#1Pulp and Paper Mill Products Market Profile Office of Business Development, Domestic Trade Program Maine DECD March 30, 2022 Pulp and Paper Mill Products This profile is intended to provide an overview of Maine's Pulp, Paper, and Paperboard Mills industry (NAICS 3221), including the current presence of the industry in the state, its markets and products, and the outlook for industry products. This profile is divided into the following sections: Pulp, Paper, and Paperboard Mills Industry Summary: Overview of industry jobs and sales for Maine and the United States. Markets and Products: A summary of industries that pulp and paper mills are selling to. Market Outlook: A deeper look into the outlook for industries using pulp and paper mill outputs, and the products that they are producing. State of Maine DECD | Pulp and Paper Mill Products Market Profile | |#2Pulp, Paper, and Paperboard Mills Industry Summary Currently, there are nearly 3,000 jobs in Maine's Pulp, Paper, and Paperboard Mills industry (NAICS 3221). Approximately two thirds of these jobs are in NAICS 322121: Paper (except Newsprint) Mills, followed by a quarter of jobs in NAICS 322110: Pulp Mills and the remained of industry jobs in NAICS 322122: Newsprint Mills. Pulp, Paper, and Paperboard Mills jobs account for 0.43% of all of Maine's jobs. At the national level, jobs in this industry account for only 0.06% of all jobs. Maine's industry jobs represent 3% of total domestic jobs in the Pulp, Paper, and Paperboard Mills industry. NAICS 3221: Pulp, Paper, and Paperboard Mills Jobs, 2021 NAICS 3221: Pulp, Paper, and Paperboard Mills Job Change, Maine NAICS 322110 Description Pulp Mills Historic, 2015-2019 # COVID- Related, 2019-2020 # 322121 Paper (except Newsprint) Mills 322122 Newsprint Mills 322130 Total % % % 140 24% (11) (2%) 108 15% (625) (21%) (390) (16%) (547) (27%) (284) (55%) 24 10% (79) (34%) 0 0% 0 0% 0 0% (769) (19%) (377) (11%) (518) (17%) Projected, 2021-2026 # Source: Emsi Paperboard Mills The Pulp, Paper, and Paperboard Mills industry is an export industry for Maine. 95% of the industry's $2.2 billion in annual sales are made to consumers out of state (both domestic and foreign). Nationally, 16% of industry sales are made to foreign consumers. NAICS 3221: Pulp, Paper, and Paperboard Mills Sales, 2021 Maine United States % of NAICS Description # Total # 322110 Pulp Mills 739 25% 5,549 % of Total 6% Maine % of US 13% 322121 Paper (except Newsprint) Mills 2,011 67% 50,679 55% 4% 322122 Newsprint Mills 232 8% 3,464 4% 7% 322130 Paperboard Mills 0 Total NAICS 3221 2,982 NAICS 3221 as % of Jobs in All Industries Source: Emsi 0.43% 0% 31,882 100% 91,574 0.06% 35% 0% Maine 100% 3% United States Source: Emsi Total Sales $2,213,700,131 $76,124,101,732 In-Region Sales $112,422,814 $64,233,659,942 Exported Sales $2,101,277,317 $11,890,441,790 % of Sales In-Region 5% % of Sales Exported 95% 84% 16% On a percentage basis, job losses in this industry are more significant in Maine than nationally. In the years leading up to COVID-19 (2015- 2019), Maine lost 19% of its jobs in this industry, compared to 5% at the national level. This trend has continued throughout the COVID-19 period (2019-2020) and is projected to continue through 2026. NAICS 3221: Pulp, Paper, and Paperboard Mills Job Change COVID-Related, 2019-2020 Since 2018 total sales by Maine's Pulp, Paper, and Paperboard Mills have fluctuated between $2.0 billion and $2.4 billion. NAICS 3221: Pulp, Paper, and Paperboard Mills Total Sales Trend, Maine Year 2018 Historic, 2015-2019 Maine United States Source: Emsi # (769) (5,000) % (19%) (5%) # (377) (4,587) Projected, 2021-2026 % # (11%) (518) (5%) (3,829) 2019 2020 % (17%) (4%) 2021 Total Sales $2,160,995,000 $2,380,794,000 $2,062,665,000 $2,213,700,131 In Maine, NAICS 322121: Paper (except Newsprint) Mills have had the highest number of jobs lost - 625 between 2015-2019, and another 390 in 2019-2020. On a percentage basis, NAICS 322122: Newsprint Mills has lost the most jobs, declining by 55% in the years leading up to COVID-19. Source: U.S. Census Bureau (2018-2020), Emsi (2021) Over a longer time period the industry has experienced a decline in gross regional product (GRP) in Maine. Since 2010, the Pulp, Paper, and Paperboard Mills industry's GRP has declined by nearly $390.0 million, or 33%. The industry has declined from 2.5% of Maine's total GRP to 1.2%, indicating that the industry is becoming less of an economic contributor to the state, relative to other industries. 