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ABSTRACT

The paper machinery industry is a long-established sector facing increasing competition in growing domestic and world markets. This industry embraces the production of machinery for the manufacture of pulp and paper from the woodyard through the pulping process to the manufacture and finishing of paper. The industry is modest in size, encompassing some 230 establishments with approximately 15, 400 employees which produced about $1.44 billion in product shipments during 1987. U.S. paper machinery exports totaled $308 million in 1987, or about 23 percent of estimated production. Imports in 1987 totaled $562 million, a figure which includes some closely related equipment.

This study evaluates and ranks the major competitive factors affecting the U.S.-based producers in the industry and offers an assessment of that position in comparison with producers based outside the United States. The first four sections of the report describe the scope and nature of the industry, its history and economics, patterns of U.S. trade in paper machinery, and the characteristics of representative firms in the industry. Key price-related competitive factors are assessed and ranked in order of importance, including (1) the value of the U.S. dollar, (2) the role of export financing, (3) costs of production, (4) tariffs and the terms of trade, and (5) product liability. Nonprice factors such as aftersales service, product quality, and nontariff barriers do not seem to pose serious problems for the U.S. paper machinery industry.

The second half of the report describes the major foreign producers, the key firms in each country, general characteristics of the market, the nature of research and development, government support to the industry, and the level of participation in the U.S. market. The report documents the extensive foreign penetration of the U.S. market. It also examines the relative world market shares of the U.S. and leading competitors, finding a decline in the U.S. share to the benefit of such competitors as West Germany, Finland, and Brazil.

Options for U. S. Government action to assist the industry in its efforts to remain competitive in International markets focus on six broad areas: (1) expand export markets, (2) improve export financing, (3) increase incentives for research and development, (4) promote fairness in product liability laws, (5) increase usefulness of U.S. Bureau of the Census statistics, and (6) insure an adequate national security manufacturing base.

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FOREWORD

This competitive assessment of the U.S. paper machinery industry is the 50th industry assessment published by the Trade Development unit of the U. S. Department of Commerce's International Trade Administration. The Competitive Assessment Program is one of the Department's primary means of evaluating and communicating the competitive status of individual U. S. industries.

The purpose of the Competitive Assessment Program is to analyze the International competitiveness of specific U.S. industries, to inform government policy officials and private sector representatives of the implications of such analyses, and to identify ways in which the Federal government can maintain or enhance competitiveness and increase American exports.

The Commerce Department has published competitive assessments for a broad spectrum of industries, ranging from the traditional to high-technology. These industries have been studied because either they are important to the U.S. economy, they are undergoing persistent competitiveness problems, they are newly emergent, or they exhibit some combination of these factors.

This assessment identifies the major economic and noneconomic issues facing the U.S. paper machinery industry. We hope this assessment will inspire debate on the issues and contribute to improved U. S. competitiveness.

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ACKNOWLEDGMENT

This report was prepared by Edward D. Abrahams, an industry specialist in the Capital Goods and International Construction Sector Group, International Trade Administration.

Please address comments on this assessment to the attention of:

Deputy Assistant Secretary
Capital Goods and International Construction
HCHB--RoOm H-20O1B
U.S. Department of Commerce
14th Street and Constitution Avenue, NW
Washington, DC 20230

Government agencies providing resource data and information include the International Trade Administration, Bureau of the Census, and Bureau of Economic Analysis, U.S. Department of Commerce; Bureau of Labor Statistics, U. S. Department of Labor; the U.S. Forest Service, U.S. Department of Agriculture; the Office of Industrial Programs, U.S. Department of Energy; and the International Trade Commission. In the course of this assessment, we also sought advice and comments from the private sector. The assistance and information provided by individuals both in government and the private sector are gratefully acknowledged. However, responsibility for the analysis and findings in this report remains with the U.S. Department of Commerce, Capital Goods and International Construction Sector Group.

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