Pulp fiction has helped to rescue a Canadian company in distress.
A leaner Catalyst Paper Corp. has slashed the amount of newsprint in its production lines and shifted attention to new opportunities, emboldened by a recent contract to supply book-grade paper for a steamy bestseller.
The pulp and paper company’s Powell River mill on British Columbia’s Sunshine Coast, which began as a newsprint producer 100 years ago, has proven to be adept at changing with the times, said Lyn Brown, Catalyst’s vice-president of marketing and corporate responsibility.
Earlier this year, the Powell River site earned a coveted spot as one of the major manufacturers of specialty paper that was used in the publication of the erotic trilogy Fifty Shades of Grey. In the case of the blockbuster book, Catalyst supplied its “Electrabrite” paper grade, Ms. Brown said. “We have become nimble from a production perspective. Helping supply the book-grade paper for the must-read novel is an indication of how flexible our equipment is,” she said, noting that the Powell River plant no longer makes newsprint.
Richmond, B.C.-based Catalyst’s road to recovery comes as newsprint demand in North America continues on a steady decline. The privately held company emerged from bankruptcy protection last month and is now focusing on meeting demand for specialty paper. It closed its recycled-newsprint mill in Arizona on Sept. 30, noting that North American newsprint demand has fallen more than 10 per cent annually since the end of 2008.
That decision became necessary as the cost of acquiring supplies of old newspapers surged in recent years amid a voracious appetite from Asian newsprint mills, said Tom Crowley, Catalyst’s senior vice-president of sales and marketing.
Shutting down the Arizona plant has left Catalyst’s Crofton mill on Vancouver Island the only one of the company’s three remaining plants making newsprint. The Arizona mill, called Snowflake, had supplied mostly U.S. customers.
The company is confident that overseas customers of the Crofton site’s high-quality newsprint, made from wood fibre, will help to offset its shrinking base of North American buyers. Catalyst’s deep-sea port at the Crofton division is a strategic asset that clears the way for nurturing exports to Asia and Latin America in a cost-effective manner, executives say.
The forest products company’s other B.C. plant is located in Port Alberni on Vancouver Island.
In 2008, Catalyst boasted newsprint capacity of nearly one million tonnes a year. With only its Crofton plant now making newsprint, Catalyst’s capacity for the product will be an estimated 220,000 tonnes in 2013.
“The North American market is shrinking in the paper grades that Catalyst is in. There is no safe haven,” cautioned Kevin Mason, managing director at ERA Forest Products Research. “If you want to shift to another grade, you would be going from one declining grade into another declining grade.”
In a recent study, ERA said European newsprint producers have been able to boost their exports with the aid of a weaker euro – a much-needed increase because demand within Europe has faltered.
The North American industry’s exports of newsprint slumped 25 per cent in the first eight months of 2012.
“We’re facing the brutal truth,” Mr. Crowley said. Newsprint now accounts for 15 per cent of Catalyst’s overall revenue while specialty papers contribute 60 per cent and pulp makes up 25. In 2008, newsprint made up one-quarter of revenue, specialty papers, 54 per cent, and pulp, 21 per cent.
“The answer for us is diversity,” Mr. Crowley said. “We have a very broad product range. We’re also geographically diverse in the sense that our home markets are on the West Coast of North America, and we also have competitive shipping rates for pulp and paper to Asia, and paper into Latin America.”