion-text-3\"><p><span style=\"font-weight: 400;\">Paper mills are notorious for being expensive to run. A <\/span><a href=\"https:\/\/www.smithcorona.com\/blog\/the-progression-of-paper-mills\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">significantly high barrier of entry<\/span><\/a><span style=\"font-weight: 400;\"> keeps out new players and making a profit is increasingly difficult.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">So how does a business run without making money? Well, it doesn\u2019t.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Without investments going into paper mills (or the industry, for that matter), we\u2019re seeing more and more mills disappear. The paper mill market size has dropped from an estimated <\/span><b>$57.2 billion<\/b><span style=\"font-weight: 400;\"> in 2013 to <\/span><b>$38.2 billion<\/b><span style=\"font-weight: 400;\"> in 2023, according to <a href=\"https:\/\/www.statista.com\/statistics\/1137343\/market-size-of-paper-mills-in-the-us\/\" target=\"_blank\" rel=\"nofollow noopener\">Statista<\/a>.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">So what is it about the paper industry that\u2019s preventing investors from\u2026.well, investing?<\/span><\/p>\n<\/div><\/div><style type=\"text\/css\">.fusion-body .fusion-builder-column-1{width:100% !important;margin-top : 0px;margin-bottom : 20px;}.fusion-builder-column-1 > .fusion-column-wrapper {padding-top : 0px !important;padding-right : 0px !important;margin-right : 1.92%;padding-bottom : 0px !important;padding-left : 0px !important;margin-left : 1.92%;}@media only screen and (max-width:1064px) {.fusion-body .fusion-builder-column-1{width:100% !important;order : 0;}.fusion-builder-column-1 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}@media only screen and (max-width:640px) {.fusion-body .fusion-builder-column-1{width:100% !important;order : 0;}.fusion-builder-column-1 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}<\/style><\/div><\/div><style type=\"text\/css\">.fusion-body .fusion-flex-container.fusion-builder-row-2{ padding-top : 0px;margin-top : 0px;padding-right : 0px;padding-bottom : 0px;margin-bottom : 0px;padding-left : 0px;}<\/style><\/div><div class=\"fusion-fullwidth fullwidth-box fusion-builder-row-3 fusion-flex-container has-pattern-background has-mask-background nonhundred-percent-fullwidth non-hundred-percent-height-scrolling\" style=\"background-color: rgba(255,255,255,0);background-position: center center;background-repeat: no-repeat;border-width: 0px 0px 0px 0px;border-color:#eae9e9;border-style:solid;\" ><div class=\"fusion-builder-row fusion-row fusion-flex-align-items-flex-start\" style=\"max-width:1144px;margin-left: calc(-4% \/ 2 );margin-right: calc(-4% \/ 2 );\"><div class=\"fusion-layout-column fusion_builder_column fusion-builder-column-2 fusion_builder_column_1_1 1_1 fusion-flex-column\"><div class=\"fusion-column-wrapper fusion-flex-justify-content-flex-start fusion-content-layout-column\" style=\"background-position:left top;background-repeat:no-repeat;-webkit-background-size:cover;-moz-background-size:cover;-o-background-size:cover;background-size:cover;padding: 0px 0px 0px 0px;\"><style type=\"text\/css\">@media only screen and (max-width:1064px) {.fusion-title.fusion-title-2{margin-top:5px!important; margin-right:0px!important;margin-bottom:10px!important;margin-left:0px!important;}}@media only screen and (max-width:640px) {.fusion-title.fusion-title-2{margin-top:0px!important; margin-right:0px!important;margin-bottom:20px!important; margin-left:0px!important;}}<\/style><div class=\"fusion-title title fusion-title-2 fusion-sep-none fusion-title-text fusion-title-size-three\" style=\"margin-top:5px;margin-right:0px;margin-bottom:10px;margin-left:0px;\"><h3 class=\"title-heading-left\" style=\"margin:0;\"><b>Private Equity Getting Involved<\/b><\/h3><\/div><div class=\"fusion-text fusion-text-4\"><p><span style=\"font-weight: 400;\">This is becoming a rising issue.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">As of 2021, <\/span><a href=\"https:\/\/www.forest2market.com\/blog\/public-companies-own-the-largest-share-of-na-papermaking-capacity-why-have-they-built-far-fewer-new-machines-than-private-companies\" target=\"_blank\" rel=\"nofollow noopener\"><span style=\"font-weight: 400;\">37% of the entire North American paper and pulp capacity<\/span><\/a><span style=\"font-weight: 400;\"> was owned by private equity companies, according to Forest2Market. While public companies still hold the majority, private companies have been continuing to make their purchase of public owned mills.