Judging by the latest statistics, roughly one out of six of you is reading this sentence onscreen rather than in a printed magazine. And, frankly, you’re being pretty selfish. Across the country, pulp mills are shutting down, local economies are being decimated, the whole paper industry is slowly atrophying. If you’re also among those who tack on “think before you print” to the end of your e-mails, John D. Williams has a couple of words for you: “Just bull” is how the CEO of Domtar Corp., the top manufacturer of copy paper in North America, has characterized such messages, bemoaning the unjustified “groundswell of people taking potshots at paper and printed media.”
Despite the industry defenders’ remonstrations, paper, that most basic of modern-life commodities, is rapidly fading from our lives. A clunky, old-fashioned medium in a sleek digital age, it’s been lumped in with other nature-bespoiling industrial products and targeted by its users for elimination. As sophisticated electronic devices make reading onscreen not just convenient but comfortable, paper seems unnecessary, even obsolete, a harmful indulgence like plastic bags or incandescent light bulbs. “It’s quite a good idea that paper disappears,” British business magnate Richard Branson recently declared in announcing a new iPad-only magazine. “It’s best that trees are growing and not being cut down.” Bill Buxton, the Canadian technology guru and principal researcher at Microsoft, has suggested that the stigma on paper will soon lead printed newspapers to be viewed with the same disapproval as smoking.
The effect on the paper industry has been devastating. Since 2000, the peak in North American paper demand, printing-paper consumption has dropped by a full third. This decline will likely only pick up speed as tablets, e-readers and smartphones grow more sophisticated and ubiquitous. In a recent report analyzing the impact of digital media on paper demand, publishing industry consultancy MediaIdeas forecasts that most grades of paper will decline by 50% this decade. “The advance in electronic communication is not just one of the factors influencing demand for printing-paper grades—it is the factor,” says Verle Sutton, co-author of the report.
The drops have been steepest among paper’s biggest users. Consumption of newsprint—still the largest category—is down 55% to 60% over the past decade, with printing and writing paper following closely behind. The financial crisis delivered a gut punch to an already reeling sector. In 2009, the Canadian paper products industry lost more than $1 billion, its largest annual loss on record. While sales have recently turned up along with the economy, paper makers know the long-term decline won’t cease. So they’re fighting a battle on two fronts: a PR war to boost paper’s environmental and usability credentials, and an innovation race to find new applications for the pulp we no longer want to hold in our hands.
The idea of the paperless office has long been laughed off as a canard. The average North American office worker uses 10,000 sheets of paper a year, and the amount actually rose significantly with the advent of computers and e-mail as we printed the floods of new communication. But mobile devices have been ushering in behavioural changes. We’ve been gradually getting used to reading onscreen, in part because we increasingly read short texts, such as e-mails, blogs and Facebook updates, but also because today we use our cellphones as much (if not more) for reading and writing as talking. “There’s a social paradigm shift going on,” says Richard Kelertas, a forest products analyst with Dundee Capital Markets. “Although book clubs are growing fast, Facebook has grown 25 times faster. Blogging and Twitter probably account for 30% of paper demand reduction over the last five years.” The iPad and its ilk, meanwhile, have introduced an easy and portable way to consume text alongside other media. Three-quarters of iPad users already read books on the devices.
Paper is being curtailed all around us, from bank statements and tax forms to direct mail that now requires smaller print runs because of better targeting technologies. While e-commerce initially stimulated demand for catalogues, that trend reversed in 2006. More and more utilities charge customers for paper bills, treating a once basic service as a value-added luxury. Some sectors, such as medicine and education, are switching wholesale to electronic media. In some universities, you can go from enrolment to graduation without requiring paper for anything other than exams—study guides, textbooks, assignments, teacher assessments are all executed and delivered digitally.
