What happens when they take away the copier?

Whither paper? Will it wither away, like the buggy whip, or transform itself into new, unimagined forms? Good question, and I wish I could answer it with some degree of authority. While paper is made in a high tech way, we haven't made real progress in making it a high tech product--but there are some promising developments.

As many columnists have noted--including me--making the same old products we've always made won't cut it anymore. Back in the good old days, before the personal computer and the Internet, paper was a relatively inexpensive--and absolutely essential--way to communicate and store information. Today, while paper still holds a vital share of the "communication and storage" market, there are electronic alternatives to nearly every function once monopolized by paper: debit cards for checks, Internet for newspapers and magazines, electronic filing for essential documents, e-mail for faxes, etc.

Even one of the primary growth engines for paper consumption--the desktop printer--is being reined in. Many large companies, alarmed by unchecked growth in the numbers of desktop printers and the countless reams of paper going through them, are adopting "document management" strategies that require employees to use networked printers and train workers to use electronic alternatives to the good old printout. For example, Bank of America was able to cut the number of its printing devices to just one printer or copier for every seven employees and reduced its annual printing costs by US$ 7 million, according an article by Pui-Wing Tam in the Sept. 13, 2004 edition of the Wall Street Journal.

A quote from the article is illuminating: "Reducing the printer fleet was part of a larger initiative that has reduced the bank's consumption of paper by 1.1 billion sheets, or 5,746 tons, between 2000 and 2003. 'We just want paper use to be rational,' says Robert L. Lee, a Bank of America senior vice president."

According to research firm Gartner Inc., a US$ 500 million company can reduce its annual print spending by between US$ 5 million and US$ 15 million and a US$ 1 billion company by US$ 100 to US$ 300 million. If that happens, millions of tons of paper usage are at risk.

In coming years, these conservation efforts will continue since paper will be an avoidable expense in many applications. The trick for paper manufacturers will be to replace these reductions with brand new applications that customers will enthusiastically embrace. The time may be right to start doing this, as an excellent article by Jim Kenny in this issue points out. ("Seeing a bright future through a technological window.")

Here are recent "high tech paper" developments:

* International Paper and Smurfit-Stone Container are part of the effort to create a radio frequency identification (RFID) system for individual corrugated boxes and pallet loads. IP recently partnered with OrganicID to produce "organic" printable RFID tags, using plastics instead of more costly silicon. OrganicID's goal is to bring the approximate cost per tag down to $0.01.

* Pro Document Solutions introduced a new "image-survivable" security technology that allows for verification of printed check authenticity after it has been scanned and digitized by a financial institution.

* Sony developed a 51% paper, recyclable DVD for the new Blueray format (a different laser wavelength) with storage capacity of 25 GB.

It will take many more products like these for the paper industry to survive. Pulp mills will have to morph into an facilities that produces multiple products, including fuels and other byproducts. Paper mills must learn to focus on high value products like the ones above instead of high volume products. After all, if you can make one-half the volume you formerly made but charge three times as much, you will be way ahead of the game.

This is not inconceivable. It is possible to reinvent a traditional industry. After all, there once was a mature, commodity product suffering from a stodgy image and declining sales. Along came entrepreneurs who developed a new version of the product, gave it a hip image, and opened thousands of new outlets for this old product. Today, Starbucksstands on top of the coffee industry, making piles of money from a product everyone else had written off. Maybe there is a Starbucks out there in the paper industry just waiting for someone to brew up a new vision of success.

ALAN ROOKS

Editorial Director

Contact Alan at [phone], or by e-mail at: [e-mail]

[ILLUSTRATION OMITTED]