January 6, 2004

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DOMTAR INC., Montreal, Quebec, Canada has entered into an agreement with Tembec Inc., Temiscaming, Quebec, which will allow them to restructure their Northeastern Ontario sawmill operations. Domtar will permanently close its sawmill located in Chapleau on March 6, 2005, selling the boiler and kiln facilities associated with this operation to Tembec. This will allow Tembec to process the increased lumber output of its neighboring facility with fiber volumes historically associated with the Domtar Chapleau sawmill. Domtar stated 67 jobs would be affected by this closure, although Tembec says it will require 49 new employees under its management. This decision will result in asset write-off and closure costs amounting to approximately C$ 14 million (US$ 11.5 million).

Domtar will be adding a third shift at its Elk Lake facility to process wood that has become available due to the closure of the Tembec sawmill in Kirkland Lake, Ontario. The processing of this additional fiber will require 56 additional people beyond those currently working at the Elk Lake facility.

In a simultaneous announcement, Tembec outlined the following planned moves:

• Tembec will cease sawmill operations at its Kirkland Lake mill on March 4, 2005, and will invest, in a partnership with Domtar, over C$ 9 million (US$ 7.4 million) to transform the mill into a value-added center for the manufacturing of finger-jointed lumber, with a start-up date scheduled for the end of 2005. The center will create between 70 and 92 jobs, compared to 43 at the normal rate of sawmill production. Tembec will manage and operate the plant. The employees from the sawmill will be integrated into the new value-added center.
• Tembec's Chapleau mill will add a third shift and its annual production will increase to 147,000 mfbm from 111,000 mfbm at present.
• Tembec's Opasatika mill will shut down its operations permanently as of March 4, 2005. This closure will affect 78 employees.
• Tembec's Hearst mill will add a third shift and its annual production will increase to 155,000 mfbm from 105,000 mfbm at present. The number of employees at the sawmill will increase from 165 to approximately 202.
• The announced restructuring will also bring greater stability to the Tembec Kapuskasing sawmill and 124 existing jobs will be secured at that mill. Tembec was facing downtime in the Hearst, Opasatika, and Kapuskasing facilities that may now be reduced or avoided.

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FASTFORESTS INC., Boca Raton, Florida, USA has completed the acquisition of a 29% holding in a venture capital group, Advanced Funds Management (Holdings) Ltd. (AFM(H)L), Queensland, Australia. FastForests owns the worldwide rights to the SupaTree that grows 30 to 35 feet the first 12 months and is fully grown in 9 years and when cut down for lumber, the stump is not pulled out as new growth comes out of the stump to replenish the same tree. AFM(H)L was formed in April 2003 and has invested A$2.5 million (US$ 1.9 million) in the establishment of a venture capital company and a registration under the Pooled Development Act of 1992.

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THE FREEDONIA GROUP, Cleveland, Ohio, USA has released a trend study called, "World Packaging Machinery," which projects demand for packaging machinery to rise 5%/yr through 2008, including price increases, to over US$ 31 billion. Developing nations are expected to register the strongest gains. This represents a substantial improvement over the 1998 - 2003 period, reflecting accelerating economic growth in developing regions and Eastern Europe.

Other notable findings of the report include:

• The most promising markets are those emerging in Latin America and the Asia/Pacific region;
• China will recognize some of the strongest increases with annual packaging machinery demand rising over 8% through 2008;
• The US is the largest producer of packaging machinery, with 2003 shipments of US$ 4.9 billion; Japan follows closely behind with shipments of US$ 4.1 billion;
• The fastest growing segment of the product group will be labeling and coding machinery.

For more information or to purchase the full report, go to www.freedonia.com.

