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What will be the future of paper in a world under conquest by paperless media?
Inquiring mills around the world want to know. While the news certainly won’t send pulp and paper producers into fits of celebration, it is by no means a death sentence to the industry. Rather, these trying times are fertile ground for active reflection and decision-making.
It would be inaccurate, or at least misleading, to say that paper production overall has plummeted over the past decade. According to a report from Hawkins Wright, a market intelligence service provider,paper production grew adequately in emerging markets and developing nations over the previous decade. But even these small successes come with caveats. For one, growth has slowed in these regions in the last few years.
Waning economic activity in mature markets, however, indicates a much bigger problem. Generally speaking, if the maturity of a region triggers a drop-off in production volumes – say, a developing country develops beyond the need for an abundance of paper products – then the industry as a whole has seen where its limit lies. Research from RISI corroborated this phenomenon: Global printing and writing paper forecasts from 2007, when demand peaked, projected figures around 40 million metric tons more than what the numbers currently are. And while predictions from the heyday of 2007 climb higher into 2017 and beyond, the reality is demand has slipped and plateaued.
What does this tell us about paper and pulp? Barring innovation, across-the-board production will continue its downward trajectory regardless of region and flatten out.
While immediate fixed cost slashing may relieve economic pressure for paper and pulp mills, it isn’t a panacea. These facilities will need to address their variable costs as well. Takt time, maintenance spend, uptime disruption, resource utilization, waste – nothing can be taken for granted. This is an opportunity to reinvent this industry from the ground up. Managing these factors allows mills to confidently meet the expectations of the modern consumer and generate profit instead of playing catch-up in perpetuity.
To answer questions you have about the status of paper and pulp in 2017, as well as the best methods for reining in the industry’s most formidable costs, we’ve written an eBook on the subject: Crumpled But Not Counted Out. Check it out here.
How are American metallurgists doing these days? At a cursory glance, presumably well. The U.S. Geological Survey estimated the iron and steel industry in America, for example, produced 26 million metric tons of pig iron and 81 million metric tons of raw steel in 2015, cumulatively valued at about $103 billion.
Quite a substantial feat and an economic boon to sectors like construction and automotive, unless one looks at the recent past. Of the top 11 independent iron- and steel-producing countries in the world between 2014 and 2015, the U.S. experienced the biggest drops in both iron and steel production among them all. In steel, the U.S. fell from third place to fourth. In iron, the U.S. fell from fifth place to seventh.
What’s behind these plummeting production figures? It could have something to do with the recent U.S. Department of Commerce investigation focused on an alleged tariff-dodging scheme and the dumping of low-cost corrosion-resistant steel imports from China. But because that story is still in development, let’s turn instead to the operational and regulatory challenges in metal smelting that undoubtedly raise financial issues for U.S. metal makers.
Carbon emissions and regulatory restrictions
Research from the Center for Climate and Energy Solution shows the industrial sector generates about 20 percent of all greenhouse gas emissions in the U.S. CCES also pointed out industries like iron production and cement manufacturing as major contributors, as their high-heat coal and coke-powered furnaces directly release carbon dioxide.
As metal industries enter the crucible of federal regulations, will something new be forged? Or will businesses simply get burned?
Numbers like these are what drive government agencies to step up regulatory costs for businesses, with industries like metal and cement taking the brunt. A 2014 study from the National Association of Manufacturers estimates environmental regulatory costs to U.S. businesses reside in the ballpark of $330 billion annually.
Furthermore, hazardous air pollutants caused by many forms of metal production have caught the ire of U.S. regulators. The Environmental Protection Agency’s Clean Air Act, for instance, forces metal makers to invest in maximum achievable control technology (MACT). As such, smelters not only pay more than ever for their processes, they also invest more in technological advancement because of government oversight.
Can new smelting technology help businesses win out in the end?
Absolutely, according to the Institute for Industrial Productivity. HIsmelt, Hisarna, and Romelt smelting processes and technology like cyclone converter furnaces achieve remarkable reductions to carbon emissions, some by removing coke use altogether. With a substantial amount of operating expenses in metal manufacturing going to regulators, smart investment in long-term environmental solutions could easily prove lucrative.
Recently, MIT researchers accidentally stumbled upon a promising new smelting method that could potentially revolutionize industries like copper and nickel. While attempting to develop a new “all-liquid high temperature storage” battery, scientists instead discovered a way to produce pure metals without producing sulfur dioxide. Moreover, if it can be scaled to industrial levels, this method will also lower energy costs for metal manufacturers, a significant burden in industries that have to keep furnaces at a few thousand degrees Fahrenheit at all times.
Metal as an industry isn’t going anywhere, but disruption is imminent. In an age of innovation and environmental cognizance, old-world processes will no longer suffice.