Coronavirus biz news: Toilet paper might be in short supply (again)

All those mad toilet paper runs to Costco might pay off for some shoppers. Others who scoffed at the buying binge might be out of luck.

Supply cuts that were supposed to bolster the beleaguered lumber market are now creating an unintended effect: the wood chips required to make sought-after toilet paper and wipes during the coronavirus pandemic are becoming more scarce.

Right now, about 25% of Canadian sawmill capacity is shut after producers from West Fraser Timber Co. and Canfor Corp. idled operations amid a price slump and poor outlook for spring building as the coronavirus spreads.

That’s reduced the output of wood chips that pulp mills rely on to make everything from toilet paper and wipes to cardboard boxes and paper bags, said Derek Nighbor, president and chief executive officer of the Ottawa-based Forest Products Association of Canada.

Without federal aid to get some sawmill capacity back online, input costs could rise or there could be a shortage of the materials pulