SCA Announces Joint Venture with American Fiber Services

SCA Tissue North America, a leading manufacturer of tissue products, has taken an equity position in American Fiber Services (AFS), an Atlanta-based recovered fiber supply chain specialist.

“This joint venture will enhance SCA’s access to recycled paper for use in its tissue manufacturing while expanding the ability of AFS to compete in the global market for recovered fiber,” says SCA Tissue President Don Lewis.

AFS currently provides pulp and paper sales and procurement services to clients in 27 states and in Canada and Mexico. AFS specializes in servicing companies in the document destruction industry, helping them increase their profits by improving management of the scrap paper side of their business. Among the services it offers, AFS works with shredding companies on the design and purchase of recycling equipment as well as on developing the best markets for recycled paper.

SCA Tissue is one of the largest consumers of fiber generated by the document destruction business. The joint venture will provide SCA Tissue with a deeper understanding of the recovered fiber industry and improved access to an important source of its raw materials.

SCA Tissue, AFS and AFS clients all will benefit from increased stability in the volatile recovered fiber market through SCA Tissue’s role as a large consumer of recovered fiber and with pricing arrangements that can mitigate fluctuations in supply and prices.

The joint venture also will open new growth opportunities for AFS.

“The partnership with SCA Tissue will enable AFS to quickly grow in areas that would have taken significant resources and time to achieve independently,” says Mark Zachocki, AFS founder and president. Under terms of the joint venture, Zachocki will continue as president of AFS and his management team will remain intact.

“SCA (parent company of SCA Tissue) has a growing business in Mexico, which will enable us to expand our operations there,” Zachocki continues. “They also operate worldwide, which provides AFS with exciting future prospects for expansion into other new geographic markets.”

SCA Tissue, with annual sales of $1 billion and 2,400 employees, produces tissues, napkins and hand towels using 100 percent recycled fibers. Annually, the company requires 800,000 tons of recycled fiber to meet the manufacturing needs of its four U.S. mills with more than half of that fiber coming from the document destruction industry. AFS currently manages more than 150,000 tons of recycled fiber annually.

The company’s need for recovered fiber is growing quickly. SCA recently started up a second paper machine at its Barton, Ala., plant as part of a $145 million expansion. SCA also has begun work on a greenfield plant near Mexico City, an investment of $240 million. The new plant in Mexico, slated to begin operation by the end of 2010, will include a paper machine with a capacity of 60,000 tons per year, three converting lines and a recycled fiber plant.

“Ensuring a stable and consistent source of fiber is essential for SCA’s business,” says David Knight, SCA Tissue director of Fiber Procurement. “By investing our resources in this joint venture with AFS, SCA Tissue will gain valuable insight into the dynamics in the recovered fiber market and be positioned to better take advantage of opportunities in that market.”

Combining the complementary resources and expertise of SCA Tissue with those of AFS will strengthen the ability of both companies to pursue opportunities neither could effectively approach alone, Knight said, citing access to the recovered fiber supplies bid out by large national generators of scrap paper.

“SCA Tissue will benefit from the market savvy and experience of AFS, and AFS will benefit from SCA’s financial and strategic strengths,” Knight says.

AFS will not act as a buying arm for SCA Tissue, which will continue to use its own mill procurement personnel and structure, Knight adds, and SCA Tissue’s mill buyers will not be involved in the resale of supplies purchased by AFS.

SCA Tissue manufactures Tork® tissue, towel, napkin and wiper products that are engineered for use in commercial settings such as restaurants, office buildings, schools and healthcare facilities. Headquartered in Philadelphia, SCA Tissue has U.S. manufacturing and office facilities in Wisconsin, Arizona, Illinois, Alabama and upstate New York.

A division of SCA Americas, SCA Tissue is owned by SCA, a $17 billion global manufacturer of personal hygiene products, publication paper and forestry products with headquarters in Stockholm, Sweden. SCA employs 50,000 people worldwide and conducts business in 90 countries.