If you are reading your Chicago Tribune or flipping through the latest Pottery Barn catalog, it’s probably pretty hard to determine where that paper was sourced. Even harder, is where that paper has been in its lifetime, since its days as a tree. Paper can be recycled an estimated 7 times.

Though many Americans are increasing their recycling efforts, it’s interesting to note that American paper mills are going out of business.  There are several factors that can be blamed.

#1:  You are reading this online – not in print. With publishing of newspaper, magazines, yellow pages, promotional advertising, books and even credit card billing statements all going digital, there is simply less demand for mills to generate these types of paper products. In fact, today’s New York Times (electronic version) reported that Amazon’s sales of e-books just outpaced their sales of hardcovers. This wave of change is moving fast. But that doesn’t necessarily mean there is no longer a use for paper mills. Which leads us to the next reason.

#2:  Retooling is a huge capital expense. In fact, many US mills are still paying off the investments from retooling to accommodate increased recycled content, to be able to make 30% or even 100% recycled content paper for printing. And, now the shift in demand has gone from papers that we read, to packages that we ship. Packaging has increased dramatically in the past decade, with a major chunk of that demand for packaging materials coming from China, where it gets shipped back to the US and other markets wrapped around finished goods.  As they consider another retooling, they are mindful that Wal-Mart and their supply chain are busy working on significantly reducing packaging.

#3: In the battle to recycle your paper, US mills are competing against Chinese mills who are willing to pay higher prices for somewhat lower grades of paper. With cheaper costs of labor, sorting out contamination from paper bales is less of a concern. And, whether you are a printer, an office, a school or a municipality, most of us struggle with getting employees to accurately source separate the various recyclable paper commodity grades from the trash, much less from each other (by separating high value paper stock from low value paper grades, the loads can yield higher prices). So, it should not come as a surprise to us that the majority of paper collected in US recycling programs ends up being shipped overseas.

And, while the economic downturn had a negative impact on demand across the board for paper grades, it has certainly accelerated the problems for paper mills in the US. Paper Age, an industry trade journal, reported that 2009 the paper market experienced the largest drop in graphic paper demand in over 25 years.

We are working to help industries like this be more innovative in their approach to sourcing materials, helping them be more efficient. We would love your feedback and ideas as to how paper mills and the related industry will find their footing in the sustainable business setting of the future.