Some fine old machinery and civil works.

One Thursday in February found me standing on the balcony of my room watching the Coral Princess, the ship containing the aforementioned balcony and room, maneuver the Panama Canal.

The familiarity of all the works of the Gatun Locks struck me as the vessel appeared to climb the steps effortlessly. I saw large steel gates, massive concrete bulkheads, foundations, etc. The entire assemblage was familiar and comfortable to me because it looked like many an older paper mill I have seen.

The ship's staff was bragging that the Coral Princess was paying the highest toll ever paid by a ship crossing the Canal--US$ 245,000. In my mind, I started comparing this to paper prices. This is a habit I formed several years ago while touring wineries in California. At that time, I amazingly discovered that converting wine to tons at the rate of roughly 8 lbs per gallon--a calculation of which I was still capable after an afternoon touring wineries--indicated wholesale wine prices were near wholesale paper prices at a mill. For amusement, I therefore could easily mentally develop a pro forma for a winery.

I pondered the Panama Canal and watched a collection of nearly century old, well-maintained machinery collect very handsome fees. I thought about the technology of the canal, the technology of papermaking, and the respective revenue potentials of each. The thinking led me to some questions you readers occasionally ask me.

TECHNICAL VS. BUSINESS

Readers sometimes remind me that the first word of TAPPI is "technical." This leaves them puzzled when I spend so much effort discussing other aspects of the paper business. The reason is simple. If you do not understand an entire business for any area, your technical expertise will not function well. The Panama Canal gives me a good way to explain what I mean.

If a cross section of TAPPI members were to descend on the Canal for an analysis of its technical prowess, they would not have difficulty making a transition to this system from the systems in their paper mills. Civil engineers would want to study the foundations. Mechanical engineers would prefer examination of the gates and railroads. Process control people would offer suggestions for operating improvements. Even paper scientists would be comfortable discussing the use or need for slimicides to keep the massive hydraulic ducts free and clear.

The difference would occur in marketing and sales. Marketing actually takes care of itself. The choice is to go around South America in approximately two to three weeks or go through the canal in 12 hours. Remember that the Canal is almost a monopoly. Making fantastic profits in the paper business would be rather easy if one owned the only mill.

The economic future of the Panama Canal may be in jeopardy like that of old technology paper mills. Let me explain. The Coral Princess is a "Panamax" ship. This means it is the maximum size allowed in the locks--approximately 1000 ft long by 106 ft wide. As passengers learned during our cruise, another equally important dimension that limits ships in the canal is gross weight. Since the fresh water that is the entire makeup of the canal system is less buoyant than seawater, a problem occurs with ships that dimensionally fit the locks but sink below the allowable level. Our vessel sank 6 in. A thriving intermodal container train system has therefore sprung up to offload ships and use rail to transport goods to the other side. Ironically, a train existed long before the Canal. The Panamanian Railroad started in 1855. The Canal is obsolete.

GET YOUR KICKS ON ROUTE 66

In the 1960s, planners proposed building a new sea-level canal through Nicaragua using hydrogen bombs to cut the channel. Today, we hear talk about building a new canal parallel to the existing one but 10 miles to the west the Panama Canal runs approximately north to south. If this happens, I expect the existing canal would meet a fate similar to that of once-famed and vibrant Route 66--it would enjoy a nostalgic mystique while the new canal enjoys all the business. The now relevant--but old--technology will quickly fade. Doesn't this sound almost like the paper industry? S!

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About the author: Jim Thompson is chairmen and CEO of Talo Analytic International, Inc., Atlanta. He is also a member of the TAPPI Editorial Board and writes the weekly column "Nip Impressions" in TAPPI's weekly electronic newsletter, Over-the-Wire. Contact him at [e-mail].