2 | Pulp and Paper Mill Products Market Profile#3NAICS 3221: Pulp, Paper, and Paperboard Mills GRP Trend, Maine Year Industry GRP Industries 2010 $1,165,914,419 2.5% 2011 $1,085,155,728 2.3% 2012 $1,058,947,564 2.2% 2013 $1,058,295,357 2.1% 2014 $1,004,977,549 2.0% % of Total GRP AII Markets and Products Paper Mills Maine's paper mills sell their products as inputs to businesses in other industries. Within Maine, the Corrugated and Solid Fiber Box Manufacturing industry is the largest consumer of products from paper mills. Other key industries that paper mills are selling to include Commercial Printing, Sanitary Paper Product Manufacturing, and Other Paperboard Container Manufacturing. This data is related only to in-state sales from Maine's paper mills." Top 15 Industries Paper Mills are Selling to in Maine 2015 $938,360,437 1.8% NAICS Sales to Region Sales Total In- % of Total In-Region Sales 2016 $758,913,389 1.4% 322211 902999 2017 $660,050,792 1.2% 323111 2018 $725,601,694 1.2% 322299 322121 Corrugated and Solid Fiber Box Manufacturing State Government, Excluding Education and Hospitals Commercial Printing (except Screen and Books) All Other Converted Paper Product Manufacturing Paper (except Newsprint) Mills $6,107,682 14% $3,357,336 8% $3,232,380 8% $2,992,992 7% $2,591,903 6% 2019 $802,245,819 1.3% 322291 Sanitary Paper Product Manufacturing $2,046,213 5% 903999 2020 $727,344,740 1.2% 551114 Local Government, Excluding Education and Hospitals Corporate, Subsidiary, and Regional Managing Offices $1,766,865 4% $1,641,417 4% 2021 $775,971,637 1.2% 322219 Other Paperboard Container Manufacturing $970,649 2% 721110 Hotels (except Casino Hotels) and Motels $884,155 2% Change -$389,942,782 622110 General Medical and Surgical Hospitals $787,752 2% % Change -33% 326130 561730 Laminated Plastics Plate, Sheet (except Packaging), and Shape Manufacturing Landscaping Services $780,529 2% $690,884 2% 322110 Pulp Mills Source: Emsi Industry sales are of greater importance to Maine's economy than they are to the national economy. Pulp, Paper, and Paperboard Mills sales per capita equal approximately $1,613 in Maine, compared to only $229 nationally. Industry GRP (gross regional product) per capita is equal to $0.03 in Maine compared to $1.04 nationally. NAICS 3221: Pulp, Paper, and Paperboard Mills Sales per Capita and per GDP, 2021 322220 Paper Bag and Coated and Treated Paper Manufacturing $662,763 $608,172 2% 1% Source: Emsi Note: NAICS 322121 Paper (except Newsprint) Mills is used. Maine Industry Sales Total Population $2,213,700,131 United States $76,124,101,732 1,372,247 331,893,745 Total GRP $66,485,521,431 $73,306,108,828 Source: Emsi; United States Census Bureau Sales per Sales per Capita GRP $1,613 $0.03 $229 $1.04 1 Note that sales represent only the sales made from Maine's paper mills to other industries within Maine (in-region sales). Out of region sales data by industry is not available. State of Maine DECD | Pulp and Paper Mill Products Market Profile | 3#4Trends are similar at the national level, with similar industries being key consumers of paper mill industry outputs. The following table shows the total sales from the national paper mill industry to other industries within the United States. Top 15 Industries Paper Mills are Selling to in the United States Top 15 Industries Pulp Mills are Selling to in Maine NAICS Sales to Paper (except Newsprint) Mills Pulp Mills Total In- Region % of Total In- Region Sales Sales 322121 322110 $10,333,404 47% $5,654,666 26% 322299 322291 All Other Converted Paper Product Manufacturing Sanitary Paper Product Manufacturing $2,282,364 10% $1,397,258 6% % of Total Total In-Region 322122 Newsprint Mills $1,160,427 5% NAICS Sales to Sales In-Region Sales 322211 Corrugated and Solid Fiber Box Manufacturing $424,547 2% 322220 322211 323111 Corrugated and Solid Fiber Box Manufacturing Commercial Printing (except Screen and Books) $3,125,969,276 19% 322219 $1,142,798,337 7% 321113 Paper Bag and Coated and Treated Paper Manufacturing Other Paperboard Container Manufacturing Sawmills $78,796 0.36% $45,812 0.21% $21,536 0.10% 321999 902999 State Government, Excluding Education and Hospitals $992,817,067 6% 333611 903999 322220 322212 Local Government, Excluding Education and Hospitals Paper Bag and Coated and Treated Paper Manufacturing Folding Paperboard Box Manufacturing $907,709,983 5% 325212 All Other Miscellaneous Wood Product Manufacturing Turbine and Turbine Generator Set Units Manufacturing Synthetic Rubber Manufacturing $15,605 0.07% $10,199 0.05% $9,873 0.05% $872,006,617 5% 561730 Landscaping Services $9,444 0.04% $806,612,290 5% 902999 238910 322219 Other Paperboard Container Manufacturing $657,840,855 4% State Government, Excluding Education and Hospitals Site Preparation Contractors $8,541 0.04% $8,370 0.04% Source: Emsi 551114 Corporate, Subsidiary, and Regional Managing Offices $500,381,325 3% Note: NAICS 322110 Pulp Mills is used.. 322291 Sanitary Paper Product Manufacturing $292,134,348 2% 721110 Hotels (except Casino Hotels) and Motels $220,567,107 1% 323113 Commercial Screen Printing $214,152,211 322230 Stationery Product