Tissue Proves to Be Persistent Profit Machine

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Researched by Industrial Info Resources (Sugar Land, Texas). While manufacturers of paper and packaging board grades are restructuring and streamlining business groups, including closing plants and selling off assets, producers of tissue and towel products are recording profits and planning plant expansions. In 2005, operating rates at domestic tissue manufacturing plants peaked at 90% and the expectation is that 2006 could see higher operating rates. Estimates place U.S. production last year at close to 7 million metric tons of tissue, combined across major segments including consumer, away from home (AFH), and industrial.

Demand projections for tissue products continue to be strong based on average population growth and stabilized economies. Producers are responding to projections with a wave of capital expenditures that are designed to employ the latest advancements in papermaking and to reach underserved geographical markets. The current outlook for tissue related capital expenditures shows over $1 billion in active projects in development, under construction, or slated for startup in 2006-2007.

Industrialinfo.com is currently tracking over ten active tissue projects across the country that represent greenfield sites, machine additions, and rebuilds. Three of the largest tissue paper projects on record include a $200 million new tissue machine and related converting equipment at Kimberly-Clark Incorporated complex in Beech Island, South Carolina; a $200 million investment at Procter & Gamble Co mill in Green Bay, Wisconsin (See related news article - Procter & Gamble Setting Footings for Newest Paper Machine in Wisconsin), and a nearly $300 million multi-phased tissue mill in Arizona.

In general, the paper industry, not including tissue grades, has been contracting, in terms of capacity growth. High energy cost, shrinking demand, and low cost imports has had the biggest impact on manufacturing cost across all paper grades. However, the difference between tissue and other grades has been demand, or lack thereof, among non-tissue grades.

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Industrial Info Resources (IIR) is a Marketing Information Service company that has been doing business for over 23 years. IIR is respected as the leader in providing comprehensive market intelligence pertaining to the industrial processing, heavy manufacturing, and energy-related industries throughout the world.