To paraphrase Charles Dickens: In today’s tissue business, it is the best of times and the worst of times.
That was the consensus from today’s panel discussion at the Business & Management Day, Tissue World Miami Conference, “Deep Dive 1: Global Trade Shifts -Sourcing and Supply Chain Impacts.” With impending changes in tariff structures, trade balances and market forces, it is a time of unprecedented challenges as well as potential opportunities.
Moderator Jonathan Roberts started the session with a question about China’s ban on imported mixed waste and what it means for the North American tissue business.
Roger Baker of Stratfor USA asserted that the ban was a symptom of China becoming increasingly urbanized: “They are pushing back against being seen as the garbage dump of the world.”
“China needs fiber,” stated Canadian adviser Suzanne Blanchet. “But they need cleaner fiber. It would be good for everybody to have cleaner fiber, but that puts pressure on the virgin fiber market.”
On the question of the possible effects of a more protectionist USA on the tissue business, Donna Harman of the American Paper & Forest Association said you have to consider the context of President Donald Trump’s stance toward NAFTA, the TPP and trade in general.
“The United States is moving away from the totally open and free market it has been since the end of World War II,” she said. “To say the U.S. is becoming protectionist leaves out the context of the rest of the world.” She noted that despite tariffs on steel and aluminum, “No other country in the world allows as many imports with no duties.”
The panel agreed that there is likely to be a cascading effect from increased steel and aluminum tariffs that will affect equipment costs. Esko Uutela of Germany’s RISI noted that the U.S. will never be able to produce all the paper products it consumes and if higher tariffs were imposed on paper, the higher costs would be passed on to U.S. consumers.
But despite the nervousness and anxiety surrounding the current trade environment in North America, the panelists agreed that savvy multinational corporations are looking ahead to the possibility of beating tariffs by moving manufacturing to the U.S. Harman noted that is what Trump says he wants — to stimulate foreign investment in the U.S.
“They can put their equipment here and have access to the huge U.S. market,” she said.
When asked directly if the predictions he made in 2009 were still good, Uutela shared the opinion of most of the audience: “It’s getting harder to predict, both in the U.S. and the world. We have new players, we have rising protectionism, new technologies.”
When asked if the prediction business is getting harder or easier, 68 percent of the audience voted it is more difficult.
When asked whether it is a good time to be in the tissue business, the audience gave mixed responses, with almost a quarter saying these are great times, a third saying times are good but were better. Nearly 42 percent said times are difficult but OK, and less than 2 percent said it’s not a good time.
Blanchet said that compared to five years ago, the greatest challenge in the tissue business is getting a talented, well-trained workforce.
Harman agreed: “We have a skills gap, an education gap and we need to change what society thinks of manufacturing jobs. Jobs in our industry are some of the best jobs in terms of pay and benefits.”
But she noted that there is an increased emphasis on high school skills training and technical schools that can help bridge the skills gap. She pointed to the potential of some workplace needs being met by artificial intelligence and Big Data.
“There are a lot of reasons to be optimistic about the future,” Harman concluded.
