Paper Survey Shows 2001 and 2002
Washington, DC - U.S. paper and paperboard capacity fell in 2001 and 2002,
the first time that total industry capacity declined in consecutive years,
according to the 43rd Annual Capacity Survey of the American Forest &
Paper Association (AF&PA).
The survey showed declines of paper and paperboard capacity of 1.9% in
2001 and 1.3% in 2002. "The contraction reflects the industry's efforts
to adjust to stiff foreign competition and a period of cyclically weak
paper and paperboard demand," the survey said.
Total 2002 paper and paperboard capacity of 100.5 million tons has been
revised downward by 2.5% from the projection of the prior survey. Two
factors accounted for the revision: (1) removal of capacity that closed
in 2001, but had not yet met the "one year rule," which was
still in effect at the time of the survey; and (2), removal of capacity
that permanently closed in 2002 and was immediately removed from the survey
under its new ground rules.
Under prior ground rules, unless shuttered mills were immediately dismantled,
they had to remain closed for one year before their capacity was removed
from the survey. Current rules call for AF&PA to remove immediately
from capacity those shut machines where the owner's intention to close
them permanently has been clearly stated in a public announcement.
As a result, two years of capacity closures have been removed from this
survey. A total of 40 mills and 104 machines were permanently closed in
the 2001-2002 period.
Looking ahead, the survey indicates that paper and paperboard capacity
will remain essentially unchanged in the next three years, declining by
0.5% in 2003, and then increasing 0.8% in 2004 and 0.4% in 2005.
The flatline projection for paper and paperboard capacity can be partially
countered by Congress' passage of the President's economic growth plan,
with its elimination of double taxation on dividends, said W. Henson Moore,
AF&PA President and CEO. "It will make our industry more competitive
globally and fuel a lasting economic recovery with increases in business,
jobs and modern plants and equipment" he said.
Newsprint capacity fell from almost 7.5 million tons in 2000 to just over
7.0 million tons in 2002. The decline reflects a change in capacity from
newsprint to ground wood grades and the shutdown of several machines,
according to the survey. Newsprint capacity is projected to fall another
4% to 6.7 million tons by 2004, mainly due to this year's major newsprint-to-groundwood
Printing-writing paper capacity, now at 27.3 million tons, fell about
2.1 million tons in 2001 and 2002, according to the survey. This is the
lowest level for this grade since 1994. Capacity is scheduled to remain
unchanged in 2003 before climbing 1.6% next year and 0.5% in 2005.
Capacity for uncoated groundwood rose 10.3% in 2002 to 2.0 million tons,
and is projected to grow another 5.4% in 2003 and 3.4% in 2004 and remain
unchanged in 2005. Coated groundwood capacity grew 2% in 2002 to 5.04
Coated freshet capacity declined last year to about 5.0 million tons,
or about 7%. Another 2.4% drop is expected this year, at which time capacity
will have fallen by about 12.6% below its peak in 2000. The unprecedented
plunge can be attributed to more than half a dozen machine and mill closures,
according to the survey.
Capacity for uncoated freshet fell to 13.6 million tons in 2002, the lowest
level in almost 10 years. Capacity is expected to increase to 14.0 million
tons by 2004, with no appreciable change in 2005. The increase stems from
the startup of a new machine that is replacing several smaller machines.
Tissue paper capacity continues to grow, but at a slower rate than in
previous years. One new tissue machine is scheduled to come on line in
2003, and four new machines have been announced for 2004. As a result,
capacity is slated to grow at an average annual rate of 1.9% in the 2003-2005
period, compared with a 2.2% average annual growth rate in the 1992 to
The survey showed that kraft paper capacity will continue is pattern of
decline due to plastics penetration. Unbleached kraft paper capacity is
projected to fall at an average annual rate of 0.9% in the 2003-2005 period.
Bleached kraft paper capacity is expected to decline by 5.4% in 2003 and
remain stable the next two years.