April 1, 1990 Stephen Johnson

All the Paper That’s Fit to Reprint

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November 20 to 26, 1989, was recycling week in Ontario. The province went about extolling the virtues of garbage reduction, reuse and recycling, but at the same time Canada’s only newsprint recycler announced it would temporarily shut down to reduce inventory. Even with the pressure on newspapers to use recycled newsprint, Quebec & Ontario Paper CO. (Q & 0) fell victim to basic supply and-demand economics: a glut of available newsprint had pushed prices down to the point where publishers were opting for cheaper virgin paper.

Publishers say they are eager to begin using recycled newsprint once existing paper contracts expire and as soon as they can be guaranteed a steady supply of high quality recycled paper. As it stands now, the newsprint industry is ill-prepared to meet any increased demand for recycled newsprint, and any commitment by publishers to use it puts them in an awkward position: If they’re to use more recycled newsprint, where and when are they going to get it?

The problem begins in what most would consider an unequivocal recycling success story: the Blue Box program. Almost half of the nearly 650,000 tonnes of newsprint distributed in 1989 will be collected again at curbside as used newspaper. But not all that is collected is being recycled. Quite simply, there aren’t enough recycling mills.

Q & O buys 200,000 tonnes of old newsprint annually for its plant in Thorold, Ontario, near Niagara Falls, but according to Vince Benvenuti, the company’s planning director, Q & O could not recycle all of Toronto’s paper. “That’s about 250,000 tonnes a year -and that’s just Toronto.”

Owned by the Chicago Tribune, the company has borne the brunt of a huge surplus of old newspaper created by the success of the Blue Box program. It is a problem tikely to continue until well into 1990 when a second recycling plant -being built by Torontobased Atlantic Packaging Ltd. -opens in Whitby, Ontario. General manager, Bob Nelson, estimates the mill will require about 160,000 tonnes of old newspapers, but until it is up and running, and as long as the Ontario government keeps pushing the Blue Box program, the glut of old newspapers will continue to grow. Recent meetings between the provincial government and a committee of Ontario publishers headed by Toronto Star publisher David Jolley focussed on how the newspaper industry could contribute to the recycling program, and according to John Foy, president of the Canadian Daily Newspaper Publishers Association, the industry is putting up $10 million toward the purchase of more blue boxes throughout Ontario.

“The efforts to date have focussed on the collection and processing of recycled materials,” says John Hanson, executive director of the Recycling Council of Ontario which, formed in 1978, sponsors Ontario’s recycling week. And “in their enthusiasm to make it work they overlooked one side of the equation,” he says.

“We’ve concentrated on the supply side,” explains George Currie, a management consultant with Coopers and Lybrand, appointed by Ontario publishers to define the problem. “We haven’t done anything about the demand side.”

In Ontario, the provincial government seems to want to let the demand for recycled newsprint develop on its own. In the United States, however, burgeoning landfill sites and an embarrassing dependence on Canadian virgin newsprint have led 14 state governments to propose various forms of newsprint-recycling legislation. Already in Connecticut and California, laws require publishers to use increasing amounts of recycled newsprint.

But publishers and newsprint producers alike-particularly in Ontario-insist legislation is not only undesirable, it is also unnecessary.

“With public pressure on the publishers, who have publicly said that they are going to use more recycled newsprint when they can get it, we feel that things will fall into place without legislation,” says Nelson.

“You’ve got to go with the forces of the market,” adds Foy, “and that is what is being done. The worst thing to do is have government involved it screws everything up. So you try to get private enterprise to do it for you-any smart government does.”

Already in the US, 25 to 30 per cent of all newsprint produced is recycled newsprint, and as American publishers become less dependent on Canadian virgin newsprint, most foresee Canadian manufacturers responding to meet the increased demand for recycled newsprint-but not right away.
Coming off perhaps its best year ever, with mills consistently operating at 99 per cent capacity in 1988, the industry is in the midst of a global oversupply of newsprint. Five new mills came on stream in North America in 1989 and another seven are to follow by the end of1991. This in creased capacity (expected to reach 17.2 million tonnes in North America in 1990, up from 16.1 million tonnes in 1989) has pushed prices below the break-even point for many Canadian producers, and some US suppliers are offering discounts of 15 to 19 per cent. Over 200,000 tonnes of productive capacity was shut down across the continent in the first nine months of 1989, most of that in Canada, and Abitibi-Price Inc., world’s largest supplier of newsprint, reported that its profit plunged 52 per cent over the same nine-month period.

So, the likelihood of new recycling operations appearing over the next two or three years is slim: the price tag for a de-inking system now runs at around $80 million; a new mill close to $400 million.
“It’s a real dilemma,” says Benvenuti of Q & O. “One way or another, they are going to have to adjust, but it’s a decision that in economic terms does nothing for them but protect their market.”
Everyone seems to have adopted a wait-and-see approach. Although the glut of old newspapers is considered temporary, things won’t change unless Atlantic Packaging gets its old newspaper from Ontario municipalities. So far there are no guarantees. And as for the need for legislation, Bob Nelson says the Whitby mill should open before the government decides whether to step in.
“We will have to earn our way into this market, and if we don’t get the support that we need, then by all means if you want to get involved and start making legislation, then do it. But don’t do it now.”

Publishers, meanwhile, remain waiting in the wings. It’s clear newspapers are willing to use recycled newsprint-if for no other reason than to avoid mandatory recycled newsprint legislation.