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Mills require lots of capital for materials, equipment, operations, etc. Pair that with declines in demand, and debt often looms for many of them.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For example, Appvion needed help in 2017 to address its <\/span><a href=\"https:\/\/www.reuters.com\/article\/us-appvion-restructuring\/paper-maker-appvion-taps-adviser-to-tackle-debt-burden-idUSKBN19534U\" target=\"_blank\" rel=\"nofollow noopener\"><span style=\"font-weight: 400;\">$440 million debt loan<\/span><\/a><span style=\"font-weight: 400;\"> due to downward sales while Verso filed for bankruptcy in 2016 to cut <\/span><a href=\"https:\/\/www.reuters.com\/article\/us-verso-bankruptcy\/u-s-paper-firm-verso-files-for-bankruptcy-to-cut-debt-idUSKCN0V4210\" target=\"_blank\" rel=\"nofollow noopener\"><span style=\"font-weight: 400;\">$2.4 billion of its debt<\/span><\/a><span style=\"font-weight: 400;\">.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Some private companies acquire mills by leveraging their debt for the expressed purpose of later selling them for a profit. Which, unfortunately, means they don\u2019t re-invest in the paper industry.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Some of these companies include:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Bain Capital<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Atlas<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">H.I.G Capital<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Lindsay Goldberg<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">These private firms are what\u2019s considered \u201cshort term players.\u201d Their interests boil down to increasing their investments by collecting these paper mills.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">H.I.G. Capital, for example, acquired Jackson Paper Manufacturing in 2021 and Pixelle Specialty Solutions in 2022, which at the time operated 4 mills across several states.\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Mills purchased through private equity often change hands so much it\u2019s hard to keep track. And sadly, we eventually see them close. <\/span><\/p>\n<\/div><\/div><style type=\"text\/css\">.fusion-body .fusion-builder-column-2{width:100% !important;margin-top : 0px;margin-bottom : 20px;}.fusion-builder-column-2 > .fusion-column-wrapper {padding-top : 0px !important;padding-right : 0px !important;margin-right : 1.92%;padding-bottom : 0px !important;padding-left : 0px !important;margin-left : 1.92%;}@media only screen and (max-width:1064px) {.fusion-body .fusion-builder-column-2{width:100% !important;order : 0;}.fusion-builder-column-2 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}@media only screen and (max-width:640px) {.fusion-body .fusion-builder-column-2{width:100% !important;order : 0;}.fusion-builder-column-2 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}<\/style><\/div><\/div><style type=\"text\/css\">.fusion-body .fusion-flex-container.fusion-builder-row-3{ padding-top : 0px;margin-top : 0px;padding-right : 0px;padding-bottom : 0px;margin-bottom : 0px;padding-left : 0px;}<\/style><\/div><div class=\"fusion-fullwidth fullwidth-box fusion-builder-row-4 fusion-flex-container has-pattern-background has-mask-background nonhundred-percent-fullwidth non-hundred-percent-height-scrolling\" style=\"background-color: rgba(255,255,255,0);background-position: center center;background-repeat: no-repeat;border-width: 0px 0px 0px 0px;border-color:#eae9e9;border-style:solid;\" ><div class=\"fusion-builder-row fusion-row fusion-flex-align-items-flex-start\" style=\"max-width:1144px;margin-left: calc(-4% \/ 2 );margin-right: calc(-4% \/ 2 );\"><div class=\"fusion-layout-column fusion_builder_column fusion-builder-column-3 fusion_builder_column_1_1 1_1 fusion-flex-column\"><div class=\"fusion-column-wrapper fusion-flex-justify-content-flex-start fusion-content-layout-column\" style=\"background-position:left top;background-repeat:no-repeat;-webkit-background-size:cover;-moz-background-size:cover;-o-background-size:cover;background-size:cover;padding: 0px 0px 0px 0px;\"><style type=\"text\/css\">@media only screen and (max-width:1064px) {.fusion-title.fusion-title-3{margin-top:5px!important; margin-right:0px!important;margin-bottom:10px!important;margin-left:0px!important;}}@media only screen and (max-width:640px) {.fusion-title.fusion-title-3{margin-top:0px!important; margin-right:0px!important;margin-bottom:20px!important; margin-left:0px!important;}}<\/style><div class=\"fusion-title title fusion-title-3 fusion-sep-none fusion-title-text fusion-title-size-three\" style=\"margin-top:5px;margin-right:0px;margin-bottom:10px;margin-left:0px;\"><h3 class=\"title-heading-left\" style=\"margin:0;\"><b>Not Investing in the Mills Themselves<\/b><\/h3><\/div><div class=\"fusion-text fusion-text-5\"><p><span style=\"font-weight: 400;\">Not putting money into keeping paper mills going is ultimately a one way ticket to ruin. We can see this example play out with the Pixelle mill in Jay, Maine.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">It was during the mill\u2019s tenure with private equity firm Lindsay Goldberg that a pulp digester exploded in April 2020. This disaster removed the mill\u2019s ability to run as fully integrated, meaning\u00a0 it produced its own pulp and generated its own energy at lower, controlled costs.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">That key feature that made the mill unique. However, no investments were ever made to fix the pulp digester.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">As a result, pulp was bought at market price, which ballooned over the next 2 years. After H.I.G. Capital took over in early 2022, the <\/span><a href=\"https:\/\/www.smithcorona.com\/blog\/the-pixelle-mill-closure-what-it-means-for-the-labeling-industry\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">mill announced it would close<\/span><\/a><span style=\"font-weight: 400;\"> only a few months later.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The Pixelle mill is now set to close in April 2023 and will remove 230,000 tons of specialty paper and release liner from the North American paper market, between 20-30% total.\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The company choosing to not invest in the pulp digester hindered the Pixelle mill\u2019s ability to continue operating at lower costs, ultimately leading to its demise.<\/span><\/p>\n<\/div><\/div><style type=\"text\/css\">.fusion-body .fusion-builder-column-3{width:100% !important;margin-top : 0px;margin-bottom : 20px;}.fusion-builder-column-3 > .fusion-column-wrapper {padding-top : 0px !important;padding-right : 0px !important;margin-right : 1.92%;padding-bottom : 0px !important;padding-left : 0px !important;margin-left : 1.92%;}@media only screen and (max-width:1064px) {.fusion-body .fusion-builder-column-3{width:100% !important;order : 0;}.fusion-builder-column-3 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}@media only screen and (max-width:640px) {.fusion-body .fusion-builder-column-3{width:100% !important;order : 0;}.fusion-builder-column-3 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}<\/style><\/div><\/div><style type=\"text\/css\">.fusion-body .fusion-flex-container.fusion-builder-row-4{ padding-top : 0px;margin-top : 0px;padding-right : 0px;padding-bottom : 0px;margin-bottom : 0px;padding-left : 0px;}<\/style><\/div><div class=\"fusion-fullwidth fullwidth-box fusion-builder-row-5 fusion-flex-container has-pattern-background has-mask-background nonhundred-percent-fullwidth non-hundred-percent-height-scrolling\" style=\"background-color: rgba(255,255,255,0);background-position: center center;background-repeat: no-repeat;border-width: 0px 0px 0px 0px;border-color:#eae9e9;border-style:solid;\" ><div class=\"fusion-builder-row fusion-row fusion-flex-align-items-flex-start\" style=\"max-width:1144px;margin-left: calc(-4% \/ 2 );margin-right: calc(-4% \/ 2 );\"><div class=\"fusion-layout-column fusion_builder_column fusion-builder-column-4 fusion_builder_column_1_1 1_1 fusion-flex-column\"><div class=\"fusion-column-wrapper fusion-flex-justify-content-flex-start fusion-content-layout-column\" style=\"background-position:left top;background-repeat:no-repeat;-webkit-background-size:cover;-moz-background-size:cover;-o-background-size:cover;background-size:cover;padding: 0px 0px 0px 0px;\"><style type=\"text\/css\">@media only screen and (max-width:1064px) {.fusion-title.fusion-title-4{margin-top:5px!important; margin-right:0px!important;margin-bottom:10px!important;margin-left:0px!important;}}@media only screen and (max-width:640px) {.fusion-title.fusion-title-4{margin-top:0px!important; margin-right:0px!important;margin-bottom:20px!important; margin-left:0px!important;}}<\/style><div class=\"fusion-title title fusion-title-4 fusion-sep-none fusion-title-text fusion-title-size-three\" style=\"margin-top:5px;margin-right:0px;margin-bottom:10px;margin-left:0px;\"><h3 class=\"title-heading-left\" style=\"margin:0;\"><b>Hard Customers to Please<\/b><\/h3><\/div><div class=\"fusion-text fusion-text-6\"><p><span style=\"font-weight: 400;\">Would you spend money on a business that proved to have difficult customers? Doesn&#8217;t sound like the most attractive option.