Rejuvenation: Challenges and Opportunities
By Pulp & Paper Canada
If industry leaders choose to rethink the fundamentals of their businesses -- from raw materials to manufacturing processes to markets -- the crisis could be turned from a challenge into an opportunit...
By Pulp & Paper Canada
If industry leaders choose to rethink the fundamentals of their businesses — from raw materials to manufacturing processes to markets — the crisis could be turned from a challenge into an opportunity. Instead of continuing to be marginalized, the industry could undergo a major rejuvenation. Once again, it could be a major player in the economy, attract serious investment capital, and experience growth, stability, and profit.
But rejuvenation won’t be easy and won’t be overnight. The current crisis in the pulp and paper industry has been building for decades. And, as is common among highly complex businesses, there are multiple reasons for the challenges it now faces.
Image and Infrastructure
In the eyes of many financial investors and others, pulp and paper companies are commodity producers in old industries without growth potential. While part of this is due to the way our society now views much of the manufacturing sector, pulp and paper is particularly affected. Recently, a senior executive of a major bank noted that pulp and paper industries have only 1.7% of the valuation of the Toronto Stock Exchange.
Pulp and paper companies are caught up in corporate reconfigurations, many of which provide few obvious, real, or permanent benefits. They are constantly fighting for profits, and their primary means of coping with predictable, periodic price squeezes is machinery shutdowns — a temporary but costly approach.
Between 1999 and 2002, there were closures at 121 mills in North America and these claimed 13.5 million tons of capacity and more than 19,000 jobs.
“The industries, for the last 30 years or so, have reacted to every crisis in the same way — cut spending,” says David Paterson, former manager of the Canadian Pulp and Paper Association’s Technical Section (now PAPTAC.) “So technical personnel have been fired and the scientific infrastructure severely damaged.”
Other long-standing situations have also negatively affected the infrastructure. Ongoing process research activities are largely conducted by organizations such as Paprican (the Pulp and Paper Research Institute of Canada) and the Swedish Forest Technical Institute, as well as major industry suppliers. These activities have generally been limited to fine-tuning current processes. There has been little attention paid to rethinking fundamental concepts, which would convey the impression of vitality and expansion.
The image of turbulent industries past their prime is often exacerbated by the media. Both the trade and consumer press focus on the mergers, acquisitions, reorganizations, and financial difficulties taking place.
“The industries have not succeeded in getting a good story out to the ordinary person, particularly in our cities,” says Paterson. “Company reputations are quite reasonable in most mill towns, but in London or Toronto or Montreal, the only contact most people have is via the newspaper on the doorstep each morning. Newspapers, TV, and magazines manage to ignore the industries, except when some scandal breaks.”
While the trade press publish numerous reports on research activities, it reflects, rather than challenges, the status quo. As a result, the public and investment community see a fully mature industry doing the “same old, same old.” In a world where potential is everything, pulp and paper companies will find it increasingly difficult to attract much-needed investment capital.
No matter how elegant the engineering of pulp and papermaking processes has become, the overall philosophy remains essentially the same. Large, capital-intensive machines use huge quantities of energy and water to break down forest-sourced, bark-sheathed, tightly bundled cellulose fibres. Then other large, capital-intensive machines and great amounts of energy remove that water while reassembling the fibres into paper.
Energy is one area that companies have taken numerous measures to control. They have cut their purchased energy requirements by strategically reducing usage and by generating their own energy from by-products created during debarking and pulp processing operations. Despite their efforts, many companies remain large users of outside sources of electricity. Privatization and deregulation of the electrical power industry is becoming pervasive throughout North America, and its impact is far from certain. California’s energy crisis in 2001 may provide a glimpse into the future.
“Prices have risen dramatically on the West Coast of the U.S. from $30-40 per megawatt hour to hundreds of dollars, even thousands in parts of California,” says Ken Peterson of the Powerex Corp.
If kilowatt-hour costs rise substantially, pulp and paper companies will face very difficult times. Even those that produce large amounts of their energy requirements by burning black liquor, waste wood, and bark will in time face carbon dioxide and other emission limitations. Energy consumption will likely be the industries’ Achilles’ heel.
While recycling the waste of some paper products has reduced the requirement for virgin fibre, no one suggests that recycling is the complete solution. We are still going into the forests and cutting down trees faster than they can replace themselves. Reforestation efforts have not reversed this negative in nature’s account.
