PSI Fall Conference: Challenging Times

The worldwide economic unrest of late 2008 has brought extreme challenges to the recovered paper industry, but it has not entirely eliminated opportunity.

“We’re facing a challenging environment,” said Doug Schwartz, managing director of recycling for International Paper, addressing attendees of the 47^th Annual Fall Conference of the Paper Stock Industries (PSI) Chapter of ISRI, held recently in Orlando.

Sweeping worldwide economic trends are driving the downturn in the paper market, Schwartz said, citing the decrease in industrial production of non-durable goods and ensuing decline in demand for global packaging as key factors.

The industry is facing declines in production capacity and demand in numerous sectors, including old newspaper (ONP), containerboard and pulp, Schwartz said.

One bright spot in the market has been tissue, demand for which is forecast to increase by 3.2 percent per year through 2020, according to Schwartz.

Overall, across the industry, the credit crisis and lagging demand for material has driven prices down for all grades. “This was an aggressive correction,” Schwartz said. U.S. mills are over supplied, as are Chinese mills, he added. This has been particularly damaging to the market, since for the last several years, China has been “the engine driving demand,” Schwartz said.

However, even with bad economic news dominating the market, recyclers and other paper industry professionals have reasons to remain optimistic about the market, according to Erik Deadwyler, executive vice president of Rock-Tenn’s recycled fibers division.

 First of all, recycling is a sustainable industry, which, in spite of the current market downturn, indicates long-term viability. Sustainability has become a more mainstream business idea in recent years, with major companies like Wal-Mart and Coca-Cola looking to recycling as a means to operate more efficiently, in addition to earning an environmentally-conscious reputation.

In addition, although the price of oil has dropped along with most all commodities, energy remains a pressing issue. Deadwyler points out that using recycled products in place of virgin material creates substantial savings in energy, a factor that will help boost demand for recycled material.

The recycling business also creates jobs, which will be key to overall economic recovery, Deadwyler says, adding that there are 56,000 recycling businesses and organizations that employ more than a million workers.

The PSI Fall Conference was held Nov. 11-14 at the JW Marriott Grande Lakes in Orlando. More information is available online at www.paperstockindustries.org.