with 16 percent of the 1986 total of $144 million going to the United States. As in the United States, the industry suffered through economic doldrums between 1981 and 1983 as paper demand fell and the pound sterling remained high. A fall in sterling, coupled with more efficient use of plant by machinery makers and increased customer demand, has allowed the industry to regain lost ground between 1984 and 1986. However, little real growth was achieved over the entire 5-year period. The Domestic Market. The U.K. paper machinery industry has been limited by its weak customer base. Output of paper in the United Kingdom is estimated at slightly more than 6 percent of total U.S. output. In 1987, the British paper and paperboard mills produced 4.2 mmtpy. Pulp production, which has been in decline, totaled only 389,000 mtpy. Production capacity at six leading U.K. paper mills has fallen by 12 percent over the past 7-years as the manufacture of certain paper grades, especially newsprint, has moved offshore. As in the United States, specialty grades, such as lightweight coated paper which is used for magazines, have replaced newsprint as the primary constituent of paper mill output. These changes have reduced demand for new machinery, encouraging U.K. paper machinery manufacturers to maintain high export levels. Industry Overview. The British paper machinery industry has a heavy foreign-owned component, with U.S.-based firms accounting for about 40 percent of the industry. Among the U.S. leaders with British subsidiaries are Beloit Walmsley (Bolton), Black Clawson (Newport), Johnson Corporation (Ilkley), Albany International (Slough), and Paper Converting Machine Co. (Plymouth). Among leading Britishbased producers Strachan Henshaw Machinery (Bristol), which makes sheeters. Hunt & Moscrop Ltd. (Bristol), which makes calenders and profilrolls, is now a subsidiary of the West German-based firm Kleinewefers. The industry is scattered through industrial areas of Britain with greatest concentration in Lancashire and greater Manchester. A listing of British manufacturers appears in Appendix A. The industry is represented by an active trade association, the British Pulp and Paper Machinery Manufacturers Association, founded in 1945 and now representing over 40 members. The association seeks to promote British exports; it, in conjunction with the British Board of Trade, conducted a trade mission to the People's Republic of China in October 1986. A technical association, the Paper Industry Technical Association, also provides a forum for the publication and dissemination of industry research. Although the Government Support, R&D, and Capital Expenditures. British Government does not provide specific assistance to paper mills or paper machinery firms, it does provide regional development assistance to firms locating in so-called development areas. Several paper mills have received such assistance towards the purchase of machinery and equipment. The government also has subsidized the conversion of paper mill power plants from oil to coal. Deferral of taxes is offered for investments in forests and woodlands. R&D expenditures are an estimated 3-4 percent of sales annually for paper machinery manufacturers. The major U.S.-based producers, Beloit and Black Clawson, maintain separate R&D facilities at their U.K. plants. Other U.K. firms also appear to benefit from overseas R&D. New capital expenditures by the U.K. paper industry have topped $300 million onnually since 1984, after declining to $150 million in the recessionary year of 1982. The leading expenditures have been for new capacity in tissue production and for uncoated free sheet. Production, Trade, and Consumption. British paper mills are generally small with only a half dozen mills maintaining high production levels. Table 33 provides estimates of production, imports, exports, and the size of the domestic market. The statistics are based on a consolidation of government and industry figures. Source: British Paper Machinery Manufacturers Association. Other Countries Switzerland. The Swiss do not rank as leading players in the international paper machinery market and largely exclude the production of wide-width machinery. However, they have been quite successful as producers of converting equipment, especially as Source: U.S. Department of Commerce, International Trade Administration internal documents. manufacturers of corrugated box-making equipment. A dozen firms account for nearly all of Switzerland's paper machinery production, valued at approximately $275 million in 1985. In the same year, Switzerland exported $248 million worth of paper machinery, approximately 90 percent of production. of this total, $56 million constituted paper machinery and $192 million was converting machinery and equipment. Table 34 shows trends in Swiss production and exports of paper machinery. Several Swiss producers of paper converting machinery maintain major operations in the United States. Bobst S.A., a major producer of corrugating equipment, has a U.S. facility at Roseland, New Jersey. The Lausanne-based firm also has a Canadian subsidiary and branch offices or affiliates in Italy, France, Japan, and Brazil. SulzerEscher Wyss AG, based in Zurich, was one of the first foreign companies to enter the U.S. market through the act of buying an existing domestic supplier. In 1978, Sulzer purchased the Manchester Machine Company, Middletown, Ohio from Diamond International, Inc. This transaction gave Sulzer-Escher Wyss a U.S. manufacturing base and