WWW.IBISWORLD.COM Paper Mills in the US May 2017 1 Paper jam: Foreign competition and declining demand for paper will plague industry mills This report was provided to IBISWorld Staff Member (2127139711) by IBISWorld on 26 October 2017 in accordance with their licence agreement with IBISWorld IBISWorld Industry Report 32212 Paper Mills in the US May 2017 Anya Cohen 2 About this Industry 17 International Trade 36 Key Statistics 2 Industry Definition 20 Business Locations 36 Industry Data 2 Main Activities 36 Annual Change 2 Similar Industries 22 Competitive Landscape 36 Key Ratios 3 Additional Resources 22 Market Share Concentration 37 Industry Financial Ratios 22 Key Success Factors 4 Industry at a Glance 22 Cost Structure Benchmarks 38 Jargon & Glossary 24 Basis of Competition 5 Industry Performance 25 Barriers to Entry 5 Executive Summary 26 Industry Globalization 5 Key External Drivers 7 Current Performance 28 Major Companies 9 Industry Outlook 28 Verso Corporation 11 Industry Life Cycle 31 Operating Conditions 13 Products & Markets 31 Capital Intensity 13 Supply Chain 32 Technology & Systems 14 Products & Services 33 Revenue Volatility 15 Demand Determinants 34 Regulation & Policy 16 Major Markets 34 Industry Assistance www.ibisworld.com | 1-800-330-3772 | [email protected] WWW.IBISWORLD.COM Paper Mills in the US May 2017 2 About this Industry Industry Definition The Paper Mills industry manufactures newsprint, packaging material and paper in paper mills from pulp, a household papers. These products are fibrous material derived from wood. sold in bulk to individual consumers, Mill operators may manufacture their businesses and downstream own pulp or purchase it. Industry manufacturers who may further convert products include paper rolls and reams, the industry’s products into specialty including printing and writing paper, paper products. Main Activities The primary activities of this industry are Manufacturing rolls of printing paper, writing paper, packaging paper and industrial paper from pulp Manufacturing clay-coated paper Manufacturing absorbent sanitary and tissue paper Manufacturing newsprint The major products and services in this industry are Facial tissue Napkins Newsprint Paper towels Toilet tissue Other sanitary products Similar Industries 32211 Wood Pulp Mills in the US Industry operators manufacture pulp from woodchips but do not manufacture paper or paperboard. 32213 Paperboard Mills in the US Industry operators manufacture cardboard from pulp and recycled materials. 32222 Coated & Laminated Paper Manufacturing in the US Industry operators purchase paper from mills and treat it by coating and laminating it. The industry also manufactures paper bags and sacks. 32223 Office Stationery Manufacturing in the US Industry operators convert purchased paper and paperboard into office stationery. Some mills may convert their own paper into stationery products. 32229a Sanitary Paper Product Manufacturing in the US Industry operators purchase sanitary paper from mills and convert it into various tissue products. Some mills may convert their own sanitary paper. 32229b Paper Product Manufacturing in the US Industry operators purchase paper from mills and convert it into various paper products. 42411 Paper Wholesaling in the US Industry operators purchase paper rolls from manufacturers and distribute them to retailers or directly to customers. Some large clients may bypass the wholesaler and buy directly from mills. Provided to: IBISWorld Staff Member (2127139711) | 26 October 2017 WWW.IBISWORLD.COM Paper Mills in the US May 2017 3 About this Industry Similar Industries 42412 Office Stationery Wholesaling in the US continued Industry operators purchase stationery from manufacturers and distribute it to retailers and customers. Additional Resources For additional information on this industry www.afandpa.org American Forest & Paper Association www.icfpa.org International Council of Forest & Paper Associations www.gonpta.com National Paper Trade Association www.paperage.com PaperAge Magazine www.pulpandpaper.net PulpandPaper.net IBISWorld writes over 1000 US industry reports, which are updated up to four times a year. To see all reports, go to www.ibisworld.com Provided to: IBISWorld Staff Member (2127139711) | 26 October 2017 WWW.IBISWORLD.COM Paper Mills in the US May 2017 4 Industry at a Glance Paper Mills in 2017 Key Statistics Revenue Annual Growth 12-17 Annual Growth 17-22 Snapshot $43.8bn -2.8% -2.5% Profit Exports Businesses $2.1bn $7.6bn 132 Revenue vs. employment growth Demand from paper manufacturing Market Share Verso Corporation 5 6 7.8% 3 0 0 -5 -3 % change % change -6 -10 -9 -15 -12 Year 09 11 13 15 17 19 21 23 Year 10 12 14 16 18 20 22 Revenue Employment SOURCE: WWW.IBISWORLD.COM p. 28 Products