Mills cut paper production as e-filing increases with poor economy
By Lindsay Wolfe
Edited by Kevin Walker
Posted April 1, 2010
Declines in paper sales and increases in electronic document management are causing paper mills — still a major employer in South Carolina — to cut production, and in some cases jobs, to maintain profit.
According to the American Forest and Paper Association, mills in the state employ over 13,000, particularly in counties with higher-than-usual unemployment rates such as Marlboro, York and Georgetown. The state's paper mills are just getting by in this recession-prone economy. Mills are cutting production to increase profit as demand decreases.
Demand is declining because more companies are trying to save money by reducing paper use. A report by Pearson Education estimates companies save between 20 and 25 percent in paper costs by managing documents for employees and clients electronically.
At Domtar, which has a paper mill in Bennettsville, office paper sales have decreased 3 to 4 percent annually, said Tom Howard, vice president of government relations.
Though the mill hasn't suffered any layoffs, production has slowed down, said Don Newton, the Bennettsville mill's human resource manager.
About 325 people work at the mill, with 40 more at a satellite packaging office. People commute as far as 60 miles each day, Newton said.
Al Jones, who tests paper moisture levels at the mill, has been working there since the mill opened nearly 20 years ago. "Been here since 1990, hope to be here 10, 15, 30 more years," he said.
Jones' job — along with the other jobs at the mill — is secure, said Newton. The mill sells uncoated free sheet paper, or office paper, mostly to Europe and isn't seeing the same decline as companies that produce news and magazine print.
AbitibiBowater, which has a mill in Catawba, filed for Chapter 11 bankruptcy protection last year, and the Catawba mill laid off 30 employees in early March, said Debbie Johnston, AbitibiBowater's U.S. director of public relations.
International Paper, which has two mills in South Carolina — in Eastover and Georgetown — declined 6 percent in 2009 sales, but the company ended up with $663 million in earnings after losing $1.3 billion in 2008.
That's because, to combat falling demand, companies are lowering their paper supply and upping prices. But with less production comes fewer employees.
"What we continue to do is focus on those things we can control like lowering our raw material, energy and supply chain costs where we can, and managing our production to our customer demand," said Kim Gill, communications manager of the Georgetown branch of International Paper.
International Paper has about 600 employees at both branches. The company declined to say how many people had been laid off.
The rising price of pulp is causing mills to make even less paper, said Alfred Walden, president of Walden-Mott Corp., a New Jersey-based information provider to the pulp, paper, packaging and printing industries.
Last year, wood pulp, which is pressed into paper in mills, cost $640 per ton. This year, however, it's up to $890. Recent blows to major wood suppliers, like the earthquake in Chile and port strikes in Finland, have contributed to cost, Walden said.
Howard said he doesn't expect declining paper sales to continue in the near future; in some cases, he says, there is no substitution for paper (legal documents, etc.). And if demand increases as the amount of paper available decreases with restructuring, paper sales will increase.
But that's a big if as more and more companies go paperless. And as for legal concerns, a Federal Rules of Civil Procedure Amendment passed in 2006 says that electronic versions of documents are just as viable as print. According to the amendment, electronic copies wouldn't be used only because of "undue burden or cost" outweighing benefit.
Since 2007's economic downturn, businesses and organizations from SCE&G to the S.C. revenue department have been moving toward electronic data on employees and clients.
A 2009 report by the Association for Information and Image Management, a nonprofit organization headquartered in Silver Spring, Md., says that e-filing is increasing rapidly in 70 percent of 768 organizations surveyed worldwide.
In the Midlands, businesses like SCE&G have saved a lot in operating expenses by cutting down on paper, said public affair strategist Roxanne Argo.
After the Columbia office moved from Main Street to the 12th Street extension in Cayce late last year, employees all hooked into a shared printer rather than having individual desk printers.
"That's a move that is saving a tremendous amount of money in operating expenses each year," Argo said.
Also, the company has begun managing information about employees and clients electronically and has begun offering online bill payments. And when customers get bills through the mail, Argo says, SCE&G prints messages directly on the bill instead of mailing a separate letter.
South Carolina's revenue department offers online tax filing so residents can get their returns back quicker. Public relations officer Adrienne Fairwell said the department printed 60,000 less 64-page tax booklets this year than last year.
As of March 19, 80 percent of the 1.3 million returns filed were filed online. The department did not have numbers available showing how much those initiatives have saved.
Don Newton, a manager at Domtar's Bennettsville mill, says the company's sales have declined 3 to 4 percent annually for the last few years.
Al Jones, who tests paper humidity levels at Domtar's Bennettsville mill, has been working there since it opened in 1990. The mill hasn't lost any employees because of slowing paper demand.
