Industry Analysis & Industry Trends
Paper mills are big business around the world, taking in $529.2 billion in revenue during 2011 and showing annualized growth of 4.8% over the past five years. Some 3,920 mills operate globally, employing approximately 415,500 people. In 2011, the industry is expected to continue recovering from 2009, the worst year in decades. A global drop in demand caused revenue to contract in 2009, with major adjustments to capacity and employment. The average operator recorded net losses of 2.9% of revenue for the year. This indicated tough operating conditions for most companies, and the inability to cut costs and capacity at a fast enough rate to match a drop in demand. Production is expected to increase during 2011, while the world price of pulp will grow by 4.3%... read more
Industry Investment
Paper mills are generally large and contain sizeable and heavy machinery used in the production of pulp, paper and paperboard. The mills are large because small-scale production is too costly on a per output basis. The sort of machinery required for large-scale production is expensive and therefore capital expenditure in the industry is substantial. That is the main reason for a high level of capital intensity; approximately $0.13 worth of labor is required for $1 worth of capital investment. The industry's capital intensity has increased slightly since 2005, mainly due to a significant fall in industry wages.
Labor dependency in mills is falling. Technological developments in paper making machinery are still relatively rapid, meaning that production workers are fewer... read more