The 90,000 tons/yr mill in central Pennsylvania with a long, colorful history remains fixated and growing in UFS.
In the last two years, the company spent $15 million on a critical coal to natural gas boiler project that significantly reduces the mill's production cost, opened a new warehouse, and started up a second cutsize sheeter. Further, company CEO Mike Grimm, who started at American Eagle Paper in early 2013, sees continuing interest and growth potential in 100% recycled-content office/copy paper, which is an American Eagle staple. In 2015, for example, the city of New York started using 100% recycled-content office paper at its government offices.
Next week, American Eagle Paper celebrates the capital spending advancements. More than 100 guests are expected, including bankers and politicians. The mill in Tyrone, first erected in 1880, was shut in the fall of 2001 by Westvaco – while Westvaco and Mead combined in a $3 billion merger that was completed in early 2002.
2003 restart. Former mill personnel manager John Ferner led an investor group Team Ten LLC that acquired the Tyrone assets in July 2003 and the mill, which had made both uncoated and coated printing and writing papers, restarted as an UFSonly operation in November 2003.
The same challenge as in 2003 remains today, according Grimm. American Eagle Paper's share of the North American UFS market is 1%.
"The challenge we all face is a declining market," he said. "For us, we must sell in the right places … with a flexible operation that can do a number of different things – all with the same overhead structure."
"I didn't grow up in this industry," said Grimm. "What's the future going to look like in terms of the supply of paper? Is it going to be coming out of a few large systems only or also localized systems that are scaled. My gut tells me that mill operations that can produce products that serve several segments of the market while being very efficient will succeed."
Since 2013, along with the demand decline from mobile device use that replaces print on paper, five US UFS producers – –including the largest four – –shut down almost 1.5 million tons/yr of capacity. That 1.5 million represents 17% of today's North American demand.
Grimm said a tour of the Tyrone mill next week will start at the legacy 1957 boiler house that is eight stories tall. The newly-installed Babcock and Wilcox natural gas package boiler is much smaller, emblematic of the mill's changes. The reduced energy footprint of the mill led to the shuttering of the 60-year-old power generation equipment as well.
The mill negotiated a five-year electricity contract at a cost that is lower than what it would cost American Eagle to produce the power on-site at the mill with existing equipment, Grimm said.
"This is a solid five-year plan allowing us to cut cost and focus our capital on our business vs overleveraging to make power. We can circle back in the future and reinvest in co-gen at a later time," he said.
The old equipment shut July 10 and the new boiler starting running on July 16. No longer is the mill a 70,000 tons/yr coal consumer paying to landfill 10,000 tons/yr of coal ash. Its emissions declined by 70%. Its water usage was cut by 82% or a staggering 11.5 million gallons per day.
New grades. The mill's two paper machines are non-pulp integrated, running primarily on pulp from recovered paper including hard white envelope cuttings. The 152-in-wide trim machine No. 3, a Pusey and Jones unit installed in 1950, and 84-in PM 4, also a Pusey and Jones unit but installed in 1910, make office/copy, offset, envelope, and reply card papers. This week, Grimm added that the company is shipping some new grades of paper never made before on the mill's machines. "We're not going anywhere. We are continuing to grow and adapt continuously. The small guy can be successful," he said.