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The Pulp: the birth, life and death of an industry

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The establishment of the pulp and fine paper mill (The Pulp) at Burnie in Tasmania was a decades long battle and the battle never ceased until its closure last year. Allan Jamieson looks at the life and death of the fine paper industry in Tasmania.

 

 

It was miraculous that the paper mill at Burnie, Tasmania – known widely as The Pulp – lived for over 70 years. It took the combined efforts of some optimistic entrepreneurs to have it built and they gave the mill more years of life than it deserved, egged on by one of them, Gerald Mussen (1872-1960), who persevered for decades.

  • 1908: Mussen is shown a large private forest near Burnie; cannot envisage a business proposition

  • 1914: An American expert commissioned by the Tasmanian Government to determine if eucalypts can be used to make paper concludes: ‘it is not feasible’

  • 1923: Two Australians in WA, lacking experience in the paper industry, report that good paper can be made from eucalypts. Mussen in immediate contact

  • 1925: Amalgamated Zinc (De Bavays) Ltd funds full-scale tests in Holland; good paper is made from eucalypts

  • 1935: An international paper industry expert, commissioned by Mussen to assess three possible investment schemes, recommends a fine paper mill at Burnie, saying that eucalypt pulp is: ‘25 per cent better than any other wood pulp in the world’

  • 1936: Amalgamated Zinc and four other Collins House Group companies jointly form Associated Pulp and Paper Mills Ltd (APPM).

 

The American expert has been criticised over his conclusion – which ruled thinking for over two decades – however, the parsimony of the Tasmanian politicians gave him no alternative: He had planned five months work, but Government money ran out in less than half this time. Even WL Baillieu, arguably Australia’s all-time greatest entrepreneur and the man behind the Collins House Group of Broken Hill mining companies, was cautious for many years.

Gerald Mussen admitted that he ‘knew nothing about pulp and paper’ and the other APPM board members with a mining background were equally inexperienced in this new – to them – industry. Unfortunately they got one key decision wrong: what kind of fine paper would the mill make? There is no evidence that they sought opinions of persons knowledgeable about paper mills and fine paper markets, yet very relevant information had existed from 1907:

“Only those mills can continue business that either manufactured on the large scale or else offered a peculiar or exceptional quality of paper, which practically amounted to a monopoly.”


Burnie’s first paper machine was: ‘the largest fine printing paper machine in the British Empire’, ordered on the assumption that two-thirds of the machine’s output would be a single grade of paper for The Bulletin, but this never came about. Without that bulk order The Pulp had to make small tonnages of many different qualities – in effect to make specialties using commodity paper mill equipment – and Burnie was a poor location as specialty customers expect prompt delivery; Bass Strait shipping was expensive, slow and unreliable.

 

At the AGM in August 1939, Chairman Massy-Greene remarked:

We have experienced, if not hostility, definite opposition to…our papers.’


War came to Europe just days after that AGM, saving APPM from imminent bankruptcy. By January 1940, The Pulp had six months of orders on its books. After the war, APPM expanded: From 1946 to 1960, eight new paper machines were installed at Burnie and employee numbers grew from 730 to 3,410. Burnie had been a rudimentary village in 1936, with a population just over 3,000, but by 1945 10,000 people lived there and in each of the next 50 years at least 150 houses were constructed. In 1988 Burnie became a city.

 

Mussen was altruistic:

No project was too formidable for him to tackle if the realisation meant profitable progress, not primarily for himself, but for the public at large.’


A fish cannery project at Port Lincoln cost him thousands of pounds, but it achieved his object of establishing a much-needed industry. To Mussen, industries employed families. In 1919, he said:

The human element in commerce and industry must have first consideration, and profit must be placed second … If the employees feel that they are not fairly treated, no monetary reward will induce them to give their fullest production.


APPM formed a welfare Council at The Pulp. This was far in advance of what existed elsewhere in the world and the whole community benefited from it as well as from the usual commercial activity of a large company. Geoff Yaxley recalled:

‘I worked at The Pulp for 38 years from 1954. I was the business face: We bought everything locally if we could. I spent $8-10,000 a day in Burnie.’

The Pulp was the sole manufacturer of fine paper in Australia until 1956 when the British company, Wiggins Teape, built a mill at Shoalhaven in NSW. The Shoalhaven machines were small, ideal for manufacturing specialties. In contrast to commodity mills, which must frequently install ever-larger machines to compete in the world, specialty paper producers need much less capital and can operate with small machines throughout their life, however they depend on the skill and attitude of the machine operators; these must take readily to frequently upsetting their machines in order to make different grades — hard work! What about The Pulp’s employees? Gerald Mussen’s “family” emphasis meant that anyone with relatives at The Pulp could also join — without an aptitude or attitude test. Life was comfortable, but if management asked for a greater intellectual input to operations, few employees could be counted on.

