SIC 2611
PULP MILLS



This category covers establishments primarily engaged in manufacturing pulp from wood or from other materials, such as rags, linters, wastepaper, and straw. Establishments engaged in integrating logging and pulp mill operations are classified according to the primary products shipped. Establishments engaged in integrated operations of producing pulp and manufacturing paper, paperboard, or products thereof are classified in SIC 2621: Paper Mills if primarily shipping paper or paper products; in SIC 2631: Paperboard Mills if primarily shipping paperboard or paperboard products; and in SIC 2611: Pulp Mills if primarily shipping pulp. Establishments primarily engaged in cutting pulpwood are classified in SIC 2411: Logging.

NAICS Code(s)

322110 (Pulp Mills)

322121 (Paper (except Newsprint) Mills)

322130 (Paperboard Mills)

Industry Snapshot

Followed by Canada, the U.S. pulp industry is by far the world's largest, representing roughly one-third of worldwide production in recent years. U.S. pulp mills produce a wide variety of pulps for making paper and paperboard. In 2000, shipment values for U.S. pulp mills totaled about $3.7 billion, representing about 4.7 percent of total shipment values for pulp, paper, and paperboard mills. Capital expenditures for equipment and plants totaled approximately $236.8 million that year, up from $186.2 million in 1999. Most of the pulp made in the United States is chemical pulp, which is produced by a chemical digesting process that converts wood chips into pulp by chemically liberating the cellulose fibers from the lignin that holds them together in the wood. Mechanical pulps are made with large "grinders" that physically shred the wood pulp into individual fibers. Some processes combine elements of mechanical and chemical pulping.

After the wood chips are digested or ground, they are called wood pulp. This wood pulp is cleaned, screened, and refined. Pulp to be used for white paper is bleached (otherwise the pulp retains its natural brown color). At this point, the pulp is ready to be used in papermaking. Various grades of pulp can be made from softwood trees such as southern pine, hardwood trees such as oak, or from other sources that include recovered paper, rags, or agricultural products such as cotton linters, kenaf, bagasse, or straw.

In the early 2000s most pulp was used in integrated pulp and paper mills, which means that the pulp mill and the paper mill were owned by the same company and operated in many cases at the same location. There were numerous smaller paper mills, however, that were not connected with a pulp mill; they purchased "market pulp" on the open market from other pulp producers. Some companies produced only market pulp; other companies sold the excess pulp that could not be used by their paper machines.

Organization and Structure

U.S. pulp mills maintain a dominant share of the U.S. market for pulp and are also very strong competitors in global markets. One reason for this market strength is good economic fundamentals—U.S. pulp mills have access to low cost and abundant raw materials, a highly trained workforce, and they operate world-class plants and equipment.

In most cases, pulp mills need to be located near their raw materials—trees or wastepaper—to minimize transportation costs. The United States has a very large growing stock of pulpwood in several areas: the Pacific Northwest, the upper Midwest, the Northeast, and the Southeast. This circumstance, combined with its efficient manufacturing base, makes the United States the leading low-cost producer of many grades of pulp throughout the world. However, by the late 1990s, that position as low-cost producer was being challenged by a new generation of pulp mills, largely in South America and Southeast Asia. These mills have access to fast-growing hardwood and softwood fiber, which dramatically reduces operating costs. Many new, world-class pulp mills were built in South America and Southeast Asia in the 1990s, while none was built in the United States and Canada. This new capacity made the global pulp market very competitive and, consequently, increased the volatility of pulp prices.

While the pulping and papermaking processes are very energy intensive, the industry has become an efficient user of energy by burning its own waste byproducts, such as tree bark and spent chemicals from the pulping process. In the late 1990s the pulp and paper industry generated well over half of the energy needed to run its mills. From the early 1970s to the mid-1990s, the industry reduced oil consumption by nearly 66 percent and natural gas consumption by 10 percent while increasing production capacity by 60 percent. Some mills even generate excess power and sell it back to local utilities.

