Conference Report: Quebec’s pulp and paper industry needs a game plan A.S.A.P.!
By Pulp & Paper Canada
Each year for close to 25 years now, the Congrs Francophone du Papier (previously known as Confrence Technologique Estivale) in Quebec City has been a good barometer of the mood of the industry. The...
By Pulp & Paper Canada
Each year for close to 25 years now, the Congrs Francophone du Papier (previously known as Confrence Technologique Estivale) in Quebec City has been a good barometer of the mood of the industry. The 2002 edition, held May 29-31, will be remembered for the sense of emergency that came out of all roundtable discussions. If those panels are right (why shouldn’t they be?), Quebec’s pulp and paper industry is in bad shape and it goes far beyond the negative cycle it has been stuck in for close to 18 months now. Its softwood fibre sources are running dry, not enough students choose a career in pulp and paper and many companies are afraid that they will be out of qualified workers as soon as in five years. And our North American industry is 20% less productive than Europe’s, which would explain why the UPM-Kymmene and Stora Enso of this world are in no rush to buy any more mills here.
To top it all off, the traditional Friday Forum confirmed that the 2020 horizon offers bleak perspective of growth for our industry. The growth will be felt especially in Asia, but North American companies are not positioned to take advantage of the situation.
In the forum and in each roundtable, the consensus was that it is time for the industry’s leaders, the suppliers, researchers and governments to sit down at the same table and discuss Quebec’s pulp, paper and forest paper future.
During this year’s forum, entitled 2020: a Pulp and Paper Odyssey, moderator Simon Durivage, said it himself: “Your industry badly needs a game plan. When we discussed at last year’s forum, about the image of your industry, your leaders were told to take the place that’s yours and sell yourself through advertising. Where is your ad campaign? You have to take the bull by the horns and sell your image. Everything “high tech” at Bombardier is appealing to the general public; it makes the news. Why wouldn’t it be with pulp and paper?”
On the panel were Robert Eamer, now retired after many years as VP, Technology, at Domtar Inc., Martine Hamel, from the Pulp and Paper Products Council, Marcel Leblanc, from SGF-Rexfor, Quebec’s government investing harm, and Alain Lemaire, CEO of Cascades Inc. The idea of sitting down at the same table and run a consultation came from Mr. Lemaire. “We would probably wash our dirty laundry together at first, and then discuss, very openly, about what is at stake here. It would be a necessary first step.” Lemaire did not like the fact that the industry is constantly on the defensive, especially with the governments, instead of looking for solutions to its problems.
“Consolidation is fundamentally a good thing, a necessary step to go through for the industry, but people only see closings and job losses. We have to address the real issues, like fibre availability, energy costs which have risen considerably over the years (and we have been wasting it, if I compare our performance with that of Cascades Europe mills), our costs per tonne and global consumption such as chemical products. We once were “the kings” of the industry in Canada, but we have lost that position because we did not consult each other. We cannot repair what has been broken but our industry needs to be rejuvenated. We do not have to hide nor be ashamed of what we do.”
Marcel Leblanc, from SGF-Rexfor, agreed with Mr. Lemaire and focused on the positive side of things. “The forest industry has a growth rate of 5.2% per year since 1997: that is something worth mentioning. Our commercial balance would be negative if it wasn’t for the forest products industry: something else worth mentioning,” he observed. “Yes, we should have discussed and collaborated more amongst ourselves in the past but your industry is still very important to the economy.”
SGF-Rexfor manages all kinds of industrial assets. Forest products accounts for 26% of its portfolio. “At the beginning, we were aiming at participating to projects worth $500 million but up until now we have been implicated in projects worth over $2 billion. We, ourselves, invested $7.5 billion in the industry since 1997,” added Leblanc. “It’s a lot of money.”
Martine Hamel, VP in charge of commercial research at the Pulp and Paper Products Council in Montreal, unfortunately had nothing too positive to tell about 2020 in her crystal ball. According to her, the economic environment has changed over the past five years and the present situation is probably the most difficult for our industry since the 1930s. “We face many mature markets with very little growth and end-users have been consolidating their strength, namely newspaper publishers, commercial printers and converters. “Canada lost a lot of ground these past years in overseas markets,” Hamel added, particularly in paper and chemical pulp. “In newsprint, we would have to increase production by 2% per year only to compensate the sales price slump of the last months. Only consolidation have helped newsprint companies go through these difficult times. The five biggest newsprint companies now control 67% of the world market; in paperboard, five companies control 63% of the market.”
In every paper grade, the perspective remains the same: slow growth, especially for communication paper. Growth will be slightly more dynamic in paperboard, but North America and Europe will see very little of it, since it will be taking place elsewhere. Hamel says that growing markets will not be accessible to Canadian and Quebec companies.