But it’s in publishing where the transition away from paper is happening most rapidly and disruptively. All the growth in books is now on the electronic side. Amazon’s e-book sales already exceed hardcover sales and are on track to eclipse paperbacks this year. “We are going to stop the soon-to-be-ridiculous dialogue of dead trees versus e-readers,” says Bob Sacks, a veteran of the U.S. publishing and printing industry, in the MediaIdeas report. “In a year or two, the conversation will be solely about which electronic product is better for my personal reading experience.” Magazines and newspapers are moving in the same direction, though it’s tougher for them to make the economics work. While going digital greatly reduces expense—paper, printing and delivery of publications can comprise half the total production cost—online advertising revenues are insufficient today to support large media organizations.
As technology’s growing convenience pulls us to alternatives, the perception that paper is wasteful simultaneously pushes us away. In the past, says Buxton, the discussion about reading on paper versus onscreen focused on the experience, but it’s increasingly green issues that shape the debate. “People are now willing to compromise in the quality of the reading experience if they believe that compromise buys an ecological benefit,” he says. Going paperless, at least in some areas, may become the latest badge of social responsibility.
This shift is turning some publishers into pariahs. In late October, for example, an initiative called Yellow Page Mountain dumped dozens of copies of the Yellow Pages at its publisher’s Montreal doorstep, as part of a campaign to “hasten the discontinuation of the paper phone directory.” Similar campaigns have proliferated around the United States, and the online video of the stunt has been viewed more than 26,000 times.
These kinds of acts make industry executives livid. They consider the protests to be ill-informed demonizations of legitimate products. First of all, research shows that half the population still regularly consults paper directories, making them a valuable service for many residents. But the misconceptions go far beyond, and Domtar, for one, is fighting back against paper’s bad rap. Since late October, the Montreal-based company has been running the “Paper Because” campaign—its largest ever advertising initiative—to highlight paper’s benefits as a “sustainable storage” medium. “You want more status, not status updates,” read ads in major newspapers and magazines. “Underneath all our wireless streaming, hands-free technology, we’re still people,” they cajole. The messages are backed by surveys and studies arguing, for example, that paper made from Forest Stewardship Council (FSC)–certified wood actually protects wildlife, flora and “the increasingly endangered North American manufacturing job.”
Industry defenders also point to the large hole in paper bashers’ logic: those data centres that power paperless billing, those double computer screens that let you keep multiple documents open, consume lots of energy. “People look at the electronic medium as an environmentally friendly thing,” says Paul Quinn, paper industry analyst at RBC Capital Markets. “But think about the U.S. market—50% of electricity there comes from coal.” Roughly two-thirds of paper used in North America is recycled, more than any other material.
Verle Sutton, who co-wrote the MediaIdeas report and is a veteran of the U.S. paper industry, thinks producers should follow Domtar’s lead and be more aggressive in telling the environmental story, “but the media doesn’t take them too seriously.” He argues, for example, that the notion of saving trees is nonsense. “Trees have a fixed lifespan and are going to die one way or another, but that seems lost on the public.” The problem is, the younger generation that’s most receptive to the green appeal has been raised on electronic media. To reach them, paper supporters have had to move their campaign online (PaperBecause.com is a significant part of Domtar’s campaign), a little like pitching a tent in enemy territory. What’s more, young people opt for electronic over printed not as an act of environmental activism but a matter of convenience and habit.
But improving paper’s image may—at best—slow the decline in demand, not reverse it, leaving the industry grappling for ways to compensate for a dwindling customer base. A few paper segments remain stable: demand for tissue and packaging has been flat, the latter benefiting from the growth in online shopping and an even worse eco-stigma on plastic. But that likely won’t last long, explains Paul Leclair, chief economist with the Pulp and Paper Products Council, because as the manufacturing industry moves to Asia, “you want to be producing paper near to where it’s consumed. And the Chinese and Indians are rapidly developing their own capacity.” Environmental (such as FSC-certified) papers are a growth area, and an improved economy has stabilized some paper makers’ balance sheets. The decline so far is gradual, says Quinn. “You can manage when consumption is falling in a single-digit range. But when it reaches double-digit, shutting down 10% of capacity is very difficult.”