Pulp mills and paper mills use a large amount of water from lakes, rivers and, in some cases, oceans. They must reuse and/or clean all of this water before it can be returned to the body of water from which it came. In the early years of the industry, pulp mills would discharge untreated waste (effluent) into the receiving body of water. Beginning in the late 1960s, however, the industry began operating under strict water use regulations that required primary, secondary and, in some cases, tertiary treatment of wastewater. These rules were tightened considerably during the following decades. Also, to cut down on treatment costs, mills reuse a large portion of the water they used elsewhere in the pulping and papermaking process. The process of cleaning and reusing water is commonly called "closing the mill."

In the mid-1990s, it took 65 percent less water to make a ton of paper than it did about two decades earlier. The water that cannot be reused goes to large outdoor water treatment plants. By 1999 the biochemical oxygen demand (BOD) of the treated water—a measure of environmental impact—had been reduced by more than 70 percent from 1974, even though total paper production increased more than 50 percent.

Captive Pulp. The vast majority of pulp produced in the United States is considered "captive" because it is used in an integrated pulp and paper operation and is not sold on the open market. While captive pulp accounts for the majority of pulp used in the United States, much more information and documentation is available for market pulp since it is bought and sold publicly.

The percentage of virgin wood fiber used in paper and board production in the United States and other countries has been steadily declining. This decline is explained by several trends. While virgin wood fiber has long been the fiber of choice in most advanced papermaking operations, it is coming under sustained challenge from other fiber sources. For example, the use of recovered (recycled) paper is increasing dramatically and has displaced large amounts of virgin wood fiber in the pulping market. The increased use of recovered paper has been driven partly by the public's desire to reduce the amount of paper going into landfills and partly by pulp producers' realization that virgin fiber will be increasingly hard to sustain in years to come.

North American paper producers have dramatically increased their use of recovered paper in recent years. The percentage of paper recycled in the United States rose from about 30 percent (of total paper produced) in 1990 to almost 46 percent in 2000. In the mid-1990s, growth in consumption of recovered paper was far outpacing the underlying capacity growth at U.S. paper and paperboard mills. U.S. mill consumption of recovered paper rose 9.2 percent in 1996, or about two and a half times the rate of total paper and paperboard capacity growth. From 1997 to 1999, recovered paper consumption increased at an average rate of 2.9 percent, about twice the pace of paper and paperboard capacity growth during the same three-year period. However, consumption of recovered paper and paperboard fell 3.5 percent in 2000 and 1.4 percent in 2001, while capacity during those years fell 2.2 percent and 5.1 percent, respectively.

Virgin wood fiber also faces a challenge from the growing use of mineral coatings and inert fillers, mainly in printing and writing papers. Producers of these grades have completed a long-term shift from acid pulp to alkaline pulp. One reason for this shift is that paper produced from acid pulp becomes brittle and breaks up over time, while alkaline papers tend to last longer. More important, however, is the fact that alkaline papermaking tends to be less expensive since it permits greater use of fillers, such as calcium carbonate, that replace a percentage of the wood fiber in the finished paper. In U.S. printing and writing papers, such as copy paper, the amount of filler can be 10 to 20 percent of the finished paper. The cost of fillers is about one third that of wood pulp, so paper mills have a financial incentive to increase their use of fillers. Papermakers use filler not only to reduce the amount of wood fiber used but also to increase the smoothness and opacity of their finished products. As techniques to use more filler are developed, wood pulp will be displaced.

While the percentage of wood pulp in finished paper products will continue to decline, the use of wood pulp will still grow—at least slightly—as the entire market for paper expands. Global production of wood pulp should grow, on average, about 2 percent per year worldwide during the first two decades of the twenty-first century. In the United States, wood pulp will probably grow more slowly since growth in recycled fiber will be strong. However, foreign markets will likely absorb an increasing amount of U.S. market wood pulp.

Chemical Pulp. Within the overall market for wood pulp, the use of chemical pulp—mostly kraft pulp, which is produced using the sulfate process—is increasing. The trend toward greater use of chemical pulp is driven by the need for greater strength as papermakers begin to blend less costly and weaker mechanical pulps and recycled paper fibers into the furnish they use to make paper.

