Paper 360
TRAVIS DURKEE, FISHER INTERNATIONAL
The coronavirus pandemic has touched all parts of the pulp and paper industry and, much like the response to COVID-19, the focus of the industry varies from country to country. Luckily for Fisher International, our global team of experts has its finger on the pulse of paper around the world.
In the United States, toilet paper supply and demand charged to the forefront of the pulp and paper industry during the coronavirus pandemic. Mills added shifts and converted machines to meet the demand for household tissue and towel products as consumers put a newfound premium on personal hygiene. Now that the initial surges seem to be over, we’re able to look at how recent consumer habits have altered the tissue and towel industry and look ahead to what the sector could look like in the coming months.
To help answer the questions looming over this spotlight segment of the pulp and paper industry, let’s pick the brain of Fisher International’s foremost expert on tissue and tissue and towel—senior consultant Bruce Janda.
What’s the latest from the world of tissue and towel?
Janda: I think we’re finally seeing some stabilization.
I’m still reading articles and hearing people talking about the schedules of manufacturers making toilet paper the concern of the whole supply chain. Yet the bottom line is that toilet paper has a history of being hoarded when there are rumors of a shortage.
Especially in North America, we use about one-third of our tissue away from home because we’re out and about. Toilet tissue is part of our daily use whether we’re at a baseball field or at work. When all those things are shut down, that means a real change in our supply chain.
We’ve seen a big shift as companies producing those large, industrial-sized rolls of toilet paper for businesses such as hotel chains have been selling their products to places like Trader Joe’s to create more inventory on the shelves. Some production lines for converting can’t make tissue we can use at home, but those that can are running at or beyond scheduled capacity to catch up.
But again, that’s mostly behind us. What’s coming now, since we’re still without a vaccine and unsure where we are in the life cycle of this pandemic, is a question of where the tissue and towel industry will settle out.
What will things look like as we continue reopening and people aren’t as concerned about the disease?
Along with other experts, we wonder if there’s an opportunity in the washing and drying of hands with a paper towel—which is something that hasn’t been as important as it is now. I’m hoping that will remain important in the name of health as we approach flu and cold season.
As stay-at-home orders are lifted and we get back to moving about the country and going back and forth to work, will we see towel usage go up? I think we’ll see some changes there.
How are producers adjusting to demand?
Producers have made a strong case for running tissue with as much productivity as possible. This means delaying scheduled maintenance so much that I’d expect production has outpaced demand for more than a month now. Overall, the strong push is continuing to keep the supply chain full and tissue mills are working extremely hard.
At the same time, as we work through the pandemic, anyone who has a job where they can calculate schedules, order parts, or track things may still be working from home as mills make every effort to avoid getting people on the operating crews sick.
What trends have you seen in data?
The full effects haven’t shown up in the data yet, but it will when Fisher publishes the Q3 cost database in FisherSolveTM Next. From there I think we’ll see that capacity utilization has gone way up to show how much extra tissue we’ve been running.
We should also see change in demand for certain formats such as dispenser napkins (which will likely go down) and hand towels (which will see movement as more people get out of the house and head back to work).
The best estimates are that the disease effects will continue for another 12 months as vaccines are developed, approved, produced, distributed, and taken by significant populations. Google instructed its associates to plan on not returning to the office until July, 2021. Chicago and states in the northeast have instituted traveler quarantines for other American visitors.
Commercial tissue demand in highly affected areas will continue to see more outages. The tissue machine production numbers will remain steady or increasing as tissue base sheet paper can be diverted, but the converting machinery devoted to only commercial product formats can expect to see layoffs. This trend could be moderated partially by increased hand towel consumption in food prep and health care, but it is unlikely to make up for closed schools, offices, and travel facilities.
Will past hoarding affect future supply?
The people doing the production schedules have to be looking for how toilet paper hoarding might affect output and inventory.
They’ve been doing all they can to make sure machines are running at full capacity and routine project improvements and maintenance have been deferred. So, I expect producers have a clear sense of how that retail demand will fall off and will use that time to catch up on maintenance and balance themselves out as we go into the third quarter.
What interesting questions have you heard?
I think the most interesting questions are those looking beyond this. Where are we going?
We could be a lot less wasteful with our disposable napkins as we change the way people are served. We could use more hand towels in commercial restrooms as we focus more on hygiene. Clients in both Europe and North America are asking if we’re going to see some pull back from air dryers, which have a reputation for not being as hygienic.
These are all interesting questions, but I still think it’s a little early to see if any of that will come to fruition.
Any advice for industry professionals?
Here’s one question I’ve wrestled with: Will North American consumers continue to demand mostly ultra-premium products? Other Fisher consultants and I believe roughly 55 percent of at-home tissue use in North America is ultra-premium, which is astronomically higher than it was 15 years ago.
In looking at previous recessions, people usually step down to value or economy brands. But during the Great Recession starting in 2008, I saw for the first time in my career people continue to buy the highest performance tissue available despite the tough times. My prediction is that will continue for high-end brands or private labels from club stores.
Also, I believe people will continue to monitor tissue availability and consider that important. So, we have to keep that in mind when we consider quality and production. As a society, we will not regress in our use or expectations when it comes to at-home tissue products.
Bruce Janda ([email protected]) has more than 40 years of experience in the paper and non-woven industry, specializing in tissue and towel products and processes, from concept through manufacturing and commercialization. He has a BS in Chemical Engineering from Michigan Technological University and earned his MBA from the University of Wisconsin. Janda is a TAPPI Fellow, holds 19 US tissue and papermaking patents, and writes a regular column for Tissue World Magazine. For more data and insight into the present and future state of the pulp and paper industry, make sure to contact Fisher International—learn more at fisheri.com.