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INTERNATIONAL PAPER (IP), Stamford, Connecticut, USA has completed the sale of 1.1 million acres of forestlands in Maine and New Hampshire to GMO Renewable Resources LLC (GMORR), a private forest investment management company, for approximately US$ 250 million. IP and GMORR have developed a long-term wood fiber supply agreement to continue the flow of wood fiber to IP's Maine paper mills in Jay and Bucksport. The companies have also agreed to a long-term management contract by which IP's subsidiary Sustainable Forest Technologies, Inc. will provide forest management services, including third-party certification to the Sustainable Forestry Initiative(R) Standard.

IN OTHER IP NEWS: The company and its employees announced they are donating US$ 200,000 to relief efforts in Southeast Asia to help tsunami victims. IP will also match additional contributions made by employees to its Employee Relief Fund.

ALSO, IP has completed the sale of its Weldwood of Canada Limited subsidiary to West Fraser Timber Co. Ltd., Vancouver, Canada, for C. $1.23 billion (U.S. $1 billion). IP's net cash proceeds received from the sale, including closing adjustments, were approximately U.S. $1.1 billion. The transaction was completed Friday, December 31, 2004. While the loss on the sale, previously recorded in discontinued operations during the 2004 third quarter, is subject to post-closing adjustments, it is currently anticipated that the loss will be approximately 10% lower than the US$ 795 million loss previously estimated at September 30, 2004.

The sale includes eight wholly owned and four joint venture mills in British Columbia and Alberta, Canada, manufacturing lumber, plywood, laminated veneer lumber, treated wood products and northern bleached softwood kraft pulp. Weldwood also manages 8 million acres of Crown land under a variety of long-term provincial government agreements and employs more than 3,000 people.

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KIMBERLY-CLARK CORP. (K-C) said it would increase its cash contribution to the United Nations Children's Fund (UNICEF) to US$ 500,000 to support South Asia tsunami disaster relief. The company also announced it will match dollar-for- dollar gifts made by its employees to UNICEF's relief operation, up to an additional US$ 500,000. Combined, this will bring K-C and its employees' cash donations to as much as US$ 1.5 million. Previously, the company announced it would contribute US$ 100,000 UNICEF. In addition to this contribution, the company also is donating personal care and health care products to support relief efforts in the region. K-C is donating Huggies diapers, Kotex feminine pads, Scott tissue products and Safeskin surgical gloves. Products will be distributed in coordination with local relief agencies or in conjunction with UNICEF. K-C employees in Thailand responded immediately with blood drives, product donations and local relief assistance.

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METSO PAPER, Helsinki, Finland has concluded an agreement to sell its production operations in Karhula to Mesera Works Oy, Finland. According to the agreement, 105 workers transferred as existing employees to Mesera Works on January 1, 2005. Additionally, a letter of intent concerning the sale of the land area and the buildings in Karhula to a company called Kiinteisto Oy Karhulan Levyhalli has been concluded. The parties have agreed not to disclose the transaction prices. The transactions will not have a material effect on Metso's 2004 fourth quarter results.

In addition, Metso Paper has concluded an agreement with Etteplan Oyj, Finland whereby six Karhula employees involved in the mechanical development of headboxes will transfer to Etteplan as existing employees. Metso Paper will continue in Karhula with operations relating to paper machine renewals and process improvements.

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MYLLYKOSKI GROUP, Helsinki, Finland has contracted Metso Paper to deliver equipment for groundwood pulp and paper making processes to Myllykoski's paper mills in Germany, Finland, and the United States. Several of Metso's Finnish units will work with those in Sundsvall, Sweden and Atlanta, Georgia, USA will participate in the deliveries. The total value of the orders will amount to close to EUR 40 million (US$ 54 million). Included are the following projects:

• A rebuild of Paper Machine Number 11, which produces light weight coated magazine papers, at MD Plattling in Bavaria, Germany and is scheduled for December 2005 startup.
• Metso Paper will deliver the main equipment of a peroxide bleaching plant for Paper Machines Number 6 and 7 Myllykoski Paper's Anjalankoski Mill, Finland. In addition to the main equipment, the order includes preparation of the bleaching chemicals as well as Metso Automation's process control system with necessary field instruments. The plant will be ready for taking into production in early 2006.
• At Madison Paper Industries, Madison, Maine, USA. Metso Paper will expand the mill's pressure groundwood plant, including a new grinder, the mill's sixth, and an update and extension of Metso Automation's process control system. The project will be delivered in October 2005.