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For specialty paper like labels, the customer base can make it harder than other industries. This is simply because labels have such a niche market.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Labels are products that require so many different factors (i.e. size, material, coating, adhesive). It\u2019s difficult to please every customer quickly and efficiently when they all require something different.\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">And then there\u2019s often issues with money, including:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Businesses getting paid on time<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Customers wanting longer payment terms<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">These issues (especially the payment ones) don\u2019t make paper mills that produce labels an attractive option to put money into.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Because if it\u2019s difficult to deal with the customers and get paid, why invest in the first place?<\/span><\/p>\n<\/div><\/div><style type=\"text\/css\">.fusion-body .fusion-builder-column-4{width:100% !important;margin-top : 0px;margin-bottom : 20px;}.fusion-builder-column-4 > .fusion-column-wrapper {padding-top : 0px !important;padding-right : 0px !important;margin-right : 1.92%;padding-bottom : 0px !important;padding-left : 0px !important;margin-left : 1.92%;}@media only screen and (max-width:1064px) {.fusion-body .fusion-builder-column-4{width:100% !important;order : 0;}.fusion-builder-column-4 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}@media only screen and (max-width:640px) {.fusion-body .fusion-builder-column-4{width:100% !important;order : 0;}.fusion-builder-column-4 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}<\/style><\/div><\/div><style type=\"text\/css\">.fusion-body .fusion-flex-container.fusion-builder-row-5{ padding-top : 0px;margin-top : 0px;padding-right : 0px;padding-bottom : 0px;margin-bottom : 0px;padding-left : 0px;}<\/style><\/div><div class=\"fusion-fullwidth fullwidth-box fusion-builder-row-6 fusion-flex-container has-pattern-background has-mask-background nonhundred-percent-fullwidth non-hundred-percent-height-scrolling\" style=\"background-color: rgba(255,255,255,0);background-position: center center;background-repeat: no-repeat;border-width: 0px 0px 0px 0px;border-color:#eae9e9;border-style:solid;\" ><div class=\"fusion-builder-row fusion-row fusion-flex-align-items-flex-start\" style=\"max-width:1144px;margin-left: calc(-4% \/ 2 );margin-right: calc(-4% \/ 2 );\"><div class=\"fusion-layout-column fusion_builder_column fusion-builder-column-5 fusion_builder_column_1_1 1_1 fusion-flex-column\"><div class=\"fusion-column-wrapper fusion-flex-justify-content-flex-start fusion-content-layout-column\" style=\"background-position:left top;background-repeat:no-repeat;-webkit-background-size:cover;-moz-background-size:cover;-o-background-size:cover;background-size:cover;padding: 0px 0px 0px 0px;\"><style type=\"text\/css\">@media only screen and (max-width:1064px) {.fusion-title.fusion-title-5{margin-top:5px!important; margin-right:0px!important;margin-bottom:10px!important;margin-left:0px!important;}}@media only screen and (max-width:640px) {.fusion-title.fusion-title-5{margin-top:0px!important; margin-right:0px!important;margin-bottom:20px!important; margin-left:0px!important;}}<\/style><div class=\"fusion-title title fusion-title-5 fusion-sep-none fusion-title-text fusion-title-size-three\" style=\"margin-top:5px;margin-right:0px;margin-bottom:10px;margin-left:0px;\"><h3 class=\"title-heading-left\" style=\"margin:0;\"><b>Paper Market on the Descent<\/b><\/h3><\/div><div ><span class=\" fusion-imageframe imageframe-none imageframe-2 hover-type-none\"><img