The U.S. paper and pulp industry is not disappearing, but it has declined over the past two decades compared with China and other global competitors. The industry has consolidated, and mills have closed. Wisconsin was once a global center of innovation and production, but today its paper and pulp industries face major challenges that must be addressed at the state and national levels to support this once-dominant manufacturing sector in northern Wisconsin. The forestry industry is severely distressed affected by the closure of more than twenty-five facilities. Still, Wisconsin’s specialty paper, tissue, towel, label, and packaging sectors remain bright spots in paper manufacturing. Today, paper and pulp manufacturing employs about 7,800 people in Wisconsin, down from more than 40,000 in the early 1970s. Wisconsin can learn from China’s support for its paper and pulp industries, which helped China become a world leader.
Why China Grew So Fast and the Key Reasons include:
- The Chinese government identified paper and packaging as strategic industries and supported growth.
- Massive government support and domestic demand with reduced corporate tax rates, accelerated depreciation, export-related tax benefits, and industrial parks infrastructure:
- Lower manufacturing costs
- Low-cost financing for the mills
- Industrial development policies
- Infrastructure Investments in ports, transportation, and logistics
- Explosive Manufacturing Growth
- China’s export economy created strong domestic and international demand for corrugated boxes, packaging papers, tissue and household products, and specialty papers, driven by e-commerce.
- The focus is on Large-Scale Modern Paper Mills with closing down small mills. China built new, highly efficient mills with lower production costs. New facilities operate as scales much larger than the older North American mills.
- Chinese companies invested in pulp capacity and fiber supply chains in countries such as Brazil, Indonesia, Canada, plus inside of China planting billions of trees.
- Investments in Engineering Education, Technical Training, Manufacturing Skills Development, and University Industry Partnerships.
Why U.S. Industry Declines
- The decline is primarily in printing and writing paper grades.
- U.S. Paperboard has fallen 30% since 2000’s.
- Aging mill infrastructure especially in Wisconsin
- Higher labor costs compared with international competitors.
- The demand and requirements from the DNR and environmental compliance will prevent any additional investments in the State of Wisconsin
- Competition from lower-cost global producers with limited environmental restrictions and not complying with verifying their source for pulp. The US Pulp Manufacturing Companies are required to comply!
If Wisconsin is to survive, we will need to focus on the following:
- Advanced Packaging Technologies
- Sustainable fiber products
- Molded fiber replacing plastics.
- The development of new coating technologies
- Specialty Paper Products
- Established Tissue, Towels, and Hygiene Products manufacturers
- Automating and upgrading existing facilities
- Abundant forest resource
- Education with Universities and Technical Colleges
- A skilled and experienced workforce
- Manufacturing supporting industries experience in the paper and pulp industries
- A large Packaging Industry
- A large Converting Industry
- A large Printing Industry including Flexible Packaging, Label, and the Board Industry
- A large Food Manufacturing Industry
Rather than trying to compete directly with China, Asia, and Europe, Wisconsin current advantage is high-value packaging, converting, printing, and specialty paper products.