As it has been for some time, chemical paper grade pulp was the primary product of the U.S. market wood pulp industry in the 1990s and early 2000s. For example, by the end of the 1990s total U.S. market wood pulp capacity was 10.37 million tons. U.S. chemical paper grade market pulp mills held the vast majority of that total, at 9.27 million tons, while market dissolving pulp, at 1.10 million tons, accounted for the remainder. The two primary market chemical pulp grades in 1999 were bleached softwood kraft pulp, at 5.32 million tons, and bleached hardwood, at 3.32 million tons.

Overall, U.S. market wood pulp capacity was expected to remain essentially flat through the early 2000s. While some small fluctuations are expected, total market wood pulp capacity was expected to rise by a total of just 1.5 percent between 1997 and 2001, from 10.50 million tons to 10.66 million tons. The main reason for this stagnant market is that U.S. paper mills are using more recycled fiber than ever before.

Background and Development

Before the U.S. Civil War, paper was made exclusively from rags in the United States and around the world. Rag collection for papermaking was a major part of the U.S. economy. However, as the demand for paper continued to increase, the demand for rags began to outstrip supply.

This situation changed between 1851 and 1918 when wood pulp was invented, developed, and industrialized. The Civil War created a huge demand for both paper and rags; this demand helped spur research into using the fiber from trees for papermaking. This period saw the development and commercialization of all the major wood pulping processes, including groundwood, soda, and sulphite and kraft (sulphate). Wood pulp quickly reduced the cost of papermaking, allowing the use of paper in new applications and new products.

Soda pulping was invented by Burgess and Watt in England and was patented in 1854 in the United States. Groundwood became established in the 1860s. The first chemical wood pulp was manufactured in 1864 in Manyunk, Pennsylvania, and the first kraft pulp mill was built in 1909. Kraft pulping had been invented in 1884 by German chemist Carl Dahl, who used sodium sulfate as the pulping agent. The pulp produced a strong brown paper, which was then described with the German word for strong: kraft.

While other materials were used for pulping—including bagasse cactus, cudweed, straw, cornstalks and even cow dung—wood pulp quickly became the preferred source of pulp. By the 1870s, pulp mills were springing up in heavily forested areas in New York, Massachusetts, Michigan, Ohio, and Wisconsin. These areas continued to develop as key pulp and paper regions throughout the early twentieth century and most remained so in the early 1990s.

The science of pulping continued to develop along with the growth of papermaking. Major pulping milestones included the invention of the recovery boiler, in which spent pulping chemicals are burned. This process recovers the energy in the chemicals and the chemicals themselves, which can then be reused. Another milestone was the development of the continuous digester, which replaced the slower batch digesting process.

In the 1980s, entire pulp mills were rebuilt to increase capacity and quality. Popular additions included new chip screening, handling, and storage systems; new digester cooking controls; new washing systems; more screening and cleaning; new bleaching systems emphasizing oxygen; and better mixing. Pulp and paper mills also took advantage of process control to more closely control the process and produce better quality products.

The U.S. pulp industry in the 1990s saw much price fluctuation. In the early to mid-1990s low pulp prices and high levels of spending required to meet environmental demands depressed the U.S. pulp industry to such an extent that few pulp producers were profitable. By 1993 after factoring out inflation, the price of pulp was the lowest it had been in decades. However, in 1994, pulp prices began a meteoric rise that saw prices double in less than two years. The price for northern bleached softwood kraft market pulp (NBSK), a common benchmark for pulp producers, averaged $566 per metric ton in 1994 (during the year, prices increased from a low of $440 per metric ton at the beginning of the year to $700 per metric ton at year end). In 1995 the price for NBSK averaged $871 per metric ton, and many pulp producers reaped record profits (prices during the year increased from a low of $750 per metric ton at the beginning of 1995 to $910 per metric ton at year end). However, 1996 saw a steep fall in pulp prices. For the year, the average price for NBSK was $591 per metric ton, falling from a high of $860 per metric ton in the first quarter of 1996 to a low of $500 per metric ton in the second quarter. Prices recovered to $600 per metric ton at the end of 1996. Prices stayed in this range for the rest of the decade; in October 1999 the price per metric ton of NBSK was just $560. However, at the beginning of 2000, market pulp was in short supply and prices were expected to rise in one of the pulp market's cyclical recoveries.

