Monday Morning Minute: Mar. 6, 2017
Union Work – Collective Bargaining, Organizing, Arbitration, Worker Rights, Community Work, Political Work, Labor History
Dutch using paper to vote in national election amid hacking fears
The Netherlands will rely solely on pen and paper for its national election on March 15 amid concerns regarding hacking and fringe groups. The voting will be comprised of paper ballots, which will be counted by hand at local voting stations before they are tallied electronically. “No shadow of a doubt can be allowed to hang over the result,” said Interior Minister Ronald Plasterk, who cited concerns over vulnerabilities in computer software and electoral fraud. Parliament has also discussed alleged Russian meddling in the U.S. election. The Dutch election will be the first of three key elections in Europe, and 13 million voters are expected.
Fatality at UPM Shotton Mill
On February 6, 2017, a contract worker was killed at UPM’s Shotton, UK mill. The worker was struck by a large bucket loader driven by another contract worker. The bucket loader is designed to move waste paper from the floor to the recycling lines inside of the warehouse as per standard operations.
As per protocol, the Police were notified along with the Health and Safety Executive. Police arrested the driver of the bucket loader, but then released him, subsequently, without charge. The case was handed over to the Health and Safety Executive for sole investigation.
Finland-based UPM-Kymmene was the parent company of now-closed, Madison Paper Industries in Madison, ME. It was a partnership between UPM and New York Times Co subsidiary, Northern SC Paper Corp. The facility closed in May 2016 and ended the joint venture.
USW Locals 10-68 & 10-68-01 – Paperworks – Philadelphia, PA – Company Shutting Down Coated Recycled Board Mill
Paperworks is shutting down its 150k coated recycled board mill in Philadelphia by mid-April. The closure will affect a little over 100 USW members.
The mill represents about 6.5% of the industry’s CRB capacity. The shutdown should help support an ongoing $50/ton price hike effort. The news is positive for the two largest CRB producers in N.A. – Graphic Packaging is the #1 CRB producer in North America with ~950K/tpy of capacity and WestRock is the #2 producer with ~650K/tpy of capacity.
International Paper’s 4Q 2016 Financial Results, According to Analysts
North American containerboard was okay, but Printing Papers and IP's legacy pulp business were inexplicably weak. IP chopped 2017 expectations. Even with the recent price hike, IP's containerboard margins will be lower year over year in Q1 -- driven by rising input costs and the drop in 2016 corrugated prices. Despite the estimate cuts, analysts warn to not over-react. Both containerboard and pulp markets have tightened markedly over the past 60 days. IP's updated guidance doesn't assume any real pricing improvement.
Squeezed by mild price erosion and growing cost pressure late last year, IP reported lower profits for the fourth quarter and full-year 2016, even with last fall's containerboard price increase and stronger box demand. The company guided to 10% EBITDA growth in 2017, suggesting EBITDA of $3.85 billion, well below analyst's consensus estimates.
IP reported adjusted operating earnings for the fourth quarter of $0.73/share, down from $0.87/share a year earlier, but beating consensus earnings estimates of $0.71. For the year, IP reported adjusted operating earnings of $3.35/share, down from $3.65/share in 2015. Sales of $21.1 billion last year were down from $22.4 billion in 2015 due to sale of several businesses.
Packaging Corporation of America – Company Accredits Decrease in UCFS Paper Imports to Trade Case Win
PCA CEO, Mark Kowlzan told analysts on January 31st that "the trade case did exactly what we targeted it to do." The case was filed last year by the USW, Domtar, PCA, Glatfelter, and Finch Paper. The US International Trade Commission finalized duties in early 2016 on imports of uncoated freesheet office/copy paper from producers in Australia, Brazil, China, Indonesia, and Portugal.
The case resulted from a major rise in imports over three years through 2014 that increased the import share to almost 25% in the US industry's most profitable and largest uncoated freesheet segment. Now, that share is down to about 15%, according to RISI's Paper Trader report.
Kowlzan added that "imports did drop significantly last year and then they picked back up … (by) the end of the year. But we expected that would happen. At the same time, we are pleased with where our volume is. We are pleased with our business."
Domtar – 4Q16 According to BMO Analysts
Domtar’s Q4 EPS came in short of BMO analysts’ estimate. Prices on both pulp and paper were down q/q and y/y. In Personal Care, sales were up 10% y/y, while EBITDA was flat. Domtar should benefit from ongoing rally in pulp prices as well as gradual ramp-up of fluff pulp production on the Ashdown, AR line.
- Key issues remain commodity pulp and paper pricing as well as progress on growth in personal care products like disposable diapers and adult incontinence products. The latter being the most critical factor for the Company.
- Commodity prices have rallied, but the performance across Domtar’s portfolio is mixed.
- Looking forward, the next couple of quarters should see the benefit from higher pulp prices and the continued ramp-up on the Ashdown fluff pulp project.
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