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St. Marys works to bring new machine up to speed.

St. Marys works to bring new machine up to speed

The St. Marys Paper Inc. mill in Sault Ste. Marie continues to modernize.

During the past year it brought its state-of-the-art Number 5 paper machine on line. The $140-million project took two years to complete.

"It effectively doubles the production of our mill," said Jim Withers, vice-president of operations at St. Marys.

Once at capacity, the mill will produce an additional 130,000 tons per year.

The mill produces supercalendered (SC) paper, a high-quality, glossy, uncoated groundwood paper.

The machine was started up in December of 1988 and has been running for a year and a half. It is currently producing paper at 3,200 feet per minute and is gradually increasing speed with a target of 4,000 feet per minute.

Only a few machines in the world can operate at that speed and Withers said the Number 5 machine is expected to be at top speed next year.

When a company puts in a new paper machine, it takes a while to get it up to speed, he explained. "It has been longer than we had hoped."

The machine is about six months behind schedule in reaching production capacity, but Withers said that is just a result of the learning curve.

The quality of the paper being produced is as good as the company wants and the quantity is increasing, he said. "The hard work is beginning to pay off."

The new machine, which is one of the most automated in the world, needs the same number of operators as its predecessor, but the tons produced per operator is now much greater.

The return on the investment, however, depends on factors the company cannot control, said Withers, listing market demand, the exchange rate of the Canadian dollar and interest rates as factors.

About 98 per cent of St. Marys' product goes into the United States.

"The high exchange rate is harmful to us," said Withers, noting that the company's costs are in Canadian dollars and its income is in U.S. currency.

A reasonable exchange rate for the company would be about 80 cents on the dollar, he added.

When the new machine was planned, the Canadian dollar was about 74 or 75 cents U.S., and Withers said the company hadn't project an 85- or 86-cent dollar.

"That's one of the things we can't control."

Withers noted that Finance Minister Michael Wilson toured the mill about a year ago.

"We passed on our views to him then," he said. "It doesn't seem to have had much influence."

The company is now at about the break-even point on the installation of the new machine, he said. "We have not made a profit."

The real benefit of the expanded mill is quality, he said, noting that the product has been well received in the marketplace. The current market is mediocre, he said.

"Despite that, we can sell the additional tons. We're quite pleased with the quality of the paper we're making."

The market had been growing by 15 to 20 per cent, but in the past year that growth slowed to seven to eight per cent.

The paper produced by St. Marys is used for magazines, advertising inserts and some catalogues.

Withers said the company is still consolidating. "This last expansion was a major step for us."

The new machine will be brought up to speed and the mill made efficient before any further expansions are undertaken.

Withers said the company is also sensitive to the growing interest in recycled paper.

"All Canadian newsprint makers are thinking about it," he said.

Recycling would require a deinking system which Withers said would be a major project.

A hydroelectric co-generation plan, which would have eliminated the existing steam plant, has fallen through.

"It's unfortunate because that would have been a fortunate way of correcting the air problem," Withers said.

The steam plant burns wood waste and natural gas, and the ash is emitted from the stack. The co-generation plan would have burned natural gas and wood waste and produced 60 megawatts of power.

"The project, although it is not dead, is on the back burner," said Withers.

The excess power from co-generation would have been sold to Ontario Hydro.

Withers said conditions must change to make the project feasible and it is now looked at as a long-term project.

The project would use a lot of natural gas and the relative price of natural gas and electrical power had to be considered, he explained. "We couldn't assure ourselves or our partners we could have sold power in the future at a profit."

Instead, the company is installing a $3.5-million scrubber on the stacks of the steam plant which should be complete by September.

St. Marys Paper began operations on June 1 of 1984 with the acquisition of an inefficient and outdated groundwood paper mill which produced specialty newsprint grades.

The mill has been transformed into a modern, efficient operation which is the largest producer of supercalendered paper in North America.

The company's first task was a $23-million improvement and conversion program. In 1985 the mill began producing SC paper. Annual capacity was 90,000 tons of SC paper and 35,000 tons of high brightness, machine-finished (MF) paper.

A further $157-million expansion was undertaken and by November of 1988, the project was complete. It included the installation of a new state-of-the-art Tampella paper machine - the first new machine in Canada designed to produce SC paper and the first new paper-making machine for the mill in 75 years. Annual SC capacity was increased to 225,000 tons per year.
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Title Annotation:Focus on Sault Ste. Marie; St. Marys Paper Inc.
Author:Bickford, Paul
Publication:Northern Ontario Business
Date:May 1, 1990
Previous Article:Centre creates jobs, but little hype.
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