Robert J. Eamer had a futuristic vision of the 2020 pulp and paper mill to offer. On the pulp side, Eamer sees an even smaller amount of companies managing mills, with one director for two or three mills. Fibre reception at the mill will be “just in time” with stocks for merely eight hours. Multi-stage bleaching will be accomplished in a single tower at 50% consistency, allowing mills to practically attain “zero reject”. On the paper side, Eamer says that mills will be more like a part of a chain supply. Paper machines will be faster and more flexible: no paper order, no production! Modern presses will allow to maintain 75% dryness on the sheet and value-added treatment on its surface will be done on-line. No more broke (that will be the day!) and easy switch on grades (within minutes) will take place. Is this just wishful thinking? Not according to Eamer who adds that in many cases the technology and conditions are already there and that “mechanisms have to be developed in order to implant tomorrow’s mill.”
Good news for clay and chemical products suppliers in general: panellists on the Fibre Supply roundtable, which took place at the morning of May 30th, concluded that the industry has to turn towards hardwood as a more stable fibre source and that mineral content in the paper will increase in the mid-term.
According to Pierre Cornellier, from Quebec’s Ministry of Natural Resources, there is no short-term fibre shortage, but in five or ten years, the industry has to turn towards a different fibre source than softwood. “At present time, availability of softwood in Quebec is about 5% whereas availability for hardwood reaches as high as 35-40%,” Cornellier added. Chips usage is clearly on the upside for makers of pulp and chipboard, while there is no growth with recycled fibres.
Cornellier’s recommendation is simple: diversify. “The time where big contracts of pine trees supply were available in Quebec is definitely over. At the moment, co-refining softwood and hardwood is indicated but hardwood is definitely the fibre of the future. The future of the industry is in value-added papers requiring less softwood chips and more mineral content.”
Then Andr Proulx, forest engineer and strategic planning director at Kruger Inc., discussed the dynamic of fibre supply at the company. The Kruger Trois-Rivires and Bromptonville mills are fed with chips (57%), roundwood (27%) and recycled fibres (16% now but that should increase to 30% once the Kruger Wayagamack mill modernization is completed.
“Our present and future needs dictate that we intensify planning in our public and private forests. I am certainly not ashamed of our fores
t regime, but we need to make it better. In terms of forest productivity, we are very low on the world scale,” Proulx said. The average yield of Quebec’s forest is 1.26 cubic meter/hectare, while the Montmorency forest, a specially managed forest north of Quebec City, has a yield of 2,25 cubic meter/hectare. In Sweden, that yield climbs to 2.5 cubic meter/hectare and in New Zealand, it is a whopping 25 cubic meter/hectare.
At Abitibi-Consolidated Clermont (about 150 km east of Quebec City, on the north shore of the St. Lawrence River), the problem is the stability of chips quality. Because of the difficult geographic situation of the mill, it deals with 17 different chips suppliers for its annual consumption of 800,000 cubic meters. The blend used is actually 66% black spruce, 25% fir, 5% pine and 4% aspen (only since March 2001 and it is fed separately for better control). The pulping system is made of 10 Sunds refiners for a daily pulping capacity of 1150 tonnes.
Roger Leroux, who overlooks fibre supply at the mill, says that chips quality has been gradually going down over the past few years. Having 17 suppliers certainly doesn’t help, but he explained that foresters have to go further north to get quality fibre, rising transportation costs to the roof. “Our containers from Saguenay and Charlevoix region are often mixed bags and there is a lot more fir than what we expect, compared to what is being shipped from regions further north. Quality variation is a constant battle and we have to adjust our processes so it does not impact paper quality.”
Meanwhile, equipment suppliers like Andritz are trying to play a key role in the adaptation of the process to the use of a different fibre supply. Charles Asselin, from Andritz, discussed the new RT pulping technology, which allows to pressurize the chips at the entrance of a high compression screw. The mechanical action causes the chip to soften, and fibre detaches itself more easily, facilitating resin removal. “At 20 psi during 20 seconds, pulp brightness is not impacted,” he added. Asselin also talked about co-refining with hardwood: the PR-C process from Andritz allows for efficient pre-conditioning of the chips under acid or alkaline conditions, at atmospheric pressures.
On Thursday afternoon, manpower was discussed, or the lack of it. Germain Gaudreault, from Quebec’s Forest Industry Association, is preoccupied by the question and he conducted a survey last spring with 53 mills and their Human Resources Directors. In all, 26 mills replied to the questionnaire (49%). The first part of the survey reveals that the average age in those mills (representing 10,460 workers) is 45.4 years. For 92% of them, retirement will come at age 58 (the other 8% will retire at age 60). In 2001, the majority of workers who retired were 58 (45.4%). The other group, 18.2%, were 60; 13.6% were 59; 13.6% were 57 and a few voluntary retirement were taken in the 55 and 56 year old groups (4, 5% respectively).