Increasingly, logging is taking place in politically sensitive and environmentally endangered locations. Around the world — but no more so than in British Columbia — logging old-growth forests has raised the ire of tourism groups, environmental associations, and organizations agitating on behalf of endangered species. Boycotts of paper products produced from old-growth rainforests and direct obstruction of logging efforts erupt periodically, despite numerous attempts by the pulp and paper industries to improve public perception or discredit opponents.
In addition, companies are devoting huge amounts of resources to cut trees in increasingly distant forests, haul the logs to pulp mills, debark the logs, chip the wood, tear the pieces apart and/or cook them, and condition the fibre before sending the resulting pulp to the paper machine.
The expense associated with logging in remote locations and then turning trees into paper, and the ongoing controversy over logging old-growth forests, make it necessary for different and new raw materials to be found, created and utilized.
Equipment and machinery
Over the last two centuries the industry has been built up by extending, elaborating, and refining the same basic processes, equipment, and machines.
“The essence of mechanical pulping is the conversion of stiff wood fibres to flexible, bondable papermaking fibres,” says Stuart Carson of PAPRO New Zealand. “Mechanical pulping technology is mature and not progressing.”
George Weyerhaeuser Jr., Weyerhaeuser’s VP of technology, makes a similar observation about recovery boilers in kraft pulp mills. “We are at the top of the S-shaped development curve for recovery technology,” he says. “Very large investments are required for relatively small gains in efficiency. As the industry is very capital intensive and risk averse, the recovery boiler is a giant barrier to innovation.”
The Fourdrinier paper machine, now nearly 200 years old, is another case-in-point. Machine performance has improved markedly, due in part to mechanical, hydraulic, electrical, and operational changes. However, many of the performance gains are actually the result of adding electronic instruments to control the paper machine and its stock. The first significant improvements in these efficiencies involved automation. The later ones involved adaptive automation.
These developments have permitted several hundred per cent increases in machine speed, while also meeting the ever escalating quality and consistency demands made by customers. But they have already made their contributions and are reaching the top of the S-curve.
The ratio of the size of machinery involved in papermaking to the product it generates is almost ludicrous. Much of the equip
ment is for handling water and then getting rid of it. Huge masses of machinery, consuming large amounts of energy, must be driven at high speeds to form and squeeze the sheet. Then other large masses of machinery must be driven and heated to evaporate the water.
The need for pumping, conveying, distributing, separating, and evaporating great amounts of water is one of the major barriers to significant improvement in these processes. While it is often stated that water is cheap, the equipment and energy required to move, use, and then remove it, are not.
The capital and operating costs of these dinosaurs is enormous. It is obvious that further expensive and time-consuming improvements will be in the area of steadily diminishing returns. Unless this and the other fundamentals are addressed, the industry will be less and less able to meet the current challenges, and even less able to meet new challenges as they arise.
Opportunities are now available that did not exist when the processes, equipment, and machines were originally designed. Over the past decades, major discoveries and developments have occurred in genetics, chemistry, metallurgy, materials, and machinery that offer considerable potential for improving the overall health of the industries. While each development is important on its own, if they could be utilized interactively and cumulatively, there would be a new and exciting future for the pulp and paper industries.
New raw materials
Annual-growth grasses and plants offer great potential as sources of fibre. Researchers devoted substantial dollars to exploring this possibility. While straw, flax, hemp, and other grasses grown in North America have shortcomings that precluded them from supplanting trees, there are promising steps towards their use.
Flax pulp has been made on Canada’s west coast for several years. China’s Jincheng Paper Co. is investing $241 million US in a 200,000-metric-ton-per-year reed pulp mill in Quebec. Samoa Pacific Cellulose LLC of California has produced the first commercial trial run of bleached pulp made from Arundo Donax, a reed that grows wild in Southern California.
One suggestion is to use plants and grasses on a much broader basis. The success of genetics in designing food plants that are resistant to pests and disease, and that produce high-volume, high-quality crops, indicates that geneticists can modify plants and grasses to eliminate many of their shortcomings.
Plants and grasses should be genetically altered to reduce pulping costs, undesirable waste products, and maturation times; to increase desirable fibre properties and yield; and to convert annual growth cycles to perennial. While it is unlikely that all of these characteristics would occur in a single plant or grass, geneticists could tailor some of them to specific processes and products. In addition, synthetics such as Nylon, Orlon, and Dacron should be blended with genetically altered plant and grass fibres to produce new hybrid products, just as they have with wood fibres.
As an interim step, genetic modification could be used to increase the yield and decrease the maturation times of such trees such as aspen. From a long-term perspective, however, modified plants and grasses offer the most advantages and opportunities, such as offering lucrative crop alternatives to hard-pressed farmers. Such a shift would cast the industry in an environmentally positive light and broaden community support.
