TP a growing commodity
Published 12:39 pm Monday, February 20, 2012
As Kimberly-Clark prepares to close its last integrated pulp mill and paper manufacturing facility, located here in Everett, other U.S. companies and communities are diving into the toilet-paper producing business, one of the bright spots in American manufacturing, the Wall Street Journal reported last week.
In the past decade, while demand for other paper products dropped, U.S. toilet paper and tissue consumption was on the way up, increasing an estimated 7.2 percent between 2001 and 2011, according to Vertical Research Partners, which tracks the paper industry.
So even as Kimberly-Clark shores up its operations, soon to be free of the burden of the pulp mill, it faces even more competition.
The Wall Street Journal reports on the town of Gorham, N.H., a logging community just like those (once) found in Washington and Oregon. The area’s last mill closed in 2010, leaving 197 workers out of good-paying jobs. But new owners have the 100-year-old Gorham paper mill running again, with 176 employees and plans to hire 48 more. And a wood-chipping plant is in the works.
The rebirth, and optimism at other paper mills, are all due to toilet paper, the WSJ reported. (Increased population increases demand.)
Patriarch Partners LLC, a New York private-equity firm, bought the Gorham mill in May 2011 for $2 million. Patriarch said it plans to invest $60 million in the mill, including paying for special machines to craft fine tissue.
“You have to find that one thing that you cannot ship from China … you have to find your niche,” Lynn Tilton, chief of Patriarch Partners, told the Journal.
It turns out TP has a major advantage for domestic manufacturers: because of its bulk, isn’t economical to ship from overseas.
Other mills and states investing in tissue paper include Clearwater Paper Corp. of Spokane, which was given $50 million in state and local incentives in North Carolina to open a $280 million tissue-making plant there last year, according to the article. The plant will employ 250 people.
Wisconsin-based Wausau Paper is spending $220 million on a tissue plant that will begin production in Kentucky in early 2013. And First Quality Enterprises Inc. opened a tissue plant in Anderson, S.C., last year.
With so many new players, there may be an oversupply and a fight, according to Vertical Research Partners. Which should be good for consumers.
When negotiations between Kimberly-Clark and potential buyer Atlas Holdings Inc. broke down, some speculated that it was mostly because K-C didn’t want to sell to a competing toilet-paper producing company. The hot TP industry lends credence to that thought.