During the 1990s a main source of environmental pressure on pulp mills involved water regulations, spurred by the desire to eliminate or reduce to nondetectable levels the toxic chemical dioxin, which was discovered in small amounts in pulp mill water-borne effluent in the mid-1980s. Despite the lack of hard evidence that dioxin in minute quantities poses a human health risk, the paper industry voluntarily spent more than $1 billion to reduce dioxin discharges by more than 90 percent by the mid-1990s.

In 1993 the Environmental Protection Agency (EPA) proposed new regulations further restricting dioxin emissions by pulp mills, among other toxic chemicals. These regulations resulted from research the EPA had begun in the late 1980s when it formed a "pulp and paper cluster group" to coordinate regulatory actions involving the pulp and paper industry.

The EPA's pulp and paper cluster group focused on two major rule-making efforts. The first involved issuing revised effluent guidelines mandated by the Clean Water Act and required by a consent decree signed by the EPA after being sued by environmental groups over dioxin discharges from pulp mills. The second area involved defining maximum achievable control technology (MACT) emissions standards for pulp and paper mills, which was required under the Clean Air Act Amendments of 1990.

The Clean Air Act Amendments dramatically changed the allowable types and amounts of emissions. Based on emissions such as ozone, carbon monoxide, and particulates, regions of the United States can be classified as "nonattainment areas." These areas' pulp mills, like other industries, can be subject to severe restrictions.

While formulating new regulations, the EPA worked with the pulp industry through the "stakeholders" process. Doing so allowed the pulp industry to develop new testing and process treatment methods; to introduce scientific data and research; and to offer advice on the environmental, economic, and industrial impact of EPA's findings. Through this cooperation, standards regulating chemical oxygen demand (COD), biochemical oxygen demand (BOD), and color and absorbable organic halides (AOX) were revamped and made less costly to the industry. Final Cluster Rule regulations were issued on April 15, 1998, and the pulp and paper industry had up to three years from that date to comply with the new regulations.

The late 1990s resolved one controversy regarding pulp bleaching that arose earlier in the decade. Advocates of totally chlorine bleaching (TCF), in which no chlorine compounds are used to bleach pulp (including chlorine dioxide), argued that the process was environmentally superior to elemental chlorine free (ECF) bleaching, which uses chlorine dioxide. While the TCF process has some following in Europe, it has not caught on in the United States; no regulations have been passed requiring TCF bleaching. As a result, just two pulp mills in the United States were producing TCF pulp as of 1999.

Recycling was another major environmental trend affecting the pulp industry. Public interest in paper recycling, driven by concerns about a potential landfill crisis, began to build in the late 1980s and peaked in the early 1990s. By the end of the 1990s, consensus on landfills did not yet exist, as studies in the mid- to late 1990s suggested the landfill crisis to be less of a threat than previously reported.

Nonetheless, the push for recycling—primarily through federal and state legislation—continued, and paper companies began marketing a wide variety of new recycled grades. Much of the new pulping capacity being built or planned used wastepaper instead of virgin fiber as its raw material; this change has had a major impact on traditional pulping of wood fiber.

Much of the impetus for recycling came from the government, and various local, state, and federal government rules still regulate the recycling process. Many of these laws specify precise levels of "postconsumer" content (paper that has been used and discarded by a consumer) and restrict the amount of "preconsumer" wastepaper that can be used. Examples of preconsumer wastepaper might include trimmings from the printing or papermaking process, unsalable newspapers, or overprints of magazines. There has been, however, considerable disagreement over where the line should be drawn between postconsumer and preconsumer.