Most of the mills answered that 11 to 20% of their employees will be retiring in five years; in one mill, 40% of the personnel will have retired in five years. That means that 2,036 workers out of 10,460 will go. In 10 years, they will be 4,195.
In the second part of the survey, Gaudreault tried to see if there would be enough young papermakers to replace these aging workers. Apparently, registration has dropped by 50% in some programs: in pulp and paper, the various programs can accommodate 216 students: last year, 150 students graduated. And that doesn’t guarantee that they will be working at a mill.
How about job offerings from the industry? Globally, there was a drop between 1983 and 2000. They were relatively stable until 1988, then decreased until 1998. An increase of about 5% from 1998 to 2000 followed. According to 57% of the survey participants, the number of jobs offered by the industry will be stable over the next five years; 23% believe that it will decrease and 19.2% think it will increase. From these results, Gaudreault hypothesized that the number of job offerings in the industry will be stable and that about 4,700 jobs will have to be filled in the next five years. Because of the reduced number of graduated students and the competition coming from other industries, a shortage is possible, depending on the job functions … and that is a nice subject for another survey.
Luc Trempe, from Bowater Gatineau, QC, followed with a sociological profile presentation of the staff at the mill, which could have been entitled: Will there be enough workers to pay for the retirement of the baby boomers? Gatineau is very concerned about the situation since 81% of its employees will be retiring in the next 15 years. “Is it a problem or an opportunity?” Mr. Trempe asked.
He said that there are two generations working together at the mill. First, the baby boomer generation: aged 36 to 53, they tend to be a bit on the traditional side, family-oriented, preoccupied by their future. Their life is often defined by their work. They generally respect authority. And then there is Generation X: 15 to 35, they live for the present and like to experiment. More individualistic than baby boomers, they are critical of authority, they want action and results NOW and they are craving for challenges at work.
“We have a different approach and all the changes at the Gatineau mill do not affect us in the same way. One thing is for sure: we are in the same boat and we work differently than we did five or ten years ago. The challenge for our company is to adapt working organization to the new rules of doing business, while answering needs and hopes of the workers. At our mill, for instance, we like the competency approach: leave room to those who are qualified for a job and will perform the most.” Trempe adds that another challenge for the industry is to keep its employees as long as possible and to find ways to motivate them (coaching, specific training, simulation, etc.)
As a matter of fact, employee retention was the number one challenge on Claude Cossette’s list. The vice-president, Human Resources at Cascades Inc., Kingsey Falls, QC, said that the average age of an employee at Cascades (40) is slightly younger than the rest of the industry. Average experience: 11 years. “To keep our personnel, we designed a special plan, identified 10 key positions and evaluated competencies, in order to identify qualified candidates more easily and to be able to develop their potential once hired.”
Cossette repeated that salary is not the only incentive that will keep an employee happy with the company. “Career opportunities have to be tangible and accessible. Respect, communication, listening skills and transparency also help in keeping employees happy. A company must recognize and encourage personal initiatives, and also be mistake tolerant: as we all know, we often learn more by our mistakes than by our successes.”
The Scandinavian model
Friday morning, May 31st, the last roundtable of the conference asked a group of panelists: Should we repair-retrofit-modernize or should we go for all new equipments, which is the trend in Scandinavian countries? To answer the question, the organizers had invited a Finnish person, of course, but one who is the mill manager of UPM-Kymmene’s mill in Miramichi, New Brunswick. Jaakko Sarantola said that there was no preferable model: retrofit is indicated in some cases, while replacing with new equipment works best in other cases.
Sarantola’s expos confirmed one thing: that Scandinavians have a different approach, a different philosophy, and that they are way ahead of the game when it comes to assets quality and competitiveness. The average world capacity of a paper machine is 212,000 tonnes/year. In Europe, that figure is at 238,000 tonnes/year and in North America, it reaches 162,000 tonnes/year.
The comparison is crystal clear: in LWC paper for instance, at a selling price of $820 US per tonne, the European papermaker makes a profit of about $126/tonne, while the North American papermaker is still losing $5/tonne. “And the weakness of the euro currency gave a big boost to Eu
ropean papermakers,” Sarantola added. “At the present time, our Finnish mills can deliver paper in North America at a lower cost than we do!”
One big difference between the two continents, according to Sarantola, is the difference in cultures: the competitive culture of the Scandinavian pulp and paper industry is very strong. “There are no debates on mill closings in Scandinavia. If a mill is not competitive, it is closed. Jobs are lost too, but politicians do not dramatize the situation by getting involved in the industry’s business and trying to save those jobs at all costs. When politics is involved, those closings become too emotional, not rational.”