width=\"760\" height=\"460\" alt=\"A graph showing the declining numbers of printing and writing paper production worldwide\" title=\"Statista P&#038;W Graph\" src=\"https:\/\/www.smithcorona.com\/blog\/wp-content\/uploads\/2023\/01\/Why_the_Paper_Industry_Isnt_Attractive_to_Investors_Graph.png\" class=\"img-responsive wp-image-14249\" srcset=\"https:\/\/www.smithcorona.com\/blog\/wp-content\/uploads\/2023\/01\/Why_the_Paper_Industry_Isnt_Attractive_to_Investors_Graph-200x121.png 200w, https:\/\/www.smithcorona.com\/blog\/wp-content\/uploads\/2023\/01\/Why_the_Paper_Industry_Isnt_Attractive_to_Investors_Graph-400x242.png 400w, https:\/\/www.smithcorona.com\/blog\/wp-content\/uploads\/2023\/01\/Why_the_Paper_Industry_Isnt_Attractive_to_Investors_Graph-600x363.png 600w, https:\/\/www.smithcorona.com\/blog\/wp-content\/uploads\/2023\/01\/Why_the_Paper_Industry_Isnt_Attractive_to_Investors_Graph.png 760w\" sizes=\"(max-width: 1064px) 100vw, (max-width: 640px) 100vw, 760px\" \/><\/span><\/div><div class=\"fusion-text fusion-text-7\"><p><span style=\"font-weight: 400;\">The global paper market has been gradually declining for years, both in demand and production. This has been since the digital age took off and was accelerated by the recent pandemic.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">And unfortunately, that decline will only continue, as indicated by the above chart from <\/span><a href=\"https:\/\/www.statista.com\/statistics\/1295296\/production-volume-of-printing-paper-worldwide\/\" target=\"_blank\" rel=\"nofollow noopener\"><span style=\"font-weight: 400;\">Statista<\/span><\/a><span style=\"font-weight: 400;\">. In the last 8 years, we&#8217;ve already seen global printing and writing paper production drop an estimated <strong>30 million tons<\/strong>. And it&#8217;s only going to continue.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">While P&amp;W paper has gone downhill, other materials processed in paper mills have seen continuous growth. Specifically, containerboard and corrugated paper for cardboard boxes.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">These markets are expected to reach <\/span><a href=\"https:\/\/www.yahoo.com\/entertainment\/corrugated-paper-market-reach-67b-173900903.html\" target=\"_blank\" rel=\"nofollow noopener\"><b>$67B by 2023<\/b><\/a><span style=\"font-weight: 400;\">.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">We can thank packaged goods and e-commerce for the spike in demand. Sustainability initiatives <\/span><a href=\"https:\/\/www.smithcorona.com\/blog\/market-shift-from-plastic-to-paper\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">pushing paper products over single-use plastic<\/span><\/a><span style=\"font-weight: 400;\"> have also helped increase the use of these materials.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">If any investments do go into paper mills, it\u2019s for the production of these materials.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">More recently, machinery originally built to handle paper grades are being converted to produce packaging materials.<\/span><\/p>\n<p><a href=\"https:\/\/www.wisconsinrapidstribune.com\/story\/money\/2022\/11\/30\/nd-paper-builds-new-recycling-facility-converts-machines-in-biron-wisconsin\/8207047001\/\" target=\"_blank\" rel=\"nofollow noopener\"><span style=\"font-weight: 400;\">Nine Dragons Paper invested $189 million<\/span><\/a><span style=\"font-weight: 400;\"> just last year to convert 2 paper machines from lightweight coated paper to handle packaging grades for containerboard boxes.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">And it makes sense as to why we see these types of investments: investors are following the market demand and where the money is.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">If there\u2019s less and less money in P&amp;W paper, there\u2019s little sense in spending money in that market.