Figure 3
Central Wisconsin
Secondary and Small Primary Wood Users    

Source:  Wisconsin Department of Natural Resources,
Directories Wood Using Industry, Primary 1986, Secondary 1982

     If paper makes Wisconsin great, paper also makes Central Wisconsin great. Total pulping capacity in the state, including chemical, mechanical, and secondary fibre pulping is estimated at 6200 tons per day. Central Wisconsin mills produce about 2000 tons per day or nearly 320/0 of the state total. All of the Central Wisconsin capacity is primary fibre recovery. The region produces 39.2070 of the groundwood, 47.4% of the sulfite and 81.7% of the kraft pulp made in Wisconsin.

     Wisconsin's estimated paper production is about 12,000 tons per day. Central Wisconsin mills produce about 4650 tons per day or nearly 39% of all the paper produced.

     If Lincoln County is included in Central Wisconsin's figures, the region would account for over half the total pulping capacity and 48.80/0 of the paper made in "the paper state:' The Wisconsin paper industry is definitely not a Fox River Valley phenomenon.

Outlook

     Demand for forest products is highly cyclical in nature. Much of the demand for both primary and secondary wood products, particularly lumber and furniture, fluctuates with the demand for housing. Individual firms are almost all price takers and concentrations are less than 30% in all segments of the industry, including paper.

     The short term outlook for both lumber and paper appears vigorous. The Wisconsin lumber market is upbeat according .to University of Wisconsin-Extension Forester Ted Peterson. He reports strong demand for 4/4 and 5/4 red oak, 4/4 ash, basswood, cherry, and hard maple and 4/4 and 8/4 pine. Many lumber mills are having difficulty meeting demand. In addition, sales of most grades of paper have also been vigorous.                                                           

     The long term prognosis for the industry may depend more on the attitude of state and federal agencies toward the industry than ever before. We have seen that 1975-1985 was a decade of no-growth for the forest products industry both regionally and state-wide. The decade was also marked by an increase in public concern over environmental quality. The paper industry spent much of its capital, previously invested in mill expansion, on pollution abatement facilities. Future concerns of paper industry leaders are not so much with a need to comply with environmental regulations but, rather, with bureaucratic processes associated with regulation compliance. Obtaining necessary permits often requires enormous amounts of management and staff time.

     Wisconsin pulp and paper mills are old by industry standards. Compliance with continually increasing state and federal water quality standards could force our sulfite mills, in particular, to cease pulp manufacture in the future. How far in the future will depend on the rate with which we increase the stringency of our environmental standards. Meanwhile, our pulp mills desperately need scientists to develop an economical method for separating lignin from cellulose which does not result in air or water quality degradation.

     Our paper mills benefit from few economies of scale. They have managed to survive because they compete in segments of the industry where quality and responsiveness to changing customer needs are the hallmarks of success. In the spring 1987 mid-year report, Paper News quotes five industry leaders regarding their views of the industry and its future. Their comments were:

"We'll continue ... putting as much capital into the business as is necessary to maintain our status as a low-cost producer."
             Harold Ellsworth, President
             Fox River Paper Company
             Appleton

"Above all, we have to be efficient; that's all there is to it'
             George Mead, Chair
             Consolidated Papers, Inc.
             Wisconsin Rapids

"We work aggressively, day-after-day, year after-year, to keep our product line up-to-date, and at the same time on cost control and productivity, and where appropriate we keep our equipment up-to-date with capital investments. "
             George Mueller, President
             Wisconsin Tissue Mills, Inc.
             Menasha

     The Wisconsin paper industry lives in a very competitive environment. No company controls the market in which it competes. All respond to market demands. Finally, the industry is capital intensive. Demands for capital expenditures not equally required of competing mills in other states can put our companies at a genuine competitive disadvantage. Included in this category are expenditures for state and local taxes, environmental projects, raw materials, and labor, among others. Wisconsin lumber and furniture industries have similar concerns with one additional problem; these segments of the industry are almost exclusively composed of small businesses, independently owned and operated and price takers.

     While the paper industry has been able to afford, nationally, to endow the Institute of Paper Chemistry and, locally, to support the undergraduate program in Paper Science at UW-Stevens Point, the solid wood-using industry has nothing similar. The U.S. Forest Products Laboratory does basic utilization research in wood and paper chemistry and physics, but its work is of a national nature and the laboratory lacks funds to provide extensive local technology transfer. The forest products industry itself spends comparatively little on research and development. Tombaugh reported in 1982 that the forest products industry nationally spent the second lowest of all economic sectors when research is compared to percent of sales. Lowest was the stone, clay, glass, and concrete products industry. Ron Giese at UW-Madison will state in one of the spring issues of the Journal of Forestry that expenditures on research and development by the forest products industry are also decreasing at a steady and alarming rate.