From the SCM 1980 Annual Report

The Allied Paper division is headquartered in Kalamazoo, Michigan. Allied Paper manufactures pulp, paper, business forms, copy paper and paper products for office, home and school. SCM's Business Equipment operation, now a part of Allied Paper, is a nationwide distributor of office copiers. The paper industry is capital intensive. It has been growing at about the same rate as the U.S. Gross National Product, although some segments of the industry have higher growth. Business forms, for example, is growing at about 8 percent a year. Although earnings have tended to be cyclical, industry profits have been good since 1972. Pulp and paper operations are especially sensitive to the level of industry operating rates. As a general industry rule, demand for paper and pulp must be sufficient for operating rates to be close to 90 per cent of capacity to earn an adequate profit.

Environmental concerns have had a heavy impact on the industry. It is estimated that air and water pollution control equipment and facilities have added $60 million to the cost of building a 600 tons-per-day pulp and fine paper plant in the past 10 years. At the same time, higher overall capital costs of new plants have caused a reduction in the rate of capacity additions. The combined effect of these factors is expected to cause operating rates to be comparatively high in future years, assuming average GNP growth. The industry tends to be fairly well segmented both in product and markets served. Major products such as commodity printing grades are produced in integrated mills and have a large number of producers. Technical and specialty papers tend to be more highly segmented and a single firm can establish a leading position in one or more segments.

Pulp: Allied Paper has an integrated pulp and paper mill at Jackson, Alabama. While most competitive local mills own substantial amounts of timber lands, Allied fills its needs from private wood owners. Allied does maintain ownership of a small timber back-up. The pulp mill's annual capacity in 1977 was 175,000 tons, of which about 50 per cent is sold in the market and 50 per cent is used by other Allied operations. Pulp sales are direct in the U.S. and through agents overseas. The Jackson paper mill produces 250 tons a day, principally printing, book publishing, business forms and office papers. Kalamazoo operations include seven paper machines that can produce 250 tons a day. About 50 per cent of Kalamazoo capacity is in lightweight book publishing papers, 25 per cent in medium book publishing papers and the balance in technical specialties.

Allied has upgraded its product line into lighter weights and more specialized papers, and its research efforts, intensified in recent years, are aimed at further development of such papers. These tend to have more demanding technical requirements but fewer competitors, and more customer loyalty. The Kalamazoo mills still, however, have some dependence on commodity-type grades of printing papers and converting grades. Allied is a significant factor in book publishing papers and is the leader in lightweight "Bible" papers, used in Bibles, encyclopedias and text and reference books. Other examples of specialty paper are electrostatic papers, tipping and white tipping papers.

Allied's business forms operation, Allied/Egry, is headquartered in Dayton, Ohio. Forms are manufactured by Allied/Egry in plants in Leipsic, Ohio; Gainesville, Georgia; Petersburg, West Virginia; Denison, Texas; and Columbus, Ohio.

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Last Edited by JMW 08/19/07