LONGVIEW, Wash. (From news reports) -- In an effort it says will address environmental challenges and safeguard jobs, Norpac is converting one of its Longview paper machines to produce packaging products from 100% recycled waste paper.
The company announced Monday it is expanding its business to include packaging papers, such as boxes, displays and bags. Packing products will now comprise almost one-third of Norpac's production, which has historically included newsprint, book paper and copy paper.
"Norpac is applying our long history of innovation to create this broad range of quality recycled packaging papers," Norpac CEO Craig Annenberg said in a prepared statement Monday. "By doing so, we can address this regional environmental crisis while meeting global customers' evolving needs for lighter-weight, higher recycled-content packaging papers with world-class printing."
In January 2018 China effectively prohibited the import of waste paper from the U.S., and that paper ended up in local landfills instead, the release says. Traditionally waste paper was exported to be recycled.
"The focus of this expansion is to not only enter the packaging business, but, through recovered fiber operations, consume the volume of waste paper across the region," said Norpac spokesman David Richey.
Norpac plans to recover about 440,000 tons of post-consumer waste paper annually, recycling it into linerboard, corrugated medium, bag grades and specialty Kraft papers. Company officials estimate that all of the available waste and mixed paper grades in Washington, Oregon and Idaho will be used in the process, "effectively dealing with the environmental challenge and diverting this waste material from landfills," the release says.
The waste paper comes from homes, businesses, schools and governments, among other product users, Richey said. Norpac will enter in contracts with waste paper collection companies to gather the material it needs to make its recycled packaging products, he said.
The conversion will safeguard about 400 direct jobs at the Longview mill, the release says. Those are existing jobs that "depend on Norpac's overall ability to compete in the marketplace," Richey said.
Poor market conditions driven by competition from Canadian producers in the fall of 2017 led Norpac to stop newsprint production on Paper Machine 1, the unit now getting converted to create the new packaging products. Almost 50 employees were laid off as a result.
Norpac restarted newsprint production on Paper Machine 1 in May 2018 and restaffed the machine with 50 employees. However, the overall outlook for the newsprint market remains bleak as newspapers across the nation downsize and convert to digital publication.
According to international market analysis provider RISI Fastmarkets, demand for newsprint will decline at least 5% per year through 2024.
"North American and European printing and writing paper producers are entering a new era that will be marked by a secular decline in some of their primary end-uses, such as printed magazines, catalogs, newspapers and direct mail advertising," Fastmarkets said. Elimination of paper-making capacity "will be a trend for the next 15 years."
Management consultant firm McKinsey & Company said the graphic paper industry, which includes newsprint, shrunk by 7.6% between 2010 and 2018. Conversely, the paper packaging market grew by about 4.4%.
The paper packaging market was valued at $69.91 billion in 2019 and is anticipated to reach $85.24 billion by 2024, according to Mordor Intelligence, another market research company.
McKinsey predicts that the "severe decline in demand" for newsprint and other graphic papers will lead companies to convert their machines to make packaging and specialty papers, much like Norpac is doing.
Cowlitz Economic Development Council President Ted Sprague commended Norpac for its "innovative" solution for sustaining the Longview mill and creating stability for employees.
"This is going to be a long-term product for the company," Sprague said, adding that it's rare for a paper company to produce 100% recycled packaging products.
"I can't think of any other facilities that are doing it, so this is a big leap for the Northwest. ... Sometimes Cowlitz County gets knocked for having an old world economy, but when you look at it we truly don't," Sprague said. "We are very innovative with the products we manufacture, and this (Norpac conversion) is a good example of that."
Longview is also home to a paper mill owned by Atlanta-based Westrock Co., which also produces packaging products. Westrock reported growing sales in its third quarter of 2019, making about $553 million more than in the same quarter last year, according to a news release.
Sprague said the packaging market is large enough to support both companies without any harmful competition between the two local mills. The Longview plant is Westrock's only mill on the West Coast.
U.S. Representative Jaime Herrera Beutler also offered her support of Norpac's expansion in a prepared statement Monday.
"Increasing local capacity to process recyclable materials has the potential to benefit Southwest Washington," Herrera Beutler said. "And Norpac's expansion into recycled paper operations demonstrate an innovative path forward."
