Immagini della pagina
PDF
ePub

expenditures, etc. may be made in Finland, West Germany, or Switzerland as well as Wisconsin, Massachusetts, or Ohio. This has lowered the profile of some firms in the small communities where plant facilities are usually located. The family directed, locally based enterprise (which still very much exists in this industry) has long been at the center of local community life. Now with local ties weakened, management may seek more formalized ways of implementing decisionmaking. Furthermore, the decisions made by foreign management may alter impacts on the trade balance or domestic R&D capability.

Since the middle 1980s, foreign-owned suppliers have tended to be government and publicly held firms which are larger in size than their U.S. counterparts, such as Valmet in Finland. U.S. producers have traditionally been smaller, closely held, family-dominated enterprises. Further, foreign suppliers, especially in Finland, are more likely to have substantial interests outside the paper machinery industry such as the shipbuilding and forest products industries. The recent mergers in the U.S. industry have altered this picture somewhat and have given several leading U.S. producers a place as substantial parts of strong, publicly held firms. However, the U.S. industry as a whole still remains at a

disadvantage in terms of resources and influence in competing with major foreign producers.

Canada

Canada is the largest market for U.S. paper machinery makers, taking annually about one-fourth of U.S. exports during 1981-85. It is also a major source of U.S. paper machinery imports. This flourishing bilateral trade, with an historic but declining balance in favor of the United States, has produced significant benefits for manufacturers on both sides of the border.

Canadian producers of paper machinery are both competitive with and affected by U.S. producers. The large stake in the Canadian industry held by U.S.-based firms inevitably affects decisions on sourcing, labor relations, equipment purchases, and plant location to name only some obvious circumstances. At the same time, the Canadian branches are expected to yield a profit to their U.S. parent firms and may compete with the U.S. locations for specific contracts for delivery outside Canada and in the United States.

The U.S.-Canada Free Trade Agreement (FTA) may affect the competitiveness of the Canadian paper machinery industry. The tariff structure of the industry will be changed and various government assistance programs to industry may be affected. the FTA, Canadian and U.S. tariffs will be lowered to zero over 5 years in annual increments starting January 1, 1989.

Under

Furthermore, the Canadian industry faces challenges from both traditional competitors such as Finland and from new sources such as

Brazil. This parallels the experience of the U.S. industry. Canadian domestic producers have also attracted buyers from outside the United States, notably in the case of Valmet (Finland) in its consolidation with Dominion Engineering and its purchase of Sentrol Systems, of North York, Ontario. High labor costs affect Canadian producers in much the manner faced by U.S. firms. Long considered a healthy part of the North American market, Canadian suppliers have had to respond to the globalization of the industry and the need to source outside the country and to seek export markets in nontraditional areas far from home.

Industry Overview.

Canada has long been a major producer of paper machinery. Fostered by high tariffs and ample wood resources, production of paper and paper machinery developed rapidly in the 19th and early 20th centuries much in the fashion of the U.S. industry. When the industry's growth spurted in the years following World War II, U.S. producers came to dominate the Canadian industry. Approximately three-fourths of the firms are under non-Canadian ownership, with about half of the industry consisting of subsidiaries or affiliates of U.S.-based companies.

The Canadian industry presently consists of approximately 60 firms of which 15 employ over 100 persons each. Exact employment figures are not available, but employment in the industry, including closely related firms, may reach 3,500 or about one-fifth of the U.S. total. Annual shipments have gyrated as in the United States but have recently exceeded $200 million annually. In 1985, the last year for which precise figures are available, product shipments of paper machinery by Canadian firms totaled $231 million, up by $37 million, or 19 percent from 1984, but still $73 million or 24 percent below the pre-recessionary high of $303 million set in 1981. Most Canadian producers are located in Quebec, Ontario, and British Columbia. Drawn in part by the presence of PAPRICAN, the Pulp and Paper Research Institute of Canada, a number of major firms have clustered near Montreal, at Pointe Claire, Quebec. Although more of the industry is urbanized than the U.S. industry, major plants of several U.S.-based firms are located in small towns such as Sorel, Quebec (Beloit) and Owen Sound, Ontario (Black Clawson).

As noted earlier, a large percentage of Canadian paper machinery firms are under foreign ownership, mostly U.S. ownership. Nearly all U.S.-based paper machinery suppliers active in exporting have found it both necessary and desirable to locate plants in Canada or maintain license agreements with Canadian firms. Canadian facilities of major U.S. producers such as Beloit and Black Clawson have capabilities comparable to the equivalent U.S. facilities, and the Canadian plants may, in some instances, compete with U.S. plants for orders both within and without Canada.

Table 23 lists major Canadian firms under foreign ownership. The number of U.S.-owned firms in Canada supplying the paper industry is

NAME OF FIRM

TABLE 23

MAJOR U.S. AND FOREIGN

FACILITIES IN CANADA

U.S.-BASED FIRMS

LOCATION OF FIRM

Albany International, Inc.

Beloit Canada, Ltd.

Bird Machine Co., Ltd.

Black Clawson-Kennedy, Ltd.

Sprout-Bauer, Inc.

Goulds Pumps Canada, Ltd.
Ingersoll-Rand Canada, Ltd.
Johnson Corporation
Lamb Cargate Ltd..
Nicholson Mfg. Co.

Nash Engineering Co., Ltd.
Sandy Hill Canada, Inc.

Thermo-Electron (Canada), Inc.

Dresser Industries,
Worthington Pump Div.

HQ-Pointe Claire, Que.

P-Perth, Ontario
P-Cowansville, Que.

HQ-Pointe Claire, Que.
P-Sorel, Que.

HQ-Pointe Claire, Que.
P-Saskatoon, Sask.
HQ-Montreal, Que.