Some pulp mills are switching to grades of paper that still show some life, but doing that is very expensive, and “because almost everything is declining, you can’t have a great deal of success,” says Sutton. “The mills will go bankrupt and will shut down. It’s just a question of when.” Many companies have shuttered equipment or plants to reduce production and thus manage supply. But, combined with the economic crisis, the past few years have decimated the industry, says Stephen Atkinson, a BMO Capital Markets analyst, driving 70% of North American newsprint supply into bankruptcy. “Looking at what’s left, there isn’t much,” he says. “Globally, Canada is high-cost, and our ridiculous softwood lumber agreement [with the U.S.] means that costs will stay high.”
That leaves paper makers with one solution: to innovate their way out of the dilemma. Within the arena of packaging, for example, companies are developing smart papers that change colour when food goes bad. But the biggest effort is in getting more value from each tree and expanding the uses for pulp beyond paper—opportunities particularly promising for integrated pulp and paper producers.
Bio-energy is one major direction. With the help of government subsidies, companies are investing in converting wood fibre (known as biomass) into ethanol and diesel. The other diversification route is the bio-refinery model. Wood is a hydrocarbon that can be used to manufacture most things made out of oil. Wood byproducts already go into everything from solvents to ice cream, plasma screens to toothpaste, tires to pharmaceuticals. It’s a niche play, though. “These are small specialty markets that someone can come in and wipe out with one big facility,” says Chad Wasilenkoff, CEO of Fortress Paper in Vancouver.
Fortress, a five-year-old company, was founded to tap those niches. Taking advantage of bottom-scraping prices, it bought two plants focused on specialty papers—wallpaper and currency—and converted a third one, in Quebec, from photographic paper into a supplier of pulp to rayon-making textile mills. But Fortress is a relatively small, nimble operation investing only in categories that are growing. Conversely, the large forest-products companies’ most urgent problem is cutting costs. “These transformations require large capital investments when these companies are riddled with debt,” says Wasilenkoff.
Amid the gloom hides one important fact: on a global level, paper consumption is growing; it’s just not demand western pulp mills can easily tap. Asia and South America are voracious for paper. The Indian Paper Manufacturers Association expects demand in that country to double to 20 million tonnes by 2020. China today has about 2,000 newspapers, up from 70 or so 15 years ago. Helped by cheap labour and more lax regulations, the paper industry is thriving in those countries. China is expected to soon overtake the U.S. as the largest paper manufacturer in the world.
Even on this continent, paper isn’t going to follow audiotapes and floppies into obsolescence. Digital tech remains awkward for some applications. If you track your every encounter with paper in a day—from Post-it notes to billboards to business cards—you realize how extensive its presence still is, says Buxton. In particular, we tend to turn to paper when we need to absorb and think through information. “If I’m studying a textbook, it’s inconceivable I don’t have a pencil in hand,” and a notepad nearby, says Buxton. Two of his colleagues who wrote a book on the myth of the paperless office found, for example, that for non-recreational reading, people usually need three documents simultaneously: one for reference, one for note-taking, and one containing whatever they’re reading. Tablets can’t replace that today, and may never do so elegantly. On the other hand, Buxton can envision some print products phased out—newspapers, for one, which are actually easier to consume onscreen in tight spaces like subways or planes. “Paper is as much a technology as is the Internet,” he says. “The dynamic here is less of paper being replaced but finding its own niche within a rich
mosaic of media.”
Digital media will continue cutting into paper’s terrain. By the decade’s end, Media
Ideas forecasts, most smartphones will be equipped with reading-friendly technology, and tablets will increasingly curb the need for printers and photocopiers. The Domtar campaign’s appeal to nostalgia for greeting cards or our high-school diplomas—“Memories are more fond on paper”—will be lost on today’s children. Things we commonly used only a few years ago, like cheques or printed forms, now feel inefficient. When did you last consult a printed encyclopedia? A dictionary? Nostalgia won’t bring back what we no longer need, especially if we believe it’s not good for us.