Paper companies feel impact of weak economy but look to future

Minnesota State Roundup

Published January 1, 1992  | January 1992 issue

The impact of less consumer spending and business belt-tightening has led to lower profits for Minnesota paper companies in the third quarter of 1991.

As a result of less demand paper companies are experiencing lower prices and an oversupply of stock. "Paper prices are down, like everything else," says Bruce Barker, assistant vice president of Minnesota Forest Products Industry Inc., a trade association. "They're down from a year ago."

But there's not a doom and gloom feeling by companies, Barker says. For example, he notes that Potlatch Corp. in Cloquet is moving ahead on a planned expansion as soon as its environmental impact statement is approved. And as of early December, most companies were on standard production schedules, and none had laid off workers.

There have, however, been fewer orders for paper on which to print advertising supplements. Barker says that while there has been less than the usual pre-holiday demand for paper for catalog production, newspaper filler ads are somewhat better than earlier in the fall.

"From an overall standpoint, I'm reluctant to say we have a bright future in the next quarter, but the industry in the state is healthy and growing," Barker says. In 1990 Minnesota's forest products industry had a value of over $6 billion, considerably higher than the $3.9 billion reported for 1986. Coinciding with the increased value is a continual increase in employment: 51,800 in 1986, nearly 54,000 in 1989 and about 59,000 in 1990.

With six paper mills located in the northern part of the state, papermaking is the largest segment of the forest products industry in Minnesota, and forest products is the second largest manufacturing industry in the state, behind the computer industry.

Kathy Cobb