and services segmentation (2017) Key External Drivers 6.9% Napkins Demand from paper 24.4% manufacturing 11.8% Newsprint Corporate profit Facial tissue Price of paper Percentage of services conducted online 14.9% Trade-weighted index Paper towels 21.7% Toilet tissue p. 5 20.3% Other sanitary products SOURCE:SOURCE: WWW.IBISWORLD.COM WWW.IBISWORLD.COM Industry Structure Life Cycle Stage Decline Regulation Level Heavy Revenue Volatility Low Technology Change Medium Capital Intensity Medium Barriers to Entry High Industry Assistance Medium Industry Globalization Medium Concentration Level Low Competition Level High FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIX ON PAGE 36 Provided to: IBISWorld Staff Member (2127139711) | 26 October 2017 WWW.IBISWORLD.COM Paper Mills in the US May 2017 5 Industry Performance Executive Summary | Key External Drivers | Current Performance Industry Outlook | Life Cycle Stage Executive The Paper Mills industry has struggled downstream operators to trade up to Summary over the past five years due to high-quality paper, the rising number of competition from foreign paper services conducted online has continued manufacturers and persistently declining to pressure demand for industry goods. demand for paper products. Industry Over the five years to 2017, the operators have toiled with concerns percentage of services conducted online surrounding the increasing popularity of has increased at an annualized rate of online communication, which has 13.4%, which means that more significantly reduced demand for consumers are turning to the internet traditional paper products. Furthermore, than ever before. Due to the increasingly operators in the United States are no digital landscape of the United States, longer the world’s largest producers of fewer consumers are using paper for paper, having been overtaken by Chinese things like advertising or communication. This trend has pressured downstream demand for industry products, and in The rising percentage of services conducted 2017, IBISWorld estimates that industry online continues to prolong the industry’s revenue will decline 0.4%, along with a 4.1% increase in the percentage of gradual decline services conducted online. Over the five years to 2022, the manufacturers, which has caused industry will continue to encounter industry exports to decline. As a result of challenges, particularly as paper these negative trends, IBISWorld purchases from print publishing estimates that revenue for the Paper industries gradually wane. Demand for Mills industry has fallen at an annualized paper products may not change rate of 2.8% over the five years to 2017, significantly, but the increasing presence totaling $43.8 billion. of digital office communication Over the five years to 2017, the platforms will certainly remain a industry has suffered from slowed growing threat to industry revenue going demand from downstream markets amid forward. As a result of this competitive vastly reduced spending on nearly all pressure, IBISWorld expects industry forms of commercial and industrial paper revenue to decline at an annualized rate products. Despite an increase in of 2.5% over the five years to 2022, corporate profit, which has enabled totaling $38.6 billion. Key External Drivers Demand from paper manufacturing Corporate profit Paper product manufacturing industries Purchases of paper products can vary are significant users of paper mill depending on the level of activity in key products. An increase in activity and downstream markets, such as finance, revenue for these downstream industries advertising and publishing industries. indicates growing demand for paper rolls Corporate profit growth typically and reams, which will positively affect improves business sentiment, mill operators. Demand from paper encourages business expansion and manufacturing is expected to increase in increases demand for the industry’s 2017, representing a potential products. Corporate profit is expected to opportunity for the industry. increase in 2017. Provided to: IBISWorld Staff Member (2127139711) | 26 October 2017 WWW.IBISWORLD.COM Paper Mills in the US May 2017 6 Industry Performance Key External Drivers Price of paper is expected to increase in 2017, posing a continued Industry revenue largely depends on the potential threat to the industry. retail price of the goods produced. Changes in the domestic prices of Trade-weighted index printing and writing paper cause The trade-weighted index (TWI) measures fluctuations in revenue, with higher the value of the US dollar relative to the prices resulting in growing revenue and currencies of its largest trading partners. If lower prices cutting into the industry’s the TWI decreases, the relative prices of US revenue and profit