BIID (Body Integrity Identity Disorder) is a strong impulse among otherwise normal humans to amputate a healthy limb, usually a leg or arm and sometimes both. It is more psychiatrically described as a persistent desire to physically match an idealized image such humans have of themselves. Obviously to “BIIDS,” less is somehow more.

I recently watched a documentary (ironically titled "Whole") about this disorder on the Sundance Channel, the same that delivers AL Franken late at night. It explored the lives of several men (most BIID victims are male) whose worlds were made whole and happy again by amputating perfectly good legs. At least they seemed happy enough hobbling around on crutches in their kitchens and down sidewalks, chatting and smiling at the camera. It was strangely disturbing, though, to see videos taken of them only a few weeks earlier doing the same things, but without crutches, unhappy and grumpy.

New Industry Image. That documentary helped me better understand the North American paper industry, which seems to have developed a strange, idealized image of its own-that fewer is somehow better than more.

In pursuit of this image, U.S. and Canadian paper companies have been lopping off mills and plants left and right during the past decade. Just last month, GP amputated Green Bay and 850 workers along with it (1,100 worldwide). In July, not to be out-amputated by anyone, IP announced intentions to chop off everything, almost-its share of Carter Holt Harvey, coated papers, SC papers, beverage packaging, kraft papers, Arizona Chemical, wood products, and some 6.8 million acres of forestland in the U.S. A month earlier, IP had announced it would slice 3000 jobs from its domestic workforce.

By my count, the North American pulp and paper industry has amputated 100 or so mills during the past decade, and more than 130 paper machines, counting the ones most recently announced. Associated job cuts are approaching 50,000, and considerably more if you bring in the wood products sectors. Probably as many if not more secondary jobs have also been shucked.

The U.S. paper industry, inescapably, has become a BIID. “Really, board of directors, we'll be better off without mills. Keeping them running is a pain, literally. And they convey the wrong image.”

Shifting Dynamics. With all of the capacity amputations in this country, you might wonder where paper products are going to come from in the future to feed the demand monster on this continent. This was explored in the last issue of PaperAge (September/October 2005), concluding that, most likely, a great deal of lost capacity will eventually resurrect in developing countries of South America and Asia, China especially, where basic economics and government support are much more favorable.

In fact, several large U.S.-based companies have already announced intentions along those lines. There's no escaping the fact that it will be considerable less costly to produce paper and board in fiber-rich South America, for example, where labor is cheaper and regulations easier, ship it back to North America, and probably make a higher profit than from domestic operations, transportation costs factored in.

So what happens to all of the amputated assets on this continent? While some are decaying into gray field sites, others have been razed and sold off piecemeal. IP now says it plans to sell or spin-off some of the units on its current chop list, a definite change from past strategies.

Investment companies have taken the reins of a few discarded mills in North America and appear to be doing OK—Blue Ridge Paper Products, NewPage, Boise Paper, to name a few. Because they generally operate "outside the box," "march to the beat of a different drummer," etc., independent investment groups could become viable, long-term players in a continued paper manufacturing base in the U.S, if not North America as a whole.

Other players also, such as Stora Enso, able to work from a longer-term perspective, will likely be key players on the future domestic stage. Yet a third player, Asian countries such as China may find North America to be a fertile alternative for feeding its rapidly growing, pulp-hungry paper and paperboard base, at least until a suitable domestic plantation fiber supply is developed and matured. The possible interest by Chinese companies in acquiring abandoned/amputated North American assets, particularly on the West Coast, was explored in detail by David Price in his "What if…'' column in the September/October 2005 issue of this magazine.

China Syndrome. The current issue of PaperAge you are now reading, in fact, contains an in-depth feature report on the very first such acquisition in the U.S. by a Chinese company. The article examines Lee & Man's (Hong Kong) plans and strategies for the troubled, abandoned Samoa, Calif., pulp mill.

Lee & Mann has already spent millions to get the large kraft mill up and running again, and is going forward with plans to replace the mill's mile-long outfall line with a new secondary waste treatment plant. To solve many of its environmental woes, the mill had converted to peroxide-based TCF bleaching in the 1990s, but today its new Chinese owners are producing unbleached kraft pulp, all of it being shipped to China for captive use in Lee & Man's paperboard mills and/or sold to clients on the open market there.

Whether or not this first such acquisition blossoms into a trend will require several years in the unfolding. But many related dynamics are already at work. As reported by Harold Cody in his Market Grades report on page 20, North American pulp shipments to China are up nearly 20% over last year. The world demand for market pulp grew by some 7 million metric tons this past year, with Asian countries accounting for 58% of that. As Cody notes, "market pulp really isn't a bad market to be in right now."

In the meantime, it's a matter of perspective, I suppose, whether the U.S. paper industry is more becoming on crutches these days. Long-term, life in the BIID lane might not prove as debonair and glamorous as first imagined. In this regard, maybe it wouldn't be such a bad idea for some paper company boards of directors to adopt a Hippocratic Oath of their own. You never know.

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