New machinery and processes
New raw materials based on plants and grasses would provide an enormous opportunity to develop radically new processes. There would be a rare time-window to design manufacturing equipment and machines from the ground up and to incorporate modern technological advances. For instance, the development of high-power, solid-state electronics has made the generation of intense ultrasonic and microwave fields practical and economic. These technologies could be of importance in redesigning pulping and papermaking processes.
Cecil Shewchuk, a pioneer in developing simulation programs for designing pulping and papermaking processes, suggests that new types of fibre could make bio-processing feasible. Bioreactors would then be available to replace today’s digesters and lessen the effluent problems that plague our industry.
Shewchuk also suggests that developing processes that use non-water carriers for pulp and paper might be practical if the machines were designed around the alternative solvents, instead of — as in the past with methanol — trying to utilize them in conventional equipment. In addition, air, which is currently used in making non-woven paper, might be substituted for water as a carrier for a wider range of products. Substantially reducing or eliminating the use of water would significantly decrease costly energy requirements.
The pulp generated by new raw materials and processes could facilitate development of radically different fibre distribution, binding methods, and sheet formation.
Innovative raw materials and new processes could lead to a wide spectrum of new products and to the revision of existing ones. During this phase, it would be prudent to consider developing specialized mills to manufacture groups of various products.
Less extensive and expensive machinery might be designed to replace the Fourdrinier and conventional dryers. For containers, direct moulding might have potential over conventional board making and assembly. Mini-mills could be the economic solution for producing and recycling certain groups of products.
Path to rejuvenation
The current attempt to solve the industry’s problems by financial and corporate restructuring is a short-term solution at best and an ineffective one at worst. Resolving the problems in the long term requires fundamental changes in technology. Rejuvenation will offer unprecedented opportunities, not only for pulp and papermakers but their suppliers, associated consultants, research institutions, and universities.
The motivation, capabilities, and resources necessary to effect these changes already exist. It just requires an initiating spark — the vision and the will of key industry leaders — to make the necessary changes happen.
A first step would be for industry leaders to meet and make a commitment to transform pulp and paper into a more stable and consistently profitable industry through fundamental changes in technology. They would then appoint a task force to generate a long-term, master plan to achieve this objective. The task force would draw on the different disciplines and areas of expertise that would be needed to chart a completely new course. It would look at the industry as a whole, set strategic goals, and identify immediate to intermediate targets.
A formal corporation would then be set up to execute the task force’s recommendations. The corporation would seek government, industry, and private investor funds to finance contract research and development activities. Once funding is in place, it would invite proposals for genetic research in plants and grasses. While there are very competent institutions and companies with the required expertise, agricultural and pulping process experts would have to be closely involved to ensure the results are industrially useful and economic.
As the new raw materials are developed, the task force would undertake concurrent studies to examine what new processes and machines are required. Designers would be wise to optimize the overall proposed systems rather than the individual components. Once the background work is complete, the task force would ask major industry suppliers to select the most appropriate systems and machinery for them to design, manufacture, and ultimately market.
To generate enthusiasm, encourage new developments, and achieve specific targets, competitions with prizes for the best solutions would take place. This has been done before with outstanding success. The now ubiquitous kraft process occurred as the result of a competition. Lindberg’s flight across the Atlantic w
as motivated similarly, and the current “Project X” space vehicle competition is another prize-based way to encourage innovation.
At the culmination of these activities, those who have had the vision and courage to initiate these changes will need to personally step up to the plate and order the new machines and processes from their suppliers. They will have be the first to replace their old machines or to build new plants with the new equipment in order to convince others to follow.
There is no question that implementation of such widespread changes will not occur overnight. Because of the time required to initiate, organize, plan, research, develop, engineer, and manufacture machinery — as well as the huge installed capacity and manufacturing/customer infrastructures that now exist — it would likely take years.
For rejuvenation to occur then, planning and the initial steps must begin now.
If industry leaders rise to meet the crisis they are now facing in a creative and proactive way, they will reap the rewards of economic self-renewal. And this renewal, over time, could lead the industry to become the founding members of a really “new economy.” It is a vision worth pursuing.
Eric W. Leaver is an inventor and entrepreneur, a professional engineer, recipient of the CPPA’s Certificate of Appreciation, Fellow of the Canadian Academy of Engineers and Officer of the Order of Canada. Susan Scott is a freelance writer who has written over 100 articles, edited several books and co-authored An Idea is Not Enough with Eric Leaver.#text2#