Aside from facing environmental challenges, in the early to mid-1990s U.S. pulp mills experienced volatile swings between profits and losses. When demand began to increase again in early 1994, there was little excess capacity to supply the new demand. Pulp prices surged dramatically and quickly, reaching $910 per metric ton by the third quarter of 1995. Market pulp producers again enjoyed record profits, and speculation centered on pulp prices remaining high into the next century. However, much of the run-up in pulp prices appeared to be caused by customers stocking up on inventory in anticipation of future price increases. When these customers stopped taking new shipments of pulp, prices dropped dramatically. Also, by the late 1990s, U.S. pulp producers were being directly affected by very large pulping capacity additions in Asia and South America. These trends appear to have made U.S. pulp producers very cautious about future capacity increases.

Current Conditions

By the early 2000s, weak economic conditions combined with overcapacity and slack demand for paper had resulted in difficult times for the larger paper industry. Because pulp mills are an integral part of the paper industry, the effects of this downturn likely had a negative impact on industry shipment values, which totaled $3.7 billion in 2000. In addition, the American Forest & Paper Association revealed that, by spring of 2002, an overvalued U.S. dollar was affecting the paper industry, hurting exports and allowing foreign competitors to capture larger shares of the U.S. market. The association explained that over a five-year period domestic paper companies shuttered some 72 mills, leading to a workforce reduction of about 32,000.

Chemical Use. Per government regulations, by mid-2002 U.S. pulp mills had completely adopted elemental chlorine free (ECF) standards, substituting chlorine dioxide for chlorine to bleach pulp. According to Pulp & Paper , this shift was "among the most profound process changes in the paper industry." Coupled with other changes in pulp mill processes, including those involving pigments and fillers, this change was leading to a growing demand for chemicals. Pulp & Paper further reported that the industry's demand for chemicals would rise from almost 2.5 percent between 2001 and 2006, growing from some 18 million tons to nearly 21 million tons.

Recycling. Paper companies remained subject to recycling regulations during the early 2000s, including restrictions on products' use of "green labeling" claims; limits on permissible types of packaging; strict requirements on secondary fiber content; procurement preferences for certain kinds of recycled paper; and surcharges on paper products that failed to meet certain recycled standards. Consumers in some localities are required to collect and separate wastepaper for recycling.

Demand for recycled paper and recycling regulations are significant for pulp producers because they must manufacture the recycled pulp to be used in making the paper that meets the specifications. In recent years, the pulp and paper industry responded by building large numbers of recycled paper processing plants. However, while paper recycling is an important part of waste minimization, it is only part of what is needed to reduce the generation of solid waste. It should also be noted that recycling itself generates a considerable waste stream. In recycled newsprint pulp mills, for example, only 85 percent of incoming newsprint is usable as fiber. The rest is unusable sludge that must be cleaned out of the process and then burned or placed in landfills. In some recycled grades, sludge can be up to 50 percent of the incoming waste paper.

Timber Harvesting. Another major environmental challenge facing pulp mills in the early 2000s was timber harvesting, which is used to create lumber products as well as pulpwood. Access to pulpwood is vital for all virgin wood pulp mills, but that access has been severely restricted in some areas—most notably the Pacific Northwest. Court decisions in the early 1990s reduced harvesting drastically in many national forests and other federal areas in the Northwest. Using the Endangered Species Act, environmental groups filed successful lawsuits restricting harvesting in order to protect the northern spotted owl, among other species. While the Clinton administration attempted to broker a compromise between timber interests and environmentalists in 1993, harvests throughout the remainder of the 1990s remained at about one-sixth the level of those in the 1980s. This situation has led some pulp mills in the Northwest to close and others to seek raw materials from different sources, such as recycled paper and foreign wood chips.