Sarantola added that the cost of operation of a paper machine is 20% higher in North America than in Europe. “It is a question of labour organization and productivity, I think. A paper machine which requires 75,000 manhours in Scandinavia actually uses 200,000 manhours in America. Union demands do not often help productivity here, and workers are too specialized in one sector whereas they should be multi-qualified and able to “pinch hit” in more than one sector of the mill.”
After this rather discouraging picture, Jacques Perrault, director, paper machines, at Bowater Forest Products of Canada, explained why the former Alliance Forest Products company decided to upgrade with new equipments in its Dolbeau and Donnacona (QC) mills. “At the time, the company wanted to get away from newsprint and chose SC grades as the desired value-added product. Alliance had a fixed budget of $400 million and wanted to work with online production technology.”
The Dolbeau mill already had a new TMP, which is why the mill was chosen first for the modernization. PM 1 was entirely rebuilt, keeping the dryers only. The PM was also installed in a brand new building, allowing the mill to be idled only for six weeks instead of ten. That machine was started in July 1997. In Donnacona, the new machine prompted a major overhaul of the TMP mill to produce a higher quality pulp. That $275 million project was completed in October 2000.
“The most important thing for the company, is to have a clear vision of the objectives to attain,” Perrault advised. “In the Alliance case, the objective was to become the lowest cost producer. Before making a choice, analyze the long-term potential of the existing equipment as objectively as you can. Expand your horizon and avoid smaller projects and retrofits that will postpone the “much needed” modernization. You pay now or you pay later, but you will pay! And yes: respect your working schedule but not at the expense of very important pre-operational verifications.”
In newsprint, Bruno Tremblay from Abitibi-Consolidated, said that there is no room for expansion, but only for machine speedup. “Speed and width are what matters most in newsprint right now. And from that angle, Europe has a great advantage.” He adds that newsprint market in Europe has been growing by about 2.8% a year, while in North America the market is shrinking by about 1.6% a year.
So should we retrofit or start from scratch? “Globally, machine retrofits and new equipment installations have gone down in the 1990s,” Daniel Liard, Metso Paper, answered. “When you are a global player, you need to ask a few questions before making a choice: do I just want to improve my product quality? Do I want to start a new brand of products? Do I want to be more productive, improve my profitability? Your answer will dictate what you should do. And in that sense, equipment suppliers are at the forefront of research and development to allow companies to go a bit further and experiment with alternative fibres or new technologies,” he concluded.
While all this talk was going on, attendees could also take a peak at what is shaping our industry in terms of R&D and mill trials. Three sessions of technical papers took place: one about papermaking focusing on the wet end of the process, another session with six papers relating to process optimization and five papers at the environment session.
The subjects were diverse, going from progress in microparticular retention system to modifications on PM 8 at Cascades St-Jrme to allow for dilution control. At the Process Optimization session, variability analysis on the paper machine, increasing steam system performance and the impact of multivariable control on two kilns were discussed.
At the Environmental session, once again the Pulp and Paper Research Centre of Quebec’s University in Trois-Rivires gave the attendees an interesting paper on the usage of folic acid to treat secondary effluent in mills while Ral Baribeau, from Domtar Inc., described the new dynamic simulator used to predict the quantity of COHA in the effluent of the bleaching plant. Dany Tremblay described the implementation of a CV sludge dehydration press at Cascades Fine Papers Group in Breakeyville, QC; Rene Riffon discussed the usage of nitrate to reduce odours at Fraser Papers, Thurso Pulp mill in Thurso, QC; and Marcel Ricard, from DDH Environment in Montreal, talked about the integration of emergency response planning in the environment policy of Abitibi-Consolidated, Belgo, in Shawinigan, QC.
The Raimbault Demontigny prize for the best technical presentation was awarded to Bernard Bgin, Technical Services superintendent at Bowater Forest Products of Canada Inc., in Gatineau, QC, and Reza Amiri, researcher at Paprican, Pointe-Claire, QC, for their work on paper linting at that mill and how they were able to minimize the problem.
“We basically wanted to better understand and control paper linting,” Bgin explained when he accepted the prize at the award ceremony during Friday’s luncheon. From that understanding, we were able to modify the recipe at the pulping stage and decrease the linting phenomenon.”
Bgin and Amiri identified that the main source for linting material was ray cells. They installed the Paprican developed instrument, an On-line Pulp Linting Propensity Tester (PLPI), at the Gatineau mill to evaluate linting potential of the thermomechanical pulp. They found that raw material quality and refining operation significantly affected pulp linting propensity. For instance, the quantity of pine in the pulp increases linting, and so does the age of the wood chips. Also, increasing specific energy allows for a better development of fibres and diminishes linting propensity. The team did not find any relation between linting and the screening of the pulp, nor with the use of an impregnator.