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Paper Cuts: Oregon’s Declining Paper Industry

Paper Cuts: Oregon’s Declining Paper Industry

by Erik Knoder

September 28, 2017

Employment in paper manufacturing in Oregon has declined for decades, but it remains an important industry in the state. Paper manufacturing provides about 4,200 jobs in Oregon, down from around 10,000 in 1976. In 1976, paper manufacturing accounted for a little more than 5 percent of Oregon’s manufacturing jobs; by 2016 its share was down to 2.3 percent of manufacturing employment. In this respect it is similar to the wood products industry, which fell from about 40 percent of Oregon’s manufacturing jobs to about 12 percent over the period.

The Industry

Paper manufacturing began in Oregon with the Pioneer Paper Manufacturing Company in 1866, but the mill closed in less than a year. The Clackamas Paper Manufacturing Company opened in 1868 and was followed by Willamette Pulp and Paper in 1889 near Oregon City. The Crown Mill opened in 1890, and Hawley Pulp and Paper opened in 1909. Some of the early mills struggled with uncertain manufacturing processes and could not produce enough paper to be profitable. Newsprint was an important product for early mills.

The modern paper industry in Oregon has two major divisions: the pulp and paper manufacturing side with 11 facilities, and the converted paper products (such as box making) side that has 43 facilities. There are a multitude of types of paper manufactured: containerboard, tissue, newsprint, paperboard, copying paper, coated and uncoated, and a nearly endless list of specialty papers.

A Long Decline in Oregon

The drop in employment over the years is only partly due to decreasing output. Physical output in 2015 was only 15 percent lower than in 2001 yet employment fell by 41 percent over those years. Since 1997 the value of output has varied from nearly $1.3 billion to $734 million to (2009 dollars), but the industry’s employment has steadily declined in Oregon.

Paper is not declining globally. The Food and Agriculture Organization of the United Nations (FAO) forecasts world production of paper and paperboard to increase about 3.0 percent per year through 2020. However, much of the growth will be in Asia and Eastern Europe. Imports and trade are important issues for the industry and its unions. Oregon exported $236 million of paper in 2016 and the U.S. exported $23 billion of paper.

Occupations in Paper Manufacturing

More than 100 different occupations are employed in Oregon’s paper industry. The most common occupation in the industry is, not surprisingly, paper goods machine setters, operators, and tenders – the people who run paper machines. This one occupation made up about 16 percent of the industry’s workforce in 2014 and paid an annual average salary of $45,306 per year in 2017.

The table lists information about the 15 more common occupations in the industry. Many of them, such as mechanics and fork lift drivers, are common to other manufacturing operations aside from paper making.

Many jobs in paper manufacturing pay well. The average wage in the industry in 2016 was $70,793 per year. The average wage for all jobs in Oregon that year was $49,467.

Wages listed in the table are for occupations in the paper industry, with the exception of electricians and graphic designers; their wages in the industry are confidential so their wages were calculated from all industries combined. Manufacturing industries tend to pay higher wages than many other industries, and traded-sector (export) industries also tend to pay higher wages. Paper manufacturing is often in both these categories.

Wages are also influenced by the education and training that an occupation requires. Occupations such as manager, mechanic, and electrician require more education and training, and pay more.

Wage Effect of Unions

Another reason for high wages is that some paper manufacturers have a unionized workforce, and this partly explains why paper machine operators and production workers have fairly high wages. There appears to be no readily available, public list of firms that have a unionized workforce, but officials from two unions, the Association of Western Pulp and Paper Workers and the United Steelworkers, identified 10 units that had members of their unions. These facilities tended to represent the pulp and paper manufacturing side of the industry and comprised about 52 percent of the jobs. As far as they knew, most of the paper converting firms had nonunionized workers. The average wage in 2016 for the firms that are known to have union workers was about $82,700. The average wage for the firms that were nonunion or of unknown status was about $57,000. This was a difference of about $25,700 per year.

There are differences between these two groups of firms aside from the union status of their workers. As noted, they tend to be in two different divisions of the industry: manufacturing and converting. They also differ in size; the unionized firms had an average of 219 employees in 2016 and the nonunion/unknown firms averaged 41 employees.

Outlook

From an employment perspective, paper manufacturing is a declining industry. Projections made in 2014 were for the industry to shed another 650 jobs from 2014 to 2024. The industry appears to be handily beating this estimate; employment dropped by 244 from 2014 to 2016, about twice as fast as forecast.

Even though total employment in the industry is dropping, that is not the entire story. There are still openings to be filled due to retirement. In all industries combined, about 60 percent of total openings are for replacements, primarily due to retirement and death, and only 40 percent are due to growth of the specific industry. The paper industry is not growing, but it is still replacing retiring workers and that provides job openings.

The future of Oregon’s paper industry will be influenced by global conditions. The FAO notes that “Paper and paperboard is one of the most globalized commodity groups, with a high share of production exported and a high share of consumption imported.” The U.S. is currently re-negotiating NAFTA with Mexico and Canada. Paper workers’ unions are concerned that a new agreement could cost jobs in the domestic industry.

Another important factor in the industry’s future is the use of recycled paper as an input. The FAO stated that Europe is the largest exporter of paper products and that it has benefited from its high growth in wastepaper recovery. Oregon had been increasing its paper recycling, although the total amount dropped substantially when the recession hit in 2007. The Oregon Department of Environmental Quality estimates that Oregon recovered 790,677 tons of all types of paper in 2006. This dropped to 597,515 by 2011. Paper recycling has recovered somewhat, increasing to 683,400 tons in 2015, but hadn’t returned to pre-recession levels by that year.

Oregon’s forests make it a natural place for paper manufacturing. The industry also benefits from abundant water, a well-trained workforce and support for paper recycling. Foreign trade and improvements in technology may limit employment growth, but the industry will have a place in Oregon for years to come.