The Changing Landscape in the Lake States

In the upper Midwest, where the industry is mature and focused on pulp and paper production, the changing nature of the Forest Products industry has been particularly apparent this year. In 2013 alone, we have seen three significant transactions take place.

In May, the specialty paper businesses at Packaging Dynamics Corporation and Wausau Paper Corporation  merged to form Expera Specialty Solutions. The merger brings together two wood-using facilities – one in Mosinee, WI and the other in Kaukauna, WI – with a long history in the Lake States.  Expera is now the largest specialty paper manufacturer in North America and one of the largest paper companies in the Lake States.

September was an especially busy month. On September 4, Louisiana-Pacific (LP) purchased Ainsworth, and on September 16, Packaging Corporation of America (PCA) announced its intent to purchase Boise. The LP transaction adds four facilities in Canada, with the Barwick, Ontario facility closest to the wood basket in the Lake States. PCA will now have a facility in International Falls, MN in addition to its facilities in Tomahawk, WI and Filer City, MI. The deal is expected to close in 4Q2013.

These consolidations will likely have little impact on overall wood consumption in the Lake States as all of the mills involved have excellent operating histories. The interesting question is how these recent consolidations will affect the pulpwood and chips supply chain in the Lake States and resultant pricing.  Forest2Market’s Delivered Price Benchmark is the only way to track these changes in a meaningful way.