By late 2002 the Bush administration was proposing to make significant changes to rules established by the Clinton administration regarding the commercial use of more than 190 million acres of federal land in 44 states. These changes turned the tables in favor of the paper and forestry industry, benefiting loggers and thus pulp and paper mills. The New York Times reported that Bush's proposed changes would "give managers of the 155 national forests more discretion to approve logging and commercial activities with less evaluation of potential damage to the environment." Environmentalist groups criticized the proposal for catering to the logging industry, while a spokesperson for the American Forest & Paper Association praised the plan for allowing forest managers to better control wildfire outbreaks and downplayed negative environmental implications.

Despite the changes proposed by the Bush administration, forest product companies and pulp and paper companies around the country still face pressure from environmental groups and government bodies to change their harvesting practices. Many groups want to eliminate clearcutting, which the industry argues is the most efficient harvesting method and is environmentally sustainable, provided that the clear cut is replanted. In recent years, the U.S. forest products industries—including the pulp industry—planted more trees than they cut down. In 1999 alone, forest product companies and private landowners planted a combined 1.7 billion seedlings, according to the American Forest & Paper Association. The effect of tree planting on government, corporate, and private land is that the net amount of forested land in the United States is actually increasing. From the early 1980s to the late 1990s, forest growth exceeded the volume of trees cut or burned in forest fires. From the early 1970s to the late 1990s, the number of trees growing in the United States increased by 22 percent. Even in areas where the pulp and paper industry has access to virgin fiber, however, there is concern that the industry is effectively using all the pulpwood that is currently available and there may be shortages of virgin fiber. This potential shortage is one reason almost no new U.S. virgin pulp mills have been built recently. Pulp producers hope that by improving the growth rate of trees through genetic research, they will be able to increase the amount of wood grown on the same amount of land.

Industry Leaders

Weyerhaeuser Company. Based in Federal Way, Washington, Weyerhaeuser has several core businesses, including growing and harvesting timber and manufacturing and distributing forest products (including logs, wood chips, building products, pulp, paper, and packaging products). In 2002, Weyerhaeuser had total sales of $18.52 billion. It was among the largest producers of market pulp in the United States. In 2003, the company had 44,800 employees and owned 5.9 million acres of commercial forestland in the United States, with about half in the South and the other half in the Pacific Northwest. The company also had license arrangements on 32 million acres of Canadian forestland. In 1999 Weyerhaeuser increased its timber holdings and its market pulp production through the acquisition of MacMillan Bloedel, a large Canadian forest products company.

Georgia-Pacific Corporation. Atlanta-based Georgia-Pacific Group (G-P) has major interests in building products, pulp and paper, and paper chemicals. In 2002, G-P had total sales of $23.27 billion. In addition to producing many other products, G-P is a leading producer of market pulp, and it owns mills in Brunswick, Georgia, and New Augusta, Mississippi. G-P produces southern softwood, southern hardwood, and northern hardwood pulps for use in the manufacture of many paper grades. The company's total market production totaled approximately 600,000 tons per year in the early 2000s. G-P also is a major supplier of fluff pulp (used in disposable diapers) and other specialty pulps. G-P exports about 60 percent of its market pulp.

International Paper Company. Founded in 1898 by the merger of 18 northeastern pulp and paper companies, International Paper Company (IP) was the world's largest paper company in the early 2000s. In 2001, IP had total sales of $26.36 billion, $815 million of which was attributable to market pulp sales in the United States, Canada, and Europe. Worldwide, IP produced 2.3 million tons of market pulp in 2001 for the paper, packaging, and specialty products industries. From the United States, IP exports market pulp to more than 40 countries. Some of IP's market pulp grades are Supersoft fluff pulp, used for hygiene products, and dissolving pulp grades such as Estercell and Solvekraft, used for yarns, films, and plastics.

Parsons & Whittemore, Inc. While not among the largest pulp and paper companies in the United States, Parsons & Whittemore is a world leader in the production of both market pulp and bleached kraft pulp. In 2002 the privately held company, based in Rye Brook, New York, produced market pulp at locations in Canada and Alabama. That year the company recorded estimated sales of $1.10 billion.