Manufacturing $214,013,519 902622 Hospitals (State Government) $200,895,712 561730 Landscaping Services 622110 General Medical and Surgical Hospitals $178,654,534 $169,082,617 1% 1% 1% 1% 1% Source: Emsi Trends are similar at the national level, with similar industries being key consumers of pulp mill industry outputs. The following table shows the total sales from the national pulp mill industry to other industries within the United States. Top 15 Industries Paper Mills are Selling to in the United States Note: NAICS 322121 Paper (except Newsprint) Mills is used. Pulp Mills Within Maine, pulp mills sell most of their outputs to other paper pulp mills, within the state. Key industries that purchase from pulp mills to use the output in other products include Sanitary Paper Product Manufacturing, Corrugated and Solid Fiber Box Manufacturing, Paper Bag and Coated and Treated Paper Manufacturing, and Other Paperboard Container Manufacturing. Note again that this data is related only to in-state sales from Maine's pulp mills. 322220 4 | Pulp and Paper Mill Products Market Profile % ot NAICS Sales to Total In-Region Total In- Sales Region Sales and 322121 322211 Paper (except Newsprint) Mills $410,503,339 28% 322291 322299 Corrugated and Solid Fiber Box Manufacturing Sanitary Paper Product Manufacturing $236,402,238 16% $130,153,186 9% All Other Converted Paper Product Manufacturing $105,094,687 7% Paper Bag and Coated and Treated Paper Manufacturing $86,016,188 6% 322212 Folding Paperboard Box Manufacturing $61,326,038 4% 322219 Other Paperboard Container Manufacturing $50,035,513 3% 322130 Paperboard Mills $48,891,213 3% 322110 Pulp Mills $48,192,718 3% 325220 322122 Artificial and Synthetic Fibers and Filaments Manufacturing Newsprint Mills $43,054,459 3% $29,212,846 2% 322230 Stationery Product Manufacturing $23,446,600 2% 325212 Synthetic Rubber Manufacturing 511210 Software Publishers 522110 Commercial Banking $17,436,064 $7,378,920 $5,318,935 1% 1% 0.4% Source: Emsi Note: NAICS 322110 Pulp Mills is used.#5Market Outlook The in-region industry sales data in the following section was used to identify six 5-digit NAICS industries that are key consumers of output from Maine's pulp and paper mills: Cardboard Box & Container Manufacturing Industry Growth Projections, 2021-2026 % Change NAICS Industry Revenue Exports Imports Demand 32221 Cardboard Box & Container Manufacturing 15% 16% 14% 15% 32222 32223 Coated & Laminated Paper Manufacturing -1% -11% -18% -2% Office Stationery Manufacturing -1% 0% -2% -1% 32229a Sanitary Paper Product Manufacturing 6% 7% 4% 5% 32229b Paper Product Manufacturing 3% 4% 0% 2% 32311 Printing -4% -18% -24% -4% Source: IBISWorld Coated & Laminated Paper Manufacturing Office Stationery Manufacturing Sanitary Paper Product Manufacturing Paper Product Manufacturing Printing Products produced by these industries include paperboard containers and boxes, paper bags, envelopes, toilet paper, napkins, diapers, party supplies, and books, among others. Key Industry Products NAICS 32221 32222 32223 32229a 32229b Industry Cardboard Box & Container Manufacturing Coated & Laminated Paper Manufacturing Office Stationery Manufacturing Sanitary Paper Product Manufacturing Paper Product Manufacturing Printing 32311 Source: IBISWorld Products Paperboard containers, folding paperboard boxes, corrugated and solid fiber boxes Surface coated paperboard, coated and laminated packaging paper, uncoated paper bags and sacks Paper supplies, stationary, envelopes Toilet paper, paper towels, napkins, tissues, diapers Party supplies, molded pulp goods, misc. Books, other According to data from IBISWorld the Cardboard Box & Container Manufacturing, Sanitary Product Manufacturing, and Paper Product Manufacturing industries are expected to grow over the next five years, with revenue, national imports and exports, and demand trending positively over this time period. The strongest demand growth is expected in the Cardboard Box & Container Manufacturing industry, where growth in online retail is expected to continue to increase demand for cardboard for use in packaging and shipping. Below is a brief summary of the market outlook for each of the six selected industries, according to IBISWorld: Cardboard Box & Container Manufacturing: E-commerce is a significant downstream market for industry operators, and its increasing prevalence has propped up industry revenue growth over the past five years. Despite the economic consequences of the coronavirus pandemic in 2020, industry operators have been buoyed by the movement of consumers to shop online. Online retailers require industry products to ship goods to customers, and as consumers increasingly opt to purchase goods online rather than in brick-and-mortar stores, demand for industry products has risen. Revenue growth is