Tissue World Magazine

After reading our Euromonitor International report Western USA: From recession to recovery about ‘bellwether activities’ such as eating out contributing toward an upturn in the US economy, I must say I feel quite proud that I have done my level best to keep that particular curve on the upward trend during my recent visit to the east and west coasts. I’m looking forward to eating out for America again at the earliest opportunity.

What impressed me most during Tissue World Americas’ clearly successful Miami tradeshow and in researching our western USA regional report was a palpable sense of a returning optimism in the world’s largest single tissue market and biggest producer of T&T. There is a sense that the country is slowly recovering from the recession and our show stats underpin that – 36% more visitors from 73 countries, floor space increased by 17% to accommodate everyone, and the number of exhibiting companies up 36% to 129. There was also a noticeable increase in North America-based companies exhibiting for the first time. These figures are significantly up on those from Tissue World Americas 2010, a recessionary year where the total attendence, excluding visitor personnel, was over 700 people.

America, it could be said, is feeling a little more bullish. Recent reports have said that consumer spending is 70% of the US economy. But while the economy has been growing – there has certainly been growth despite the recession – it is the most uneven recovery on record.

And for its tissue industry? The sector has certainly had its fair share of capacity cuts: not least the loss of 208,000 tonnes with the closure of Kimberly-Clark’s Everett WA site. However, in the coming two years, a significant amount of capacity is expected to come on stream, including Clearwater Paper’s new Shelby operation and Georgia Pacific’s f-TAD production at its Crossett and its Port Hudson sites.

The west coast presented an interested challenge, and as it turned out, another bellwether activity. Of the US total annual production exceeding 7.5 metric tonnes of T&T, the west produces roughly half the amount the south east produces at 1.3m tonnes. It has the least number of operating machines, but average machine production is greater and tends to be robust with more than half of machines producing 40,000mt annually and with over 75% in the five metre and above class.

Regional costs are comparable, and company ownership is almost entirely local with only 8% of mills owned by companies not headquartered in the US.

Even as the recession hit bottom the industry was robust with retail tissue market volumes standing up well, and 2011 saw a return to growth. The shift to private label – up two percentage points since 2007 to a 17% value share of boxed facial tissues (35% on average in Europe) – went into reverse with private label’s share of total value sales in the US down to 21% in 2011 as some consumers moved back to brands.

There are significant challenges. As our Pöyry Management Consulting article explains, the presence of imports and large independent converters has created a distinctive competitive landscape that has impacted integrated domestic producers.

‘While there is a general trend towardswider environmental awareness, it is the west which leads with sales of recycled toilet paper 25% higher than the national average.’

But the west remains a bellwether region in another sense. California, its largest state, registered stronger economic growth than the national average over the last decade. The area has higher incomes, an increasing population, and is the region where green consumer activity is most evident. The US performs poorly in recycling – just 1.6% of toilet paper value sales in 2011 – and while there is a general trend towards wider environmental awareness, it is the west which leads domestically – sales of recycled toilet paper are 25% higher than the national average and double that of the mid west – and internationally.

Over the medium term, population growth and rising incomes mean that the US tissue market appears set for a moderate increase, which will once again make the west coast a key driver in a shifting future sales trend. TW