AS a long-time consultant and marketer in the converting, paper, nonwovens, and printing industries, GBIG asked me to share and overview the industry. Since I branded the participants as part of “The Converting Corridor” (and recently granted the Trademark to The New North), the converting industry has become the star of manufacturing using paper, plastics, nonwovens and printed substrates.
Wisconsin is resource rich when compared to other regions in the U.S. As the top papermaking state; as a powerhouse in flexographic and other printing; and having a strong presence in nonwovens with wipes producers and related supplies—the state has these advantages.
Users still look to Wisconsin for Graphic papers –used for print communication, advertising, and marketing, including direct mail, catalogs, corporate collateral, and magazines. Also, according to GBIG research, “the specialty papers market size was USD 44.79 billion in 2022 and is expected to grow to 71.25 billion, at around 6% CAGR through 2030.”
However, the changing nature of the paper industry in Wisconsin, and in the U.S., generally, is limiting some options for converters working on value-added products.
Paper industry issues:
- Changing ownership with foreign companies and private investment groups having no ties to Wisconsin. As of 2021, 37% of the North American paper and pulp capacity was owned by private equity companies, according to Forest2Market, with growing impact by Asian owners.
- Closures due to lack of demand, environmental issues and the failure to upgrade or add new equipment. Paper Mill market size has dropped from an estimated $57.2 billion in 2013 to $38.2 billion, in 2023, according to Statista.
- Paper and pulp manufacturing operations are expensive to start up and to run, a significant barrier to entry, plus small return on investment. In most cases, a mill needs to run at over 90% capacity to make a profit.
- American investors focus more on short term profits versus Europe and Asia looking at the long- term return on investment.
- In “Region North America, prices for graphic and specialty papers as well as input costs are expected to be stable,” according to Billerud. These papers include applications in pressure-sensitive labels and release liners.
Paper is more recyclable and easier to re-use than other substrates such as nonwovens or plastics. It’s perceived as a better choice by consumers. Creative use of papers in packaging and other products continues to expand converting possibilities. With converting defined as adding value to “mill” rolls or “parent” rolls, steps for converters range from specialty rewinding/cutting, to printing/coating, diecutting, folding, and laminating.
A portion of the industry is still adjusting to market needs following the pandemic. In some cases, filling the needs during the pandemic resulted in over-production after a couple of years. In other cases, some converters used the quieter times to invest in new capacity and to add capabilities. As I talked to converters, several contacts were looking forward to more options this year and next.
The “Converting Corridor” from Green Bay to Milwaukee also boasts logistics support, from inventory assistance to management of shipping. Experience by nearby software, engineering, parts, and machining companies keeps the industry moving. These local suppliers understand industry; after all, Wisconsin is second only to Indiana as a manufacturing state.
The converting industry is under-rated because its statistics are often wrapped into paper industry data. Converters are frequently contract manufacturers, so it is not generally known how many products and brands are made for large consumer marketers. Private ownership and numbers of small business sizes add to under-reported details. Finally, contract converters are often quiet about their customers and what’s in production.
Consumers are not aware that many national brands are made by Wisconsin converters whose names are not on the products they ship. For example, a converter might print a brand name on the package or on the product, for a customer, with just coded traceability. When I tell people that the Converting Corridor makes dry wipes and wet wipes in more than 10 factories to supply the nation, they are surprised.
Converting in Wisconsin is often done in small-to-midsize facilities that are not inclined to outsource to other states or countries. It’s another ongoing benefit for the state.