expected to accelerate in the coming years due to the recovery of downstream markets from COVID-19 and the increasing prevalence of e-commerce. Coated & Laminated Paper Manufacturing: Operators in the Coated and Laminated Paper Manufacturing industry have experienced a wide array of challenges over the last five years, particularly from import competition and weak demand. As producers of commoditized goods, industry manufacturers compete heavily on price and have struggled with foreign companies that can pass their substantially lower production costs on. Bright spots for the industry have included environmental awareness leading to a preference for paper products over plastic and steady demand from food manufacturers. While import competition, offshoring trends in downstream industries, and a declining print media sector point to continued weak demand for the industry the wide range of uses for industry products will help maintain a level of stability. State of Maine DECD | Pulp and Paper Mill Products Market Profile | 5#6Office Stationery Manufacturing: The industry has faced ongoing challenges from the trend toward digitalization. Many industry products have been digitized, decreasing demand for paper products and hampering industry revenue. Over the five years to 2026, the increasing use of electronics instead of traditional office supplies will likely continue, creating a weak long-term outlook for the industry. Sanitary Paper Product Manufacturing: Due to the industry's production of nondiscretionary goods, it is shielded from extreme fluctuations caused by macroeconomic shifts. Industry growth can be attributed to the expanding population, although this has been limited somewhat by declines in birth rates. On the other hand, the United States is a net importer of sanitary paper products as consumers and downstream markets have increasingly opted for imported goods, available at lower prices. Nevertheless, the growing elderly population has mitigated the industry's decline by fueling demand for adult incontinence products. Diapers and incontinence products represent the industry's most lucrative product segment. Demographic trends will benefit the industry over the next five years, while a shift in consumer preferences towards reusable products poses a threat. Paper Product Manufacturing: Over the five years to 2021, the industry has contended with heightened competition from substitute products and low-cost imported goods. Many paper products in this industry are considered discretionary, such as paper dishware and party supplies, causing the industry to be vulnerable to macroeconomic factors. Over the five years to 2026, industry operators are expected to benefit from favorable economic conditions and declining import penetration. Printing: The printing industry is in the midst of a decline as digital products and services continue to displace printed materials. The industry's two largest markets, advertising and publishing, have both accelerated their moves online over the last five years, reducing demand for printing. Substitutes for commercially printed material, such as online media, will likely continue to adversely affect industry demand. However, some 6 | Pulp and Paper Mill Products Market Profile bright spots remain for the industry. Although industry operators are expected to persistently lose revenue to digital media, the continued value of print advertisements to marketing campaigns may somewhat temper the pace of printing's decline. Data Sources Economic Modeling Specialists International (EMSI) To analyze the industrial makeup of a study area, industry data organized by the North American Industrial Classification System (NAICS) is assessed. Camoin Associates subscribes to Economic Modeling Specialists Intl. (EMSI), a proprietary data provider that aggregates economic data from approximately 90 sources. EMSI industry data, in our experience, is more complete than most or perhaps all local data sources (for more information on EMSI, please see www.economicmodeling.com). This is because local data sources typically miss significant employment counts by industry because data on sole proprietorships and contractual employment (i.e., 1099 contractor positions) is not included and because certain employment counts are suppressed from BLS/BEA figures for confidentiality reasons when too few establishments exist within a single NAICS code. IBIS World IBISWorld is one of the world's leading publishers of business intelligence, specializing in industry and procurement research. Through its detailed industry reports available at 5-digit NAICS level, IBISWorld provides insight into market conditions for targeted industries, helps to identify major suppliers or supply chain, and provides an understanding of competitor activity. More at www.ibisworld.com