<\/span><\/p>\n<\/div><\/div><style type=\"text\/css\">.fusion-body .fusion-builder-column-5{width:100% !important;margin-top : 0px;margin-bottom : 20px;}.fusion-builder-column-5 > .fusion-column-wrapper {padding-top : 0px !important;padding-right : 0px !important;margin-right : 1.92%;padding-bottom : 0px !important;padding-left : 0px !important;margin-left : 1.92%;}@media only screen and (max-width:1064px) {.fusion-body .fusion-builder-column-5{width:100% !important;order : 0;}.fusion-builder-column-5 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}@media only screen and (max-width:640px) {.fusion-body .fusion-builder-column-5{width:100% !important;order : 0;}.fusion-builder-column-5 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}<\/style><\/div><\/div><style type=\"text\/css\">.fusion-body .fusion-flex-container.fusion-builder-row-6{ padding-top : 0px;margin-top : 0px;padding-right : 0px;padding-bottom : 0px;margin-bottom : 0px;padding-left : 0px;}<\/style><\/div><div class=\"fusion-fullwidth fullwidth-box fusion-builder-row-7 fusion-flex-container has-pattern-background has-mask-background nonhundred-percent-fullwidth non-hundred-percent-height-scrolling\" style=\"background-color: rgba(255,255,255,0);background-position: center center;background-repeat: no-repeat;border-width: 0px 0px 0px 0px;border-color:#eae9e9;border-style:solid;\" ><div class=\"fusion-builder-row fusion-row fusion-flex-align-items-flex-start\" style=\"max-width:1144px;margin-left: calc(-4% \/ 2 );margin-right: calc(-4% \/ 2 );\"><div class=\"fusion-layout-column fusion_builder_column fusion-builder-column-6 fusion_builder_column_1_1 1_1 fusion-flex-column\"><div class=\"fusion-column-wrapper fusion-flex-justify-content-flex-start fusion-content-layout-column\" style=\"background-position:left top;background-repeat:no-repeat;-webkit-background-size:cover;-moz-background-size:cover;-o-background-size:cover;background-size:cover;padding: 0px 0px 0px 0px;\"><style type=\"text\/css\">@media only screen and (max-width:1064px) {.fusion-title.fusion-title-6{margin-top:5px!important; margin-right:0px!important;margin-bottom:10px!important;margin-left:0px!important;}}@media only screen and (max-width:640px) {.fusion-title.fusion-title-6{margin-top:0px!important; margin-right:0px!important;margin-bottom:20px!important; margin-left:0px!important;}}<\/style><div class=\"fusion-title title fusion-title-6 fusion-sep-none fusion-title-text fusion-title-size-two\" style=\"margin-top:5px;margin-right:0px;margin-bottom:10px;margin-left:0px;\"><h2 class=\"title-heading-left\" style=\"margin:0;\"><b>Higher Operating Costs &amp; Weak Returns<\/b><\/h2><\/div><div class=\"fusion-text fusion-text-8\"><p><span style=\"font-weight: 400;\">And lastly, it takes a lot of money to run a paper mill. Which many people don\u2019t have in the current economy, making investing in mills quite the risky venture.\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Paper mills require millions to operate. Machines have to constantly run at 100% efficiency just to break even. There\u2019s also the added cost of maintenance fees:\u00a0<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Cleaning machines<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Providing proper upkeep<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Regular inspections<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">And if a paper mill decides to upgrade equipment, it can tack on hundreds of millions of dollars extra and take months to years to complete. During which time these machines aren\u2019t in service.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">How is all of this spending rewarded? With little return profits.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This is best exemplified with specialty paper, like <\/span><a href=\"http:\/\/www.smithcorona.com\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">labels<\/span><\/a><span style=\"font-weight: 400;\">. Specialty paper is hard to make, and requires very tight specifications. If machines have to be changed over to accommodate even the slightest adjustment, it costs time and money. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">There\u2019s also a high rate of rejection. Precision with roll length and width must be perfect, leaving no room for error. If an order goes wrong for any reason, the customer rejects it. One bad roll can cause the entire order to be sent back.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This leaves few options: either scrap the material or try to find another buyer.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">So knowing there\u2019s all of these hurdles to jump and the market isn&#8217;t prospering, why would you decide to invest in a paper mill?<\/span><\/p>\n<p><span style=\"font-weight: 400;\">It\u2019s simple: <\/span><b>you wouldn\u2019t<\/b><span style=\"font-weight: 400;\">. If there\u2019s little to no return on your investment, you\u2019ll 100% look elsewhere to spend your money.