P-Owen Sound, Ont.
P-Brantford, Ont.

P-Cambridge, Ont.
HQ-Montreal, Que.
R-Dorval, Que.
P-Vancouver, B.C.
P-Victoria, B.C.
P-Burlington, Ont.
R-Montreal, Que.

P-Ste. Leonard, Que.
P-Brantford, Ont.

[blocks in formation]

Source: Pulp and Paper Canada, Annual Directory, 1986, see also,
"Marketing Opportunities for Canadian Pulp and Paper Equipment
Manufacturers," Department of Regional Industrial Expansion, Report
No. X 6831/1, Ottawa, Ont., August 15, 1985.

greater than shown in the table, which does not include firms producing equipment not classified as paper machinery, such as paper machine controls, motors and drives, and recovery boilers. An exception was made for stock treatment pumps because of their importance to the Canadian pulp and paper industry, with its heavy concentration in production of market pulp and newsprint.

Canadian producers of paper machinery are represented through the Pulp and Paper Machinery Manufacturers Section of the Machinery and Equipment Manufacturers Association of Canada. Many companies are also members of the Technical Section of the Canadian Pulp and Paper Association (CPPA), which is headquartered in Montreal. In addition to the technical section in Montreal, CPPA also assumes the function of representing the paper industry before the Canadian Government and in international fora. For 75 years CPPA has sponsored Canada's major exhibit of paper machinery and paper products. KŸown as Paperweek, the exhibit is customarily held in late January at the Palais des Congres in Montreal. In recent years it has attracted over 10,000 persons to the exhibits of over 300 companies and more than 2,000 to its technical sessions.

The Major Players. There are three builders of fourdrinier machines in Canada. Beloit Corp., the U.S. industry leader, and the Black Clawson Company have large Canadian plants capable of fabricating most types of machinery customarily supplied by these firms. In a major merger earlier in this decade, Dominion Engineering, Inc. established a joint venture with the Finnish-owned Valmet. Based in Lachine, Quebec, the resulting Valmet-Dominion has major paper machinery production capabilities. In a subsequent move, Valmet-Dominion entered the U.S. market through a separate joint venture known as Valmet-KMW, based at Charlotte, North Carolina, which itself has been incorporated into Valmet Paper Machinery, Inc. The extensive use of groundwood pulp in Canada has produced a substantial market for pulp refiners and other refining equipment. Major producers in Canada include Beloit, Black Clawson, and C-E Sprout-Bauer, the leading U.S. supplier of pulp refiners, which maintains a manufacturing plant at Brantford, Ontario. Hymac, Ltd., the leading Canadian-based refiner maker, has its facility at Laval, Quebec. Koehring-Waterous, a division of the Canadian multinational firm Amca International, manufactures pulpstone grinders in its Brantford plant. Other major Canadian producers include S. W. Hooper & Co., Ltd. of Montreal and a group of firms (Brunette Machine Works, Ltd.; CAE Machinery, Ltd.; and Forano, Inc.) making woodyard equipment. Leading U.S.-based producers of stock treatment and vacuum pumps, such as Goulds, Worthington, and Nash all manufacture in Canada.

Sunds

There are numerous licensing arrangements in Canada. Defibrator, the Swedish producer of refiners, has a manufacturing arrangement with Quebec Tool. Sandy Hill recently announced that

Sandy Hill Canada, Inc. had entered into a manufacturing and sales arrangement with Lefebvre Freres Ltd. of Montreal.

Pulp and Paper Production. Canada is the world's second largest producer of pulp, trailing only the United States. In 1987 its 128 pulp mills produced 23 million metric tons. As a paper producer, Canada is the world's third largest supplier, dwarfed only by the United States and Japan. Production of its 125 paper and paperboard mills in 1987 totaled 16 million metric tons. In 1984, 62 percent of Canadian pulp production was used as furnish for production of newsprint and other paper grades. The remaining 38 percent consisted of market pulp, primarily produced in British ûolumbia, of which 45 percent was exported to the United States. In the same year, newsprint accounted for 9 million metric tons, or 63 percent of Canadian paper production. Almost 90 percent of Canada's newsprint production was exported in that year, nearly all to the United States. Newsprint production is primarily concentrated in the central Canadian provinces of Ontario and Quebec.

A Flourishing Trade. As with so many other commodities, the United States and Canada are each other's largest trading partners in paper machinery. For the United States, Canada is the largest remaining market with significant two-way trade with which there is a favorable balance of trade in paper machinery. Even so this balance has been declining. Traditionally more than 3-1 in the U.S. favor, the favorable balance in 1987 stood at $47 million, with U.S. exports exceeding imports by $100 million to $53 million. Overall trade between the two countries has declined, although a surge of U.S. exports in 1987 produced the most favorable balance since well before the 1982 recession.

U.S. exports rose by 25 percent during 1984-87, reaching an all time high at $100 million. Imports fell by approximately 5 percent in 1986 to $53 million, after a $20 million jump the previous year (Table 24.)

Trade between both countries has been greatest in pulping equipment, reflecting the much higher use of refiner mechanical pulp in Canada. Parts usually account for over 60 percent of U.S. exports and about 40 percent of U.S. imports.

Considerable disparity exists in the tariff treatment of paper machinery by the two countries. Most U.S. imports are classed in the Tariff Schedules of the United States (TSUS) codes 668.00-668.07 and carry duties ranging from free to 2.4 percent ad valorem. Nearly all Canadian production is in the catchall Canadian tariff code 42700 and carries a duty rate of 9.2 percent ad valorem.

The U.S.-Canada Free Trade Agreement will phase out the existing tariffs on paper machinery in both directions. Reductions will be staged at annual intervals over a 5-year period beginning

« IndietroContinua »