access to Manchester's fiber box machinery technology. In 1986, Sulzer announced a joint venture to produce screening equipment with Bird Machine Company, of Walpole, Massachusetts, resulting in the formation of Bird-Escher Wyss. Sulzer-Escher Wyss is a multinational firm for which paper machinery represents only a fraction of overall business. U.S. Approximately 12 percent or $28 million of Swiss paper machinery exports in 1985 were sold in the United States, over 90 percent of which was corrugating equipment or parts. In 1987, Switzerland exported $70 million of paper machinery to the United States, of which $42 million constituted box-making machinery and parts. exports to Switzerland have been modest and have remained virtually unchanged at $4.2 million in 1987 as compared to $4 million in 1981. The trade balance between the United States and Switzerland in paper machinery is likely to continue in a U.S. deficit over the near term. The Swiss are highly competitive and technologically advanced in their specialty; Switzerland should continue to be the foremost foreign competitor for U.S. and third-country suppliers of corrugating machinery. Although the recent mergers presage greater ability of the few U.S. suppliers of corrugating machinery to compete internationally, they will remain a secondary factor to the Swiss outside the North American market. Australia/New Zealand. Both Australia and New Zealand have been steady export markets for U.S. producers of paper machinery. U.S. exports of paper machinery to Australia have totaled about $10 million annually over the past 5-years while exports to New Zealand averaged about $3 million a year over the same period. Neither country is a major manufacturer of paper machinery. In Australia, the Boral Johns Perry Industries, of Adelaide, does produce a paper machinery line and is a licensee of Beloit Corporation. Other firms in both countries produce some specialty items such as showers and doctor blades. The needs of the paper and paper machinery industry are represented by a binational technical association, the Australia-New Zealand Pulp and Paper Technical Association which, like its counterparts in the United States, Canada, and Britain, holds a major industry conference and annual exhibit. The Australian Government provides research support to the industry through several mechanisms, including the widely known Commonwealth Scientific and Research Organization. Australia has 18 paper and paperboard mills and 19 pulp mills. New Zealand has six paper and paperboard mills, and seven pulpmills. Production in the two countries totals 2.3 mmtpy of paper and 2.1 mmtpy of pulp. Late in 1986, a number of Australian and New Zealand paper producers planned new mill projects or major rebuilds. To try to secure some of these projects for U.S. suppliers, the U.S. industry organized a private trade mission to Australia and New Zealand. During February 23-27, 1987, eight U.S. firms visited the two countries. Stops were made in Melbourne and Hobart, Australia, and Rotorua, New Zealand. Technical papers were delivered before an audience of mill personnel. Mexico and Latin America. Mexico and several South American countries, including Chile, Colombia, and Venezuela, have long been considered principal export markets for U.S. manufactured paper machinery. However, weakness in the Mexican economy and failure of paper projects in Chile, Colombia, and Guatemala have combined to reduce U.S. exports and chill interest in new projects. In addition, the growing Brazilian industry appears to be making inroads into Latin American paper machinery markets. Despite the economic troubles noted above, Latin America in 1986 achieved the largest increases in paper and board output of any continent. Including Central America, paper and paperboard production in 1986 totaled 9.94 mmt, up 7.9 percent from the 1985 total of 9.21 mmt. Pulp production also rose over the same period from 6.58 mmt to 6.81 mmt, an increase of 3.5 percent. Table 35 shows pulp and paper production capacities for selected Latin American countries in 1987. Almost half of all Latin American paper and paperboard production, 4.7 mmt, came from Brazil, the 11th ranking country in worldwide production during 1987. Another 2.6 mmt come from Mexico. Other leading producers in 1987 were Argentina (1.1 mmt), Venezuela (0.7 mmt), and Colombia (0.5 mmt). Brazil also accounted for nearly 60 percent, or 4 mmt of the region's pulp production. Chile (0.9 mmt), Mexico (0.8 mmt), Argentina (0.7 mmt), and Colombia (0.2 mmt) were the only other sizable Latin American pulp producers in 1987. The region as a whole had 405 paper and paperboard mills and 104 pulp mills in 1987. These mills had a total capacity of 12.6 mmt of paper and paperboard and 8.1 mmt of pulp; Brazil and Mexico accounted for nearly two-thirds of paper, paperboard, and pulp capacity in the region, according to a report in the August 1988 issue of Pulp and Paper. Mexico has customarily been the second largest export market for U.S.-made paper machinery. Recently, Japan has overtaken Mexico for the second position. Canada remains the largest. In 1982, U.S. paper machinery exports to Mexico stood at $54 million. In that year, the two adjacent markets accounted for $114 million in U.S. exports, or 36 percent of the $315 million in U.S. paper machinery exports of that year. The subsequent decline of the Mexican peso and the worldwide decline in demand for paper machinery sharply reduced U.S. exports to Mexico in the following years. Since |