THERE'S NO SURGE PRODUCTION AT THE PAPER MILLS.

Apparently, you don't just ramp up production at the paper mill and call an extra train.

Companies that help supply these everyday paper products are stunned and trying to adjust to this rapidly evolving new normal in consumer behavior.

They're faced with tradeoffs. Many were already operating their manufacturing facilities 24/7 prior to the pandemic. Now, some are limiting their facilities to essential workers and contractors. It's unclear, however, what they will do in the event that those workers get sick.

"If you ask me why everyone is grabbing toilet paper, I can't really explain it," said Tom Sellars, CEO of Sellars Absorbent Materials in Milwaukee, Wisconsin. His company is a processor and converter of paper and related products. "It's not like we are suddenly using more of it. But the surge in demand could strain the supply chain," he said.

Georgia Pacific, the maker of Angel Soft and Quilted Northern toilet paper, said that last week, some orders from retailers nearly doubled. The company managed to ship out 20% more than its normal capacity. And the American Forest & Paper Association, an industry group representing paper product makers, noted the industry is working hard to respond to the sudden spike in demand.

Paper mills produce a tissue paper that can be cut, perforated, and rolled into toilet paper or sliced and interleaved into facial tissue.  The cutting takes place in what a steel guy might understand as a slitting mill.  But creating a new tissue mill isn't easy, and the ones that exist are pretty much running at capacity.

The pulp (virgin or recycled) is delivered to paper mills that turn it into large rolls of paper called "parent rolls" that are over 100 inches wide. The rolls then arrive at paper-coverting facilities, like the one run by Sellars.

"We purchase large rolls from mills and our equipment cuts and packages them into the designated end product like toilet paper or kitchen towels, depending on the quality of the paper," he said. Packaging and shipping are the final steps in the chain.

So what happens when there's an unexpected demand spike?

"Most mills are 24 hours, 7 days a week operations already. They are running on fixed capacity," said Sellars. "It's not like there's an idle machine that can be cranked up to increase production."

Retailers also have a set amount of toilet paper inventory. "What I suspect is happening right now is retailers are tapping into toilet paper inventory that's sitting in their warehouses until they get more shipment from producers," he said.

For suppliers, rapidly increasing production may not be feasible. So they might instead recalibrate factory production to make more of one type of product and less of another. "For example, less bathroom paper towels and more toilet paper," said Sellars.

A Chicago Tribune story describes the situation in a similar way.

“It’s not like suddenly all the toilet paper factories in the world are burning down,” said Willy Shih, a professor at Harvard Business School who studies manufacturing supply chains. “They’re still cranking this stuff out.”

If anything, toilet paper supplies are suffering from being too steady, Shih says. Typically, demand for the product is flat proportional to the population — there is no hot season for toilet paper. That means that factories are designed to run as efficiently as possible around the clock to produce a constant stream of product, with little room for increase or decrease.

When that constant supply meets a spike in demand, shoppers suddenly run into empty shelves.

I hope the operators of the paper mills are familiar enough with the cobweb dynamics that clutter a lot of introductory economics texts that they'll pull with an even strain rather than ramp up for now only to have to scale back once the panic passes.

It's not as challenging to set up a slitting mill, as an alert Bangor entrepreneur discovered.

When Marc Cooper first acquired a building on the outskirts of Bangor last summer with the goal of converting raw tissue paper into finished goods, he didn’t foresee the global pandemic that would flare up some eight months later — let alone the effect it would have on his business.

With the confirmed arrival of the coronavirus in Maine, panicked shoppers have been stripping toilet paper from the shelves of their local supermarkets as soon as it can arrive.

Cooper’s business, TissuePlus, only started making toilet paper in the last week, but he now has two shifts of workers cranking out rolls of it from early in the morning to past midnight. He then sells the finished goods at a wholesale price to regional distributors and suppliers.

The parent rolls come from mills in Baileyville, Maine, as well as from Massachusetts, New Hampshire, and Wisconsin.  (Hmmm, backhaul loads for Bangor and Aroostook boxcars.)

Parent rolls are a low value relative to weight commodity, there are paper mills using recycled paper and pulpwood all over the country.