Recycled Paper Plays Larger Role At Weyerhaeuser Partnerships With Paper Sources Help To Ensure Dependable Supply

Weyerhaeuser Co. recently announced a joint venture to build a new paper mill in Cedar Rapids, Iowa, where, as company executive George Henson jokes, “the closest tree is 500 miles away.”

But the mill won’t be hurting for raw material to make corrugated cardboard just because Iowa has more cornfields than forests.

The new mill will be supplied with old paper, including scrap boxes from Kmart, which has signed an agreement with Weyerhaeuser to be a supplier.

The fact that a supply of recycled paper can determine where new papermaking factories will be built - something Henson says there’ll be more of - indicates just how important the recycling business has become to the Federal Way-based forest products giant.

This is no niche business. “It’s of real importance; it’s akin to owning timberlands,” says Larry Katz, forest products stock analyst with Pacific Crest Securities in Portland, Ore.

“We’re in business to support the trees, not replace the trees,” says Henson, vice president and general manager of Weyerhaeuser Recycling.

Maybe so. But with a third of Weyerhaeuser’s fiber - the raw material for papermaking - coming from recycled materials, the recycling business is becoming as significant as the millions of acres of forests the company owns.

Weyerhaeuser is now the nation’s fourth-largest paper recycler/collector. Its network of 35 waste-paper processing plants stretches from British Columbia to Florida, and the company seems to make another acquisition every few months.

In addition to its contracts with municipal waste collectors, Weyerhaeuser is also rapidly lining up “strategic partners” - companies that can supply big quantities of boxes and mixed paper, such as Kmart, the U.S. Postal Service and The Boeing Co. (Some of its partners, such as Kraft Foods, are also major paper customers.)

It has signed up as a processor for Alcoa, collecting plastics, glass and aluminum. It is also now taking “urban wood waste,” such as the wooden forms used to hold poured concrete; that wood is an increasingly important source to make products such as oriented strand board, panels made from wood chips that are glued together.

More deals are likely because Henson says Weyerhaeuser has a goal of handling 6 million tons of paper a year by the end of 1998, double the current rate of about 3 million tons.

As demand grows, is there enough paper that can be collected? There’s still plenty of capacity to boost recycling rates in many communities. And collecting mixed papers from home, the way offices now collect and recycle paper, could be a huge untapped resource.

But those will be more expensive resources to tap than offices, businesses and newspapers. At some point paper collectors are going to bump against an economic ceiling of how much it costs to collect the next ton of paper.

That puts some urgency on lining up partners and suppliers now with long-term contracts, which explains Weyerhaeuser’s accelerated pace of buying regional recyclers.

Owning its own wastepaper system not only assures supply, it gives Weyerhaeuser the same protection against price spikes and supply squeezes that owning its own forests does in the lumber business.