 

 

 

In 1970, APPM purchased the Shoalhaven mill and Wiggins Teape became the largest shareholder in APPM. Gerald Mussen’s humanistic view was not shared any more at board level. Strikes and disruption suddenly became a fact of life, occurring roughly every three months during 1973-8 and lasting from 32 hours up to seven weeks. The union demands were unchanging – more money – but APPM was experiencing its worst decade in terms of profit. Only days after becoming Prime Minister, Gough Whitlam drastically reduced import duties and revalued the Australian dollar by over 7%. Imported papers were now $100 per tonne cheaper than a month earlier. Unions all over Australia began competing with each other, demanding huge wage gains.

The Pulp’s managers never recovered control: workers took direction from their union official instead of from their foreman or manager. In 1992, the company’s financial state was such that immediate change was necessary, but workplace change was glacial in pace due to union resistance. Work had to be brought in line with the rules in the Industry Award. Both company and unions were legally required to observe the Award, but the unions routinely ignored it and attempts by managers to impose it always prompted walkouts.

The consequent Burnie Mill Dispute of 1992 saw two strikes totalling about six weeks and the company losing over $10 million in that time due to an illegal union picket. At every point, the company was found to be obeying the Law, but the police chose not to administer the Law even after Justice Wright (Supreme Court) told the police that picketers had no special rights:

Insofar as Inspector Fox suggested that police should not interfere in a situation, which had its genesis in an industrial dispute, he was clearly wrong...[this] leads to anarchy. It is plainly unacceptable.


The Dispute was not resolved and in September 1993, Amcor purchased APPM. Employee numbers dropped and capital was injected, yet from 2000 to 2009, earnings per tonne of paper dropped from $138 to $36. In 2010 a buyer was found for Amcor’s two mainland fine paper mills, but no buyer came forward for the Tasmanian mills at Burnie and Wesley Vale. The Shoalhaven mill still operates. Even in the 1980s, Shoalhaven made as much profit as the Tasmanian mills combined, yet from a much smaller capital base.

 

There were internal company faults, for sure, but let’s not overlook four very serious constraints that any manufacturing endeavour in Australia must overcome:

1. Market size


The Australian market is rarely large enough to support capital investment by a local manufacturer without it also being attractive to overseas manufacturers. Tariff protection existed in the 20th Century, though this was unpredictable and often inadequate. In 1954, APPM “enjoyed” tariffs from 2% to 5% of the paper price, but APPM could not secure increased protection. A tariff regime is unimaginable in the 21st Century.

 

Few Australian made products have a lower delivered cost in an overseas market than similar products made elsewhere. The whole world is now one market.

2. Government apathy

 

Two options were debated by each colonial government:

(a) encourage a strong manufacturing base, or (b) assist raw material exports by improving transport infrastructure.

Option (b) envisioned a small, dispersed population of farmers and miners, incapable of supporting a robust manufacturing industry – manufactured goods would be imported and education would play a less critical role; few people with technical, marketing and innovative skills would be needed. Option (b) won favour in each colony. In 1923 came Prime Minister Stanley Bruce’s slogan: men, money and markets. Britain would supply migrants (men) and investment (money) to support agriculture and mining in Australia and we would export the output to British manufacturing industries (markets). Barry Jones said in 1992:

The reasons for our resistance to innovation emerge from our economic history: we dug up or grew raw materials and shipped them off to people who were cleverer than we were, who processed them and sold them back to us at higher value.


Australia once made its own bicycles! We now import more than one million bicycles each year — how clever!

3. Education


Clever we are not. In World War Two, the RAAF found that large numbers of recruits lacked the basic education to enable them to be trained; teachers had to be imported from England! Many employees at The Pulp were innumerate and illiterate.

4. Union power


The ability of Australia’s unions to ignore the Law is what makes manufacturing a doubtful proposition. The company lost a further $3 million at Burnie between Justice Wright’s ruling and withdrawal of the picket. In the court of public opinion, APPM was condemned: How dare control of The Pulp be wrested from the hands of the public’s darlings — our unions!

 

Far less than 5% of Australians work in the agriculture, mining and base metal industries yet these few achieve a $101 billion net foreign exchange gain from their efforts. The rest of us demolish that gain; the Nation as a whole has a trade deficit. Paul Keating used the term “banana republic” when he was Treasurer. That encapsulates what over 95% of us are doing — lying on our backs waiting for the bananas to drop!

I have described how it took a group of optimistic entrepreneurs to establish the new industry (APPM). This combination has not arisen since — and with these four constraints ever-present, it will not arise in future. Manufacturing in Australia was a 20th Century phenomenon.

[Allan Jamieson's book 'The Pulp: The Rise and Fall of an Industry' will go on on sale on 16 July 2011.]

 

 
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