North American Tissue News

Paper towels are returning to the shelves and grocery stores are stockpiling goods

After a long run, tissue products are returning to the market, however if there is another big sudden increase, the paper towel industry may not be able to meet demand

After Coronavirus hit the world in March, American shoppers emptied product store shelves, stocking everything from antiseptic wipes to meat. It took weeks for these products to return to the shelves.

Paper towels took a little longer than most other products.

According to The Atlanta Journal-Constitution, even though the state of Georgia is rich in cellulose and has big players like Georgia-Pacific, Procter & Gamble and Kimberly-Clark, the journey to get paper products back on the shelves was not an easy one.

The prolonged scarcity of something people look for daily has exposed a major shortcoming in ‘just-in-time’ manufacturing and has shown that sometimes there are no quick fixes in the vaunted US supply chain – especially when it comes to cheap products made with expensive machinery.

Paper towels are inexpensive goods purchased in bulk (about a penny or two per sheet) sold at low profit margins. However, a tissue-making machine can be as long as a football field, take three years to build and cost $ 300 million.

To remain competitive, manufacturers do not increase the extra capacity and relentlessly apply the principles of ‘lean’ or just-in-time manufacturing. Manufacturers also do not want massive stocks of paper towels in warehouses, which would further increase costs.

Some retailers chose to import paper products from Mexico, Canada and China, while paper towel manufacturers in Georgia and elsewhere struggled to adjust, squeezing their machines for even more efficiency. One way to do this was to offer consumers fewer options for brands and packaging. Machines need to be turned off to switch between brands or packaging sizes, wasting valuable time, according to Abercrombie of Georgia-Pacific.

Jonathan Raga, from Fastmarket RISI, estimates that Georgia produces 9.4% of U.S. toilet paper, also suspects that some manufacturers have switched from commercial-grade towels, which are rougher and used in places like schools and airports, to domestic pattern, which are softer.

The Atlanta’s tech industry helped. Local logistics startup Verusen had randomly started working with Georgia-Pacific just before the pandemic to give a more accurate picture of its material supply chain. Companies can see where everything is, from raw materials to machine parts, and where the twists are. Paul Noble, the founder of Verusen, said his company helped save Georgia-Pacific time and money in maintaining and moving supplies.

However, if there is another big sudden increase, the paper towel industry will still not be able to meet demand, but is working to catch up more quickly.

In contrast, according to The Wall Street Journal, grocery stores are stocking up to prepare for a possible increase in sales amid a second wave of the COVID-19 pandemic, as well as the holiday rush.

At the beginning of the pandemic, grocery stores were focusing on stockpiling weeks of supplies for shoppers, but now food sellers are focusing on the long-term, aiming to stockpile supplies for months instead, reported CNN Business.

However, according to The Food Institute, some items — such as canned vegetables and paper towels — remain hard for stores to obtain and manufacturers are worried they will lose production capacity if infections break out among workers or if other issues prevent people from working.

Kruger Products is also concerned about a second wave of the coronavirus as it indicated supply of paper towel is “very tight” across North America, reported CBC. Kruger cut back on the SKUs produced to maximize production of key products, started running some machines at a new Sherbrooke facility, and is pushing to have that facility fully operational ahead of the originally planned launch in Feb. 2021.

Additionally, Procter & Gamble reported a massive surge in sales of Bounty paper towels in July as customers cleared them off the shelves, while Clorox said consumers will continue to see a shortage of its wipes and other products into 2021 because of overwhelming demand.

Also according to The Food Institute, following data from Acosta, a definite needs exists for retailers to be ready as more than half of shoppers do plan to stock up on groceries if another coronavirus-related shutdown occurs.

“As COVID cases continue to rise, most shoppers believe we’re headed for another shutdown and plan to respond accordingly, so retailers should be prepared for a new surge in stocking up,” said Darian Pickett, CEO of North American Sales at Acosta.

Acosta’s research found 67% of shoppers think another shutdown is extremely or somewhat likely to occur.

Source
The Atlanta Journal-ConstitutionThe Food Institute
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