THIS CHART SHOWS THAT TWO SIGNIFICANT ELEMENTS OF PRICES ARE NOT UNDER THE CONTROL OF BUSINESS; NAMELY, TAXES AND POLLUTION ABATEMENT. PRODUCTIVITY IS THE ONLY WAY TO OFFSET THESE INCREASES WHICH MEANS AN AGGRESSIVE PROGRAM OF INVESTMENT IN FACILITIES. CHART 12 As evidence of this preference by paper companies for alternative investments in recent years, we show the chart below which compares the total capital spending by companies classified in the paper and allied products group with spending for paper and pulp alone. The lower line shows the investment in paper capacity only; the upper line shows total capital outlays by companies classified as paper and allied products. The trend of capital spending for paper and pulp in recent years has been low in relation to the total outlays of paper companies; this occurred despite the heavy capital requirements for pollution control in the paper industry. ARI AMERICAN PAPER INSTITUTE CAPACITY 1972-1975 WITH ADDITIONAL DATA FOR 1976-1978 PAPER PAPERBOARD WOOD PULP FIBER CONSUMPTION COMMENTARY SUMMARY TABLE 1: YEAR END CAPACITY ALL GRADES PAPER AND PAPERBOARD In the twelve months that have ensued since publication of our previous survey, the U.S. paper industry has performed a remarkable job of meeting sharply increasing demands. In the 1972 survey industry plans for 1973 paper and paperboard year-end capacity totaled 63,215,000 tons. This survey shows that the industry actually has increased the figure for 1973 by 1,942,000 tons to 65,157,000 tons. Several factors contributed to this upward revision. Planned operating days were increased an average of 2.3 days. Machine improvements have been speeded up and completed sooner than projected. Some mills that were scheduled for permanent shutdown have been kept running while others that had been closed were reactivated. But increased efficiencies resulting from longer runs, better product mixes and streamlining of mill lines probably made the greatest contribution to this capacity growth. In short, by all these means, the industry has achieved a 3.1% increase in capacity not contemplated a year ago and thus has helped to keep supply in remarkable balance with demand. Two points, however, should be kept in mind: additional capacity resulting from many of these factors is non-repetitive in nature, and the extent to which it can be sustained over long time periods is not yet clear. |