And lastly, it takes a lot of money to run a paper mill. Which many people don't have in the current economy, making investing in mills quite the risky venture.
Paper mills require millions to operate. Machines have to constantly run at 100% efficiency just to break even. There's also the added cost of maintenance fees:
- Cleaning machines
- Providing proper upkeep
- Regular inspections
And if a paper mill decides to upgrade equipment, it can tack on hundreds of millions of dollars extra and take months to years to complete. During which time these machines aren't in service.
How is all of this spending rewarded? With little return profits.
This is best exemplified with specialty paper, like labels. Specialty paper is hard to make, and requires very tight specifications. If machines have to be changed over to accommodate even the slightest adjustment, it costs time and money.
There's also a high rate of rejection. Precision with roll length and width must be perfect, leaving no room for error. If an order goes wrong for any reason, the customer rejects it. One bad roll can cause the entire order to be sent back.
This leaves few options: either scrap the material or try to find another buyer.
So knowing there's all of these hurdles to jump and the market isn't prospering, why would you decide to invest in a paper mill?
It's simple: you wouldn't. If there's little to no return on your investment, you'll 100% look elsewhere to spend your money.