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SCA HYGIENE PRODUCTS has selected PMT Italia, Torino, Italy to supply a 60,000 metric ton/yr tissue line for the new plant in Valls, Spain, outside of Barcelona. The turnkey project managed by PMT includes the supply of a bale handling system, stock preparation equipment, the tissue machine, a roll handling system, as well as auxiliary systems, controls, and electrical for the tissue machine. PMT will manage the detailed engineering and erection of the plant, which is expected to be in operation in late 2005.

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SMART Papers LLC, Hamilton, Ohio, USA has signed an asset purchase agreement with Toronto-based forest products company Fraser Papers to acquire Fraser Papers' pulp and papermaking operations in Park Falls, Wisconsin, as well as a 470,000-square foot converting, distribution and customer service facility in West Chicago, Illinois. This transaction is subject to customary closing conditions and is expected to close in approximately 60 days. The transaction includes three paper machines, a pulp and de-inking facility and well-established printing paper brands used daily by North American commercial printers.

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THE STATE PROSECUTOR OF FINLAND, Helsinki, Finland has published his decision not to prosecute the employees at UPM Kaukas pulp mill who have been questioned under suspicion of negligent environmental damage concerning the effluent emission at the pulp mill during summer 2003. According to the investigations, the employees were not guilty of any harmful intentions or negligence. According to the prosecutor, exceptional and unexpected problems occurred during the start-up of the pulp mill.

"We are glad that the incident has now been thoroughly investigated and that the decision has been made. During the investigations, Kaukas and UPM's other production plants have engaged in an active learning process aimed at preventing similar incidents from occurring again. Since the incident, we have revised our control systems and reviewed our risk management guidelines to ensure continuous improvement of our operations at all our production plants. In addition, personnel have been further trained," says Harry Sundqvist, Vice President and General Manager.

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WESTERN FOREST PRODUCTS INC. (WFP), Duncan, British Columbia (B.C.), Canada announced that it has reached an agreement with the B.C. Ministry of Forests on compensation to be paid to WFP for the reduction of its harvesting rights under provisions of the Forestry Revitalization Act (Bill 28). The government announced its plan to reduce harvest rights in March 2003. Under terms of the Agreement, Western Forest Products will receive more than C$ 16.5 million (US$ 13.5 million) in compensation for the loss of 685,216 cubic meters of annual cut and 827 hectares of timber licenses. WFP will also receive an advance payment of C$ 5 million (US$ 4.1 million) towards compensation for WFP improvements to Crown land forming part of the take back area. WFP and the Ministry will continue to negotiate towards a final settlement.


For more detail on the stories above, visit the Industry News section of the TAPPI website.

CLOVERNOOK CENTER FOR THE BLIND AND VISUALLY IMPAIRED, Cincinnati, Ohio, USA announced it worked with International Paper (IP) to develop a new biodegradable and compostable paper cup capable of holding hot beverages that will help divert paper away from landfills, satisfying customer demand for a fully biodegradable product.

Paper for the new cups was engineered at IP's Cincinnati Technology Center, under the direction of research scientists Chris Cleveland, Ph.D., and Tricia Reighard, Ph.D. The new cups are formed at Clovernook's manufacturing facility in Memphis, Tennessee, which employs visually impaired workers. In addition to cups, the plant manufactures a variety of other paper products ? including file folders and labels ? for subsequent sale to Clovernook's government and commercial customers in the United States and Canada.

Headquartered in Cincinnati, Clovernook Center began investigating ways to improve its uncoated biodegradable cup upon receiving a request from the U.S. Navy, its largest cup customer, to make the cup in larger sizes with longer liquid holdout and less hot to the touch when filled with warm liquids.

