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Domtar: A Real-Life Dunder Mifflin?

· Paper,Labor Market,Economics

NBC’s hit comedy series The Office chronicles regional paper company Dunder Mifflin and its attempts to stay relevant in an increasingly paperless world. While Dunder Mifflin solved this problem by beginning to sell printers and a pyramid-shaped tablet, real-life paper manufacturers have found that they can maintain growth while continuing to sell only paper and paper products. Dotmar Corporation, for example, is the largest producer of uncoated free-sheet paper in North America and the second largest in the world. Domtar has seen positive sales growth in recent years, but difficult times may be on the horizon.

Domtar’s main sales come from uncoated paper and personal care products, which include paper towels and toilet paper. Sales of traditional paper products have been in decline over the past few years, decreasing by 4.9% in 2016 and 0.7% in 2017. Personal care products, on the other hand, have seen more promising sales growth, with sales rising by 5.5% in 2016 and 9.6% in 2017. The result has been increasing revenue in each of the past four quarters. Analysts expect sales to continue to grow, by 5.0% in 2018 and 0.9% in 2019. The same is true of the paper industry as a whole, which is expected to grow by 0.7% in 2018 and 0.4% in 2021. However, if these analysts are to be believed, Domtar and the paper industry as a whole can expect decelerating sales. Domtar has attempted to avoid this possibility by implementing more advanced and sustainable technology. [1] [2]

In a recent report, consulting giant McKinsey outlined some of the ways paper companies like Domtar have been utilizing more efficient technology. First, using recycled fiber for paper production has resulted in cost reduction. Second, digitizing manufacturing has decreased some costs by nearly 15%. Finally, remote mill automation and drone-monitored forestry is beginning to be implemented. The report notes that innovation has come slower than expected, mainly due to the stubbornness of paper CEOs, who McKinsey claims have little experience in digitization. The consulting firm suggests paper companies hire tech-savvy employees in management positions. Additionally, McKinsey recommends increasing research into new bioproducts that could replace wood-based products for long-term sustainability. [3]

While implementing new technology, Domtar has created six sustainability goals for 2020. Domtar views sustainability as a way of creating long-term value, especially as the world’s forests continue to shrink. Of these goals, the company has already surpassed three of them: Domtar has reduced greenhouse gas emissions by 18% since 2010, implemented a model to more strategically manage water usage, and increased total Forest Stewardship Council-certified fiber usage by 22%. It is still trying to reduce the recordable safety incident rate to 0.50, expand its EarthChoice Ambassador program to 100% of facilities, and reduce total waste sent to landfills by 36%, but it is on track to achieve each of these goals. By being environmentally-friendly while implementing new technology, Domtar is creating a sustainable business model that can allow it to continue to compete in an increasingly paperless world. [4]

Domtar has managed to maintain sales growth in a rapidly digitizing world by implementing advanced and sustainable technology, but it faces decelerating sales in the coming years. If Domtar can effectively expand its usage of sustainable technology, it can likely remain profitable and increase sales at an accelerating rate. It’s important to remember that, contrary to what one might expect, the paper industry is not dying. As Dunder Mifflin Scranton regional manager Michael Scott once said: “We can't overestimate the value of computers. Yes, they are great for playing games and forwarding funny emails, but real business is done on paper.”


Written by Jack Vasquez, Edited by Alexander Fleiss

[1] All financial information from Yahoo Finance (retrieved July 5, 2018) and the Securities and Exchange Commission

[2] Statista. (n.d.). Outlook U.S. paper end-use market output 2018-2022 | Statistic. Retrieved from https://www.statista.com/statistics/407790/forecast-for-paper-end-use-market-output-in-the-united-states/

[3] Berg, P., & Lingqvist, O. (2017, May). Pulp, paper, and packaging in the next decade: Transformational change. Retrieved from https://www.mckinsey.com/industries/paper-and-forest-products/our-insights/pulp-paper-and-packaging-in-the-next-decade-transformational-change

[4] Associated Press. (2018, June 26). Domtar's 2018 Sustainability Update Highlights Continued Progress on Long-Term Strategy. Retrieved from https://www.citizentribune.com/news/business/domtar-s-sustainability-update-highlights-continued-progress-on-long-term/article_1dd44133-da69-52e2-b418-1d33c0b99604.html

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