<\/span><\/p>\n<\/div><\/div><style type=\"text\/css\">.fusion-body .fusion-builder-column-6{width:100% !important;margin-top : 0px;margin-bottom : 20px;}.fusion-builder-column-6 > .fusion-column-wrapper {padding-top : 0px !important;padding-right : 0px !important;margin-right : 1.92%;padding-bottom : 0px !important;padding-left : 0px !important;margin-left : 1.92%;}@media only screen and (max-width:1064px) {.fusion-body .fusion-builder-column-6{width:100% !important;order : 0;}.fusion-builder-column-6 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}@media only screen and (max-width:640px) {.fusion-body .fusion-builder-column-6{width:100% !important;order : 0;}.fusion-builder-column-6 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}<\/style><\/div><\/div><style type=\"text\/css\">.fusion-body .fusion-flex-container.fusion-builder-row-7{ padding-top : 0px;margin-top : 0px;padding-right : 0px;padding-bottom : 0px;margin-bottom : 0px;padding-left : 0px;}<\/style><\/div><div class=\"fusion-fullwidth fullwidth-box fusion-builder-row-8 fusion-flex-container has-pattern-background has-mask-background nonhundred-percent-fullwidth non-hundred-percent-height-scrolling\" style=\"background-color: rgba(255,255,255,0);background-position: center center;background-repeat: no-repeat;border-width: 0px 0px 0px 0px;border-color:#eae9e9;border-style:solid;\" ><div class=\"fusion-builder-row fusion-row fusion-flex-align-items-flex-start\" style=\"max-width:1144px;margin-left: calc(-4% \/ 2 );margin-right: calc(-4% \/ 2 );\"><div class=\"fusion-layout-column fusion_builder_column fusion-builder-column-7 fusion_builder_column_1_1 1_1 fusion-flex-column\"><div class=\"fusion-column-wrapper fusion-flex-justify-content-flex-start fusion-content-layout-column\" style=\"background-position:left top;background-repeat:no-repeat;-webkit-background-size:cover;-moz-background-size:cover;-o-background-size:cover;background-size:cover;padding: 0px 0px 0px 0px;\"><style type=\"text\/css\">@media only screen and (max-width:1064px) {.fusion-title.fusion-title-7{margin-top:5px!important; margin-right:0px!important;margin-bottom:10px!important;margin-left:0px!important;}}@media only screen and (max-width:640px) {.fusion-title.fusion-title-7{margin-top:0px!important; margin-right:0px!important;margin-bottom:20px!important; margin-left:0px!important;}}<\/style><div class=\"fusion-title title fusion-title-7 fusion-sep-none fusion-title-text fusion-title-size-three\" style=\"margin-top:5px;margin-right:0px;margin-bottom:10px;margin-left:0px;\"><h3 class=\"title-heading-left\" style=\"margin:0;\"><b>Other Paper Industries Do It Better<\/b><\/h3><\/div><div class=\"fusion-text fusion-text-9\"><p><span style=\"font-weight: 400;\">Now after reading all of these reasons why investments are lacking, it would seem like this is how the paper industry is everywhere. But that\u2019s not the case.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Many of the above reasons seem to plague the <\/span><b>U.S. paper industry<\/b><span style=\"font-weight: 400;\">. But other areas across the globe have an entirely different outlook on investing in their mills.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Case in point: <\/span><b>Europe<\/b><span style=\"font-weight: 400;\">.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The U.S. paper industry often follows trends emerging from Europe\u2019s paper industry, but seems to fall short in how we care for our paper mills. Europe mills see frequent investments and are tended to in a way that speaks to their value in the industry.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This night and day contrast leaves us wondering why U.S. mills can\u2019t rise to that level. Especially as we witness the decline of our own.