Addressing this request, Clovernook entered into active discussions with Cleveland regarding biodegradable and compostable coatings approved by the Food and Drug Administration. Cleveland ran coating trials at IP's Cincinnati Technology Center until a successful outcome was achieved. Production will be transferred to IP's Prosperity, South Carolina facility for commercial manufacture in the next few months.

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IGGESUND PAPERBOARD AB, Stockholm Sweden, has found the new European Union (EU) regulation governing materials used in food packaging to be both more stringent and more extensive than the previous framework legislation. "But the effects on Iggesund Paperboard are minimal since all our products and systems already meet the requirements," says Jan Erik Winlund, manager of product safety and regulatory affairs for Iggesund Paperboard.

The new Regulation (EC) No 1935/2004 on materials and articles intended to come into contact with food became effective December 3, 2004, placing tougher demands on the purity of the materials which come into direct or indirect contact with food in the packaging chain. The change is a major addition to previous regulations, since the same demands are now being placed on secondary packaging in this respect. There are also more stringent requirements on documentation, labeling and traceability.

Winlund explains that the secondary packaging is included in the regulation in order to ensure that no undesirable substances can migrate from the secondary packaging to the food contained in the primary packaging. He predicts that companies which have supplied materials for secondary packaging and which were not previously affected by the requirements governing food contact will now be forced to implement extensive measures if they want to continue supplying materials for food packaging. The companies will have to analyze materials and adapt quality assurance systems to meet requirements for documentation, labeling, and traceability.

Commentary by Jim Thompson
Contributing Editor
jim.thompson@tappi.org

Some lying is probably good--I once read a treatise defending President Eisenhower for lying about any knowledge of Gary Powers flying a U-2 spy plane over Soviet Russia (and being shot down, for you kiddies too young to remember) and how this probably allowed everyone to cool down and avert WW III. However, most of the matters us mere mortals take up are not in this category.

No, I am talking about the mundane we do every day, as either laziness, convenience, or as a cover-up. For example, in a mill I worked in about 25 years ago, the engineering department was assigned the task of replacing the overhead lights in the bleach room in the pulp mill. Our standard replacement fixture in the mill at that time was low-pressure sodium--economical fixtures, economical bulbs, low power consumption. When the management in the pulp mill heard that we were going to put "those yellow lights" in their bleachery, they threw a fit. We had to put in lights in the blue wavelength spectrum so the pulp coming over the deckers would look blue-white and not yellow. Who was lying to whom?

Recently, I was told that someone had to attend a "mandatory" meeting. What the heck is a "mandatory meeting" if it does not involve handcuffs and leg irons? Such careless use of the word mandatory cheapens its value.

Now, as most of you know, one aspect of my business involves sales. When a project is moving through the selling process, people like me tend to call the prospective buyer too much and pester them to death. I remember what it was like when I sat on the other side of the desk and how I disliked being pestered like this. So, I thought, I will try something different. I had called the prospect twice in a week. I thought that was too much, so on the third call, I said, "Look, I don't want to pester you--I know you are very busy. You have told me you will have a decision a week from Monday. Tell you what I will do, if you commit to calling me a week from Monday, whether you are awarding me the project or not, I will commit to stop calling you and await your call then. Agreed?" The commitment was made. Did the party follow through? Of course not. I finally received an email from this person three weeks later telling me no decision had been made (don't worry--I was checking through other sources and already knew this--I had not abandoned the chase).

And finally, somewhat related to the previous example, I just love people's voice mail greetings that tell me they will get back to me "as soon as they can." Hey, I have a list of about 10,000 people who must be on 3 year extended vacations in Antarctica if this message is true.

So, these are four easy examples. We lie all the time and it costs our employers money and lowers our performance and ethical standards. I will bet you have lied in other creative ways and can think of even more you have witnessed. If you send some real life ones along, we will print the juiciest ones (protecting all identities, as usual) in a future column.

