Will globalization cause a corrugated box shortage?
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By Jim Thompson
HCP columnist
A lesson in globalization near and dear to my heart. At one time, the 1990s, there were three major paper machine manufacturers in the world plus a half-dozen minor ones.
One of the big three was headquartered in the United States. Over the years, the U.S. supplier had gotten sloppy and lost their focus. In fact, in the early 1980s when I was involved in a major paper machine rebuild, less than 400 miles from the U.S. company’s headquarters, the word was loud and strong from our paper mill: “Anybody but ________” (the U.S. company).
It wasn’t price, it was quality.
In the 1990s, the U.S. company became so desperate that they took an order for two paper machines in Indonesia with very lousy payment terms. As an aside, paper machines are not cheap, they were at least $75 million apiece back then. They never collected on the order and went bankrupt.
Now, the world has two major paper machine manufacturers, one almost of the size of the first two, and two or three smaller ones. In the last 20 years, 90 percent of the paper machines built in the world were built by the two behemoths. One of these is in Finland, the other in Germany. I have been to their facilities many times.
Along comes the Ukraine War. Who, within NATO, is considered at least a country to be concerned about? Germany. Who outside of NATO, but right up next to Russia is a country to be concerned about? Finland.
An all-out European War is going to cause many problems worldwide, there is no doubt about that.
One of the problems I see is a lack of spare parts for nearly all the paper machines built in the United States in the last 20 years. These are the machines that make the paper for corrugated boxes and for kitchen roll towels and tissue.
These machines are largely customized for each purchaser. While recognizable from machine to machine, spare parts are seldom interchangeable. These are not like spare parts for a certain model automobile. A prolonged war could jeopardize the operation of these machines due to a lack of spare parts. Machines go down, supply of product goes down, prices go up.
Globalization is a great thing as long as everyone is getting along. When the guns come out, many, many things are disrupted. It is not just oil and gas.
I am sure there are other industries that have the same story as the paper industry. This just happens to be one to which I am very close, and I know the potential problems are very real.
Jim Thompson, formerly of Marshall, is a graduate of Hillsboro High School and the University of Cincinnati. He resides in Duluth, Ga. and is a columnist for The Highland County Press. He may be reached at jthompson@taii.com.
HCP columnist
A lesson in globalization near and dear to my heart. At one time, the 1990s, there were three major paper machine manufacturers in the world plus a half-dozen minor ones.
One of the big three was headquartered in the United States. Over the years, the U.S. supplier had gotten sloppy and lost their focus. In fact, in the early 1980s when I was involved in a major paper machine rebuild, less than 400 miles from the U.S. company’s headquarters, the word was loud and strong from our paper mill: “Anybody but ________” (the U.S. company).
It wasn’t price, it was quality.
In the 1990s, the U.S. company became so desperate that they took an order for two paper machines in Indonesia with very lousy payment terms. As an aside, paper machines are not cheap, they were at least $75 million apiece back then. They never collected on the order and went bankrupt.
Now, the world has two major paper machine manufacturers, one almost of the size of the first two, and two or three smaller ones. In the last 20 years, 90 percent of the paper machines built in the world were built by the two behemoths. One of these is in Finland, the other in Germany. I have been to their facilities many times.
Along comes the Ukraine War. Who, within NATO, is considered at least a country to be concerned about? Germany. Who outside of NATO, but right up next to Russia is a country to be concerned about? Finland.
An all-out European War is going to cause many problems worldwide, there is no doubt about that.
One of the problems I see is a lack of spare parts for nearly all the paper machines built in the United States in the last 20 years. These are the machines that make the paper for corrugated boxes and for kitchen roll towels and tissue.
These machines are largely customized for each purchaser. While recognizable from machine to machine, spare parts are seldom interchangeable. These are not like spare parts for a certain model automobile. A prolonged war could jeopardize the operation of these machines due to a lack of spare parts. Machines go down, supply of product goes down, prices go up.
Globalization is a great thing as long as everyone is getting along. When the guns come out, many, many things are disrupted. It is not just oil and gas.
I am sure there are other industries that have the same story as the paper industry. This just happens to be one to which I am very close, and I know the potential problems are very real.
Jim Thompson, formerly of Marshall, is a graduate of Hillsboro High School and the University of Cincinnati. He resides in Duluth, Ga. and is a columnist for The Highland County Press. He may be reached at jthompson@taii.com.