Impact of capital spending on paper industry profitability

When capital investments are critically analyzed within a framework that reflects financial reality, many large facility expansions are shown to be marginal investments. Capital investment alone is a difficult path to achieving facility profitability, while no/low capital options that improve cost and productivity have more leverage on ROI. Large capacity expansions at high capital investment are more risky, entailing both engineering/construction risk as well as being highly sensitive to product pricing assumptions.