<\/span><\/p>\n<\/div><\/div><style type=\"text\/css\">.fusion-body .fusion-builder-column-7{width:100% !important;margin-top : 0px;margin-bottom : 20px;}.fusion-builder-column-7 > .fusion-column-wrapper {padding-top : 0px !important;padding-right : 0px !important;margin-right : 1.92%;padding-bottom : 0px !important;padding-left : 0px !important;margin-left : 1.92%;}@media only screen and (max-width:1064px) {.fusion-body .fusion-builder-column-7{width:100% !important;order : 0;}.fusion-builder-column-7 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}@media only screen and (max-width:640px) {.fusion-body .fusion-builder-column-7{width:100% !important;order : 0;}.fusion-builder-column-7 > .fusion-column-wrapper {margin-right : 1.92%;margin-left : 1.92%;}}<\/style><\/div><\/div><style type=\"text\/css\">.fusion-body .fusion-flex-container.fusion-builder-row-8{ padding-top : 0px;margin-top : 0px;padding-right : 0px;padding-bottom : 0px;margin-bottom : 0px;padding-left : 0px;}<\/style><\/div><\/p>\n","protected":false},"excerpt":{"rendered":"<p>If you\u2019ve paid attention to the paper industry over the last decade, you\u2019ve noticed a considerable decline in the amount of paper mills; particularly those that make labels. Investments keep these mills running but there\u2019s been a considerable lack of funding over the years. Why? Well, the paper industry isn&#8217;t that attractive to investors.<\/p>\n","protected":false},"author":13,"featured_media":14253,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[59],"tags":[],"acf":{"theme_color":"","estimated_reading_time":4,"include_in_most_popular_sidebar":false,"hero_splash_image":14252,"grid_listing_thumbnail":14254,"sidebar_most_popular_thumbnail":14255},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v19.7.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Why the Paper Industry Isn&#039;t Attractive (to Investors) - Barcode Blog<\/title>\n<meta name=\"description\" content=\"Another paper mill is closing and chances are it&#039;s from lack of investments. So why aren&#039;t investors flocking to the paper industry?\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.smithcorona.com\/blog\/why-the-paper-industry-isnt-attractive-to-investors\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Why the Paper Industry Isn&#039;t Attractive (to Investors) - Barcode Blog\" \/>\n<meta property=\"og:description\" content=\"Another paper mill is closing and chances are it&#039;s from lack of investments. So why aren&#039;t investors flocking to the paper industry?\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.smithcorona.com\/blog\/why-the-paper-industry-isnt-attractive-to-investors\/\" \/>\n<meta property=\"og:site_name\" content=\"Barcode Blog\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/smithcoronalabels\" \/>\n<meta property=\"article:published_time\" content=\"2023-01-27T20:20:29+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-12-15T14:50:09+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.smithcorona.com\/blog\/wp-content\/uploads\/2023\/01\/Paper_Industry_Isnt_Attractive_Feature.png\" \/>\n\t<meta property=\"og:image:width\" content=\"760\" \/>\n\t<meta property=\"og:image:height\" content=\"460\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/png\" \/>\n<meta name=\"author\" content=\"Alaina D&#039;Altorio\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@sclabels\" \/>\n<meta name=\"twitter:site\" content=\"@sclabels\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Alaina D'Altorio\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"19 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.smithcorona.com\/blog\/why-the-paper-industry-isnt-attractive-to-investors\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.smithcorona.com\/blog\/why-the-paper-industry-isnt-attractive-to-investors\/\"},\"author\":{\"name\":\"Alaina D'Altorio\",\"@id\":\"https:\/\/www.smithcorona.com\/blog\/#\/schema\/person\/1b9fc3da02d7f7eb09679c7abc90ba43\"},\"headline\":\"Why the Paper Industry Isn&#8217;t Attractive (to Investors)\",\"datePublished\":\"2023-01-27T20:20:29+00:00\",\"dateModified\":\"2023-12-15T14:50:09+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.smithcorona.com\/blog\/why-the-paper-industry-isnt-attractive-to-investors\/\"},\"wordCount\":9107,\"publisher\":{\"@id\":\"https:\/\/www.smithcorona.com\/blog\/#organization\"},\"articleSection\":[\"Industry News\"],\"inLanguage\":\"en-US\"},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.smithcorona.com\/blog\/why-the-paper-industry-isnt-attractive-to-investors\/\",\"url\":\"https:\/\/www.smithcorona.com\/blog\/why-the-paper-industry-isnt-attractive-to-investors\/\",\"name\":\"Why the Paper Industry Isn't Attractive (to Investors) - Barcode Blog\",\"isPartOf\":{\"@id\":\"https:\/\/www.smithcorona.com\/blog\/#website\"},\"datePublished\":\"2023-01-27T20:20:29+00:00\",\"dateModified\":\"2023-12-15T14:50:09+00:00\",\"description\":\"Another paper mill is closing and chances are it's from lack of investments. 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