Bowater. Bowater Inc., a pulp and paper company based in Greenville, South Carolina, became one of the largest U.S. producers of market pulp when it purchased Avenor, a Canadian firm, in 1998. Bowater's total sales in 2001 were $2.45 billion. In 2002 Bowater produced approximately 1.3 metric tons of market pulp from four pulp mills. A large percentage of its market pulp production was exported.

Workforce

Total employment in the paper and allied products industry was 612,650 in 2001, with pulp mills accounting for about 10,860 of that total. The level of employment in pulp mills declined during the 1990s despite substantial capacity increases. Employee wages averaged $21.41 per hour in 2001. Increases remained at or below the inflation rate in the 1990s, averaging about 2.2 percent. These increases were far below the average 7.5 percent annual increases recorded during the period from 1975 to 1985.

Like other manufacturing industries, the pulp and paper industry employs many unionized workers. However, the heaviest concentrations of union employees are in older mills that were organized years ago. Almost all new pulp and paper mills are nonunion operations, including mills constructed by companies with unionized mills in other locations. In general, the wages and benefits provided by nonunion mills are comparable to unionized mills.

There was relative labor peace in the pulp and paper industry during the 1980s, 1990s, and early 2000s. In exchange for salary increases, management was able to obtain work rule changes that allowed workers to perform more jobs in the mill and eliminate pay differentials for Sunday and holiday pay. There were no major work stoppages in the pulp and paper industry during the 1990s.

America and the World

Market pulp is a truly global commodity, with prices changing quickly in response to capacity changes, inventory levels, and purchase levels. While market pulp is produced in about 25 countries, historically more than two-thirds of world output has come from five northern countries: the United States, Canada, Sweden, Finland, and Norway.

Reasons to Import. While the United States has the capacity to supply all the pulp it needs for domestic paper production, it still imports pulp in order to exploit the different properties of foreign market pulp. The domestic market pulp industry is largely based on southern pine and hardwood, and many U.S. mills prefer the special properties of other grades, such as NBSK produced in Canada and eucalyptus pulp produced in countries such as Brazil. At the same time, a large number of foreign paper mills covet the southern pine and hardwood market pulp produced by U.S. market pulp mills.

Despite sluggish growth and new foreign competition, the United States was expected to remain a strong global market pulp competitor in the 2000s. The combination of relatively low cost fiber resources, energy and water supplies, and improvement in product technology and operating conditions will likely allow the U.S. pulp industry to remain the leader among world producers. However, competition for sales in the United States and overseas has intensified as foreign pulp and paper producers in developing regions such as Latin America, Asia, and Eastern Europe improve pulp quality and compete harder in major consuming markets in North America, Asia, and Europe. One major change in the global pulp market was the mid-1990s launch of pulp futures markets. While these markets were not an immediate success, there was enough trading volume to sustain at least one market, the Pulpex/Finnish Options Exchange. It was hoped that futures markets, widely used to trade futures in commodity products—such as copper, aluminum, sugar, and coffee—would bring more price stability to the pulp market and even out some of the extreme price fluctuations that have plagued the global market pulp industry.

Research and Technology

Pulping processes, both chemical and mechanical, are likely to see continued improvement in research and technology. Pulp mills will focus on higher energy recovery, which can then be used in other mill processes. Doing so will be essential to the future profitability of many mills facing competition from mills with lower cost structures. Energy is already a major cost for the pulp and paper industry, which is one of the largest industrial users of electricity. Other areas of improvement include the use of additives to speed up the chemical digesting process to increase fiber yields; new technical and environmental processes to reduce air and water pollution; and increased process control, monitoring, and automation. Similar measures to keep costs down and productivity high will be needed for the industry to remain competitive and expand its market share in world pulp consuming markets.

With increasing regulatory attention focused on pulp mill emissions, more research has been devoted to the "effluent free" mill, also called the "closed mill." In theory, the closed mill perfectly balances all the "inputs and outputs" to the pulping and papermaking process so that the mill reuses, recycles, or cleans all waste materials. This efficiency would mean that the mill produces no air or water pollution. There have been several totally closed pulp mills built, but these are groundwood pulp mills, not the kraft (chemical) pulp mills that are much more common.