Safety, safety, safety. Hopefully you and the site at which you work have managed to maintain a perfect safety record thus far this year. Keep it up--safety records are built one minute at a time. Happy New Year and we will talk next week.

Editor's Note: The opinions expressed in this column are those of the author only, not TAPPI.

New Industry Growth Strategies Virtual Seminar
January 14, 2005, 1:30-2:30 p.m.
Register today! This live TAPPI virtual seminar sheds light on some unexpected ways that paper companies can find new growth in the current market. This seminar will identify proven, non-traditional business strategies that provide North American paper companies with new avenues for growth as the industry restructures itself.

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Upcoming TAPPI Events

Coating Materials: Pigments, Binders and Additives Short Course
January 17-19, 2005
Radisson Riverwalk, Tampa, Florida

Introduction to Pulp and Paper Technology Short Course
January 17-20, 2005
Radisson Riverwalk, Tampa, Florida

Kraft Recovery Short Course
January 17-20, 2005
Radisson Riverwalk, Tampa, Florida

Pira, IDTech and TAPPI Intelligent & Smart Packaging USA
January 24-26, 2005
The Wyndham Resort, Orlando, Florida

Implementing Lean Manufacturing for Flexos and Die Cutters Short Course
February 1-2, 2005
TAPPI Headquarters, Norcross, GA

Southeastern and Virginia-Carolina Local Section Conference
February 17 - 18, 2005
Hilton Garden Inn, Rock Hill, NC

TAPPI/NCSU Hands on Workshop for Pulp & Paper Basics
March 7-11, 2004
North Carolina State University, Raleigh, NC

TAPPI/IDCON: Maintenance & Operations Reliability Week
April 4-7, 2005
Perdido Beach Hotel, Orange Beach, Alabama

TAPPI Coating Conference and Exhibit
April 17-20, 2005, Toronto, ON, Canada

TAPPI Paper Expo
Plan now to attend TAPPI Paper Expo, the show for the Pulp and Paper Industry, May 23-25, 2005 in Milwaukee, Wisconsin. In addition to an outstanding exhibit, TAPPI Paper Expo also features the TAPPI Practical Papermaking Conference and the Mill VIP Program.

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TAPPI Annual Meeting
TAPPI will kick off its 90th Anniversary celebration with the 2005 Annual Meeting and Awards Ceremony and the annual Fellows Luncheon on February 23, 2005 at the Radisson Riverwalk Hotel in Tampa, Florida. This annual gathering of TAPPI members, leaders, fellows, and honored guests provides a forum for TAPPI members to share information and recognize those who have made unique contributions to TAPPI and to the industry.

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New From TAPPI PRESS
Making Pulp and Paper: Bleaching

Bleaching is the seventh of 15 CD-ROMs in the Making Pulp and Paper CD-ROM Series. Through this highly interactive, self-paced CD-ROM participants learn bleaching terms, concepts, and processes.

After completing the Bleaching CD-ROM, participants should be able to:

1. Identify the most commonly used bleaching chemicals.
2. Describe the stages of a typical bleaching sequence.
3. Explain how bleaching has changed to meet new environmental challenges.

Learn more about Bleaching and the entire Making Pulp and Paper CD-ROM series.

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Web Tip of the Week
Use the Online Membership Directory to get in touch with your fellow TAPPI members! Simply login at www.tappi.org and click on the Membership heading located on the left side of the page. You'll then see the link for the Membership Directory.

It's easy to use!

1. Enter the member's last name or last name and first name separated by a comma [ Doe, John ] to find an individual member. OR
2. Enter a city, state, province, or country name to find all members in that city, state, province, or country. OR
3. Enter any combination of these fields. For example, entering TAPPI in the business field and Atlanta in the city field will yield all members who work at TAPPI in Atlanta.