The new wave of coronavirus sparked a second rush for products in supermarkets, not as severe as the first, but which still led many retailers to impose purchase limits for certain products, such as toilet paper.
This new wave of basic product purchases is good news for toilet paper makers like Kimberly-Clark Corp in Chester, which employs 570 people in a 1.3 million square foot factory that produces a single product: 1000-sheet Scott toilet paper.
According to The Philadelphia Inquirer, the Chester plant produces 2 million rolls of toilet paper per day, or 1,389 rolls per minute. In addition, since the beginning of the pandemic, the plant has been operating vigorously to meet demand.
The company immediately imposed strict protective measures to ensure the health and safety of its workers, who remained socially distant and used masks. Another strategy adopted was to reduce packaging options for retailers, which required fewer production line stops to reconfigure the equipment to package the tissue.
“We’ve actually been able to produce more through this pandemic,” said Jeff Hutter, the plant manager of the Chester mill, noting that the adjustments that Kimberly-Clark and the rest of the industry have made to their supply chains have placed producers of tissue in a better position to meet demand.
“We’ve been able to keep rolling,” he said. “We’ve never had to shut down our facility, and that’s why I give a lot of credit to our team. This is a big change, when you think about what we’ve asked our teams to do.”
The Chester mill stepped up output during the pandemic at the same time as it was completing a major $150 million upgrade at the mill: construction of a new natural gas-fired cogeneration plant. The production of paper requires enormous quantities of energy, both to run machinery and to dry paper. The 24-megawatt cogeneration plant, supported by a $6 million state grant, supplies the plant with all the electricity and steam it needs.
The new power plant, which went online earlier this year, allowed Kimberly-Clark to retire its coal-fired power plant. Demolition of the old plant is underway now. The conversion reduces the mill’s greenhouse gas emissions by 50%, which helps Kimberly-Clark get a step closer to its goal of cutting its carbon footprint in half by 2030.
Hutter said the coal plant was state-of-the-art when it was built three decades ago and made the Chester mill cost-competitive at that time. “Fast forward 30 years, and we’re transitioning from coal to natural gas,” he said. “It’s the same story. The natural gas cogeneration is state-of-the-art and it’s also cost-transformational for us as well, so we continue to stay competitive at that location.”
Though Pennsylvania’s production of natural gas is the frequent target of climate activists, the Chester mill and a rival Pennsylvania paper plant, Procter & Gamble’s Mehoopany mill in Wyoming County, both attribute their ability to remain competitive to long-term supplies of low-cost energy.
P&G’s giant Mehoopany plant, which has 2,200 employees, produces Charmin toilet paper, Bounty paper towels, and Pampers diapers and is supplied by shale gas produced by several fracked wells on its property, about 20 miles northwest of Scranton.
In Chester, Kimberly-Clark committed itself to a new gas plant in conjunction with construction of the Adelphia Gateway pipeline that rings Philadelphia. It will bring large amounts of natural gas into Delaware County through an existing fuel-oil pipeline converted to natural gas. When the pipeline is scheduled to go into service next year, the Chester mill will get a secure supply of high-pressure gas directly off the pipeline rather than delivered through Peco’s utility distribution system, which the paper mill needs to compress to operate its equipment.
“Adelphia will send us the gas pressure that we want from the beginning, so we no longer have to compress,” said Hutter. “It takes complexity out of the process.” Less complexity equals less cost.
Such is the calculus of operating a large manufacturing facility, one of 85 Kimberly-Clark plants worldwide, including 31 in North America. The company produces mostly paper products, including Kleenex facial tissues, Huggies diapers, and Kotex feminine products. Kimberly-Clark acquired Scott Paper in 1995, and Scott’s office near Philadelphia International Airport was absorbed into the parent company’s headquarters in Irving, Tex.
Other than energy, the manufacture of tissue requires large amounts of water and wood pulp, the cellulose fibers that are derived by breaking down wood chips in a chemical process. Neither the Chester plant nor the Mehoopany plant produce their own pulp. Procter & Gamble imports wood pulp derived from Brazilian eucalyptus at the Tioga terminal in Philadelphia, and ships it north by rail. Hutter says the Chester plant has multiple sources of wood pulp, which arrives by rail in 500-pound blocks.
The Chester mill is the biggest producer of Scott 1000 and ships the product nationwide, but its market is concentrated in the Northeast and mid-Atlantic states, Hutter said.
It’s not that Americans are using more bathroom tissue in the COVID-19 era. It’s where they are using it — at home, vs. the office. The shift of millions of Americans to remote working during the pandemic depressed demand for large rolls of toilet paper for workplaces, schools, and other venues shuttered by the pandemic. But demand for retail tissue soared, allowing producers to reduce promotional discounts during times of shortage.
Kimberly-Clark’s earnings reports tell a story of a company adapting to a seismic market shift from the pandemic. Its net sales for the first nine months of 2020 of $14.3 billion were up only 3% over the same period in 2019. But the sale of consumer tissues, including bathroom tissue and facial tissue, were up 11%. Sales of its KC-Professional division, which serves institutional and corporate customers, were down 8%.
The difference was even more stark for operating profits: The consumer tissue division, which includes the Chester mill, generated $1.1 billion in operating profit for the first three quarters of this year, up 53% from last year.
With numbers like that, the Chester mill can ride along on some euphoria about its contribution to the corporate bottom line. The workforce also gets to bask in the unexpected glow of producing something so greatly appreciated that customers sometimes scuffled in grocery store aisles to get their hands on their product.
“I can’t say I was sitting here 10 months ago thinking that I was making an essential product,” said Hutter. “I guess COVID has taught us that it’s even more essential and that certainly has been a change in perspective.”
See the original article in The Philadelphia Inquirer website.