Widely regarded as impossible just a decade ago, the closed kraft pulp mill appears to be feasible provided that current technology continues to develop and the cost of implementation decreases. For example, the Institute of Paper Science and Technology has been directed by its member companies to increase its research efforts on how heat and contaminants build up in closed pulping and papermaking systems; where the optimum "purge" points are in the process; and how to deal with the increased metal corrosion in closed systems. Many industry experts consider the truly closed kraft pulp mill to be a decade or two away. However, others argue that an effluent free mill, while feasible, may not be practical in that it will be too costly to implement. They argue that the industry should focus on the "minimum impact mill," which, while producing some effluent, does not harm the environment in any substantial way.

Another major research area affecting pulp mills is in high yield forestry. The industry needs to reduce the time it takes to produce a mature pulpwood tree from 28 years to about 7 or 8 years. There are two reasons for this. One is to compete with pulpwood from countries such as Brazil, which today can produce a mature pulpwood tree in seven years. The other is to reduce the amount of forestland used for harvesting trees. There is a great deal of pressure on the pulp industry to minimize its harvesting operations, and producing the same amount of pulp-wood from a smaller amount of land may mollify some of its critics. However, reaching this goal will require major investment in plant biology and other high-tech genetic research. This area in particular will require more extensive networking between the pulp and paper companies, research institutions, and government agencies.

One of the major research initiatives involving the pulp industry is Agenda 2020, a cooperative research project involving the U.S. Department of Energy (DOE), pulp and paper research institutions, and leading paper companies. Agenda 2020 was prepared by the chief technology officers of major paper companies under the auspices of the American Forest & Paper Association. The development of the document was spurred by the DOE's "Industries of the Future" program, which seeks to fund research in specific manufacturing industries—including pulp and paper—that will reduce energy intensiveness and improve environmental performance. The DOE prepared a draft document on the "Pulp Mill of the Future," which the team of chief technology officers reviewed and modified to create Agenda 2020. It outlined six specific areas for research and development, including sustainable forest management, environmental performance, energy performance, capital effectiveness, recycling, and sensors and control. Many of the Agenda 2020 research projects involve pulping. For example, a research project underway at Auburn University and the Institute of Paper Science and Technology focuses on the bleachability of pulp. Decreasing residual lignin and modifying the chemical structure of the residual lignin to make it easier to remove by bleaching can reduce bleach plant effluent loadings. To make this process work, operators will need simple predictors of how easy the pulp will be to bleach. Once these predictors are in place, mills will be able to develop shorter bleaching sequences, which use less energy and fewer chemicals. This research may also make the use of pulping additives such as anthraquinone (AQ) more effective. Potential savings from this one research project in energy usage alone is estimated at $200 million per year, based on a projected 5.8 percent decrease in total energy usage for bleached and unbleached kraft pulping.

Further Reading

American Forest & Paper Association. "Overvalued Dollar Threatens U.S. Paper Industry," 12 March 2002. Available from http://www.afandpa.com .

——. "Recycling Levels Remain High Despite Drop in Consumption, AF&PA Says," 12 March 2002. Available from http://www.afandpa.com .

Baumgartner, William. "Chemical Markets of the Future." Pulp & Paper, June 2002.

"Can the Courts Save Wilderness?" New York Times, 4 January 2003.

"Market Pulp: Still Struggling." PIMA's International Paper-maker, February 1999.

"Mishina, Mayu. "Paper—Market Outlook." American Printer, October 2002.

"Paper Markets Will Remain Weak as Demand Slows; Recovery Delayed." Pulp & Paper, January 1999.

"Papermaker's Top 50: Muddling Through." PIMA's North American Papermaker, June 1999.

Pear, Robert. "Bush Plan Gives More Discretion to Forest Managers on Logging." New York Times, 28 November 2002.

"Pulp Markets Are Almost Cleaned Out." EUWID Pulp and Paper, 20 October 1999.

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