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Innovative Approaches Improve Competitiveness – Dongil Paper

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Innovative Approaches Improve Competitiveness – Dongil Paper Published November 3, 2011 Innovative Approaches Innovative Approaches Improve Competitiveness – Dongil Paper Executive Summary The paper industry in developed countries has been facing challenges from a mature market. In spite of challenging economic forecasts, investments in innovative technologies have proven to improve the competitive edge as well as the profitability of a company. Dongil Paper has taken a unique approach to increasing profitability. Instead of reducing costs in the hope of constant market price, they have made small scale investments to existing production machines. These investments simultaneously accomplish cost savings and address new environmental requirements, which in turn can lead to production of new higher margin grades and an increased return on investment. Dongil Paper found their competitive edge in this challenging economic market using starch spray application and curtain coating on a low brightness base sheet. Abstract The paper industry in developed countries i.e. North America, Western Europe, Scandinavia, Japan and South Korea has for many years been struggling with the incapability of maintaining profitable operation, justifying new capital investments and expanding the market areas. Dongil Paper, located in South Korea, © Valmet Page | 1 Published November 3, 2011 Innovative Approaches has through considered risk taking expanded its position as a market leader in the local packaging industry. In spite of challenging economic forecasts for the industry, investments in innovative technologies have proven to improve the competitive edge in the market as well as the profitability of the company. Capital investments in new technology provide manufacturing cost savings, positive environmental impact and give great return in the short term. Producers of liner and corrugating medium grades from recycled fiber often struggle with challenges to reach required strength properties compared to packaging grades produced from virgin fiber. Starch can be used on the size-press to compensate for the lost fiber strength, weakened from recycling. However, conventional size-press technologies have limitations when high starch amounts are targeted or at high machine speeds in modern packaging board machines. Spray sizing overcomes many road blocks and sufficient strength improvements are achieved for recycled testliner and corrugated medium. Starch spraying on the size-press has been practiced by Dongil in South Korea for many years to achieve sufficient strength improvements, but has also presented other challenges. The latest development of the spray application technology has resulted in a commercial spray device, capable of providing a large window for the starch application amount and giving an exceptional transfer rate to the web. A clean operation with no starch contamination to the machine surroundings is maintained. The theoretical provisions for an effective starch transfer to the web and starch penetration control are described in this paper. The theories are supported by pilot trial results as well as production experience. Starch application with spray is a new innovative approach to produce packaging board grades economically from a fully recycled fiber source. Curtain coating gives excellent coverage and a low brightness base sheet is easily covered up by the coating applied in two layers. When curtain coating is used to make the surface white, the high cost bleached virgin fiber layer in white top liner grades, often seen as non-environmental friendly, can be replaced with recycled unbleached fiber. Dongil Paper started up its curtain coater at the end of 2008, making the unbleached base board white. Introduction Paper Industry Trends The paper industry in Western Europe and North America has been facing challenges from a mature market for at least a decade. Also Japan and South Korea have experienced the same situation. In opposite, China is the best example of an emerging market. Focusing on containerboard, South Korea is a country where containerboard production exceeds consumption and the yearly consumption increase is marginal. In consumption/production ratio, the containerboard situation is very similar to that of Germany, and the total volume is not far behind. In the United States containerboard consumption slightly decreases and production expansion efforts should be questioned. Contrarily, in corresponding figures for China, consumption demand exceeds production and the yearly increase is consistent, as seen in Figure 1. The increasing production of the entire Chinese industry raises demand for containerboard as a packaging material. It is not surprising that the new containerboard machine investments take place in China. © Valmet Page | 2 Published November 3, 2011 Innovative Approaches Dongil Paper Manufacturing How then to survive in a mature market? The conventional attempt to improve profitability in the paper industry has in most cases ended up in cost saving attempts. Decreasing the production cost naturally will give a higher margin assuming at least a constant market price for the product. A consistent high market Figure 1. Container board production and consumption figures for selected countries [1] price for the product is of course not a given. Are there other ways to improve profitability? Dongil Manufacturing in South Korea has taken a unique approach to improve profitability when struggling in a mature containerboard market. Small scale investments to existing production machines open up the field to produce new products, simultaneously accomplishing cost savings and addressing new environmental requirements. After rebuilding the production line, new higher margin grades can be produced and the return on investment is reasonable. When the investment focuses on new machine technology instead of tuning existing machines, and being the first user of the new technology, a competitive edge is found. It will take a long time for the competition to catch up with new machine technology. Risks are naturally involved with new technology. However, considered risk taking is necessary to reach this position. The incapability of risk taking has generally harmed paper industry innovation for a long time and has run many companies into a critical financial position, common today in mature market countries. In the history of the Dongil company, many new equipment products have been installed to differ from the conventional container board manufacturing process. A competitive edge has continuously been created resulting in increased market share of the Korean market. The most significant machine improvements by Dongil to reach its goals have been: • Installation of the CondeBelt dryer in Ansan 1999, resulting in a new linerboard grade with improved strength and smoothness in linerboard. • Installation of a size-press in Ansan, 2003, further improving the testliner strength. • In the summer of 2008, installation of new starch spray technology in Uiryeong mill, opening a window to improve strength in testliner and corrugating medium not reachable with any conventional starch application methods when using Korean recycled furnish. • In the end of 2008, installation of curtain coating in the linerboard machine in Ansan, giving an opportunity to produce white top liner and coated liner grades, never previously produced in © Valmet Page | 3 Published November 3, 2011 Innovative Approaches Korea. The recent developed curtain coating technology made it possible to complete the transition into higher value grades, which was strategically started already a decade earlier with the CondeBelt installation. Improving strength in recycled fiber grades Use of recycled fiber is encouraged in the paper industry today. A model at Youngstown State University suggests that 1.5 tons carbon dioxide total output is reduced if one ton virgin fiber is replaced with one ton recycled fiber [2]. In South Korea, the paper recovery rate is the highest in the world as seen in Table 1. According to the Korean Paper Manufacturer's Association, the recycling rate has increased to as high as 81% in 2007. As a result of the high recycling rate combined with a 1 limited import of foreign fiber to Korea, the strength of Country Paper Recovery Rate the Korean recycled fiber becomes by default low. United States 48% Manufacturing of high strength liner and corrugating China 33% medium from 100% Korean OCC becomes challenging Japan 66% and use of more fiber and higher basis weight may Germany 66% become the only way to reach the strength targets Canada 43% required in corrugated boxes. Size-press starch improves Finland 38% strength as well. It can be calculated that it is more Sweden 62% economical to add starch to the sheet than to add fiber to South Korea 77% reach the required strength properties. Conventional size- France 53% press technology however has some limitations: Italy 46% • A pond size-press limits the speed; splashing and World 45% runnability issues prevent operating at high 1 Note: Paper Recovery Rate is calculated as recovered paper and paperboard divided by speed, necessary for today´s profitability apparent paper and paperboard consumption. demands. The starch application amount is hard These percentages reflect the average recovery rate to control and starch concentration ends up being from 2000-2005 low and drying energy demand high, which harm the economics. Table 1. Paper recycling rates for top ten paper producing countries and the world 2000-2005 [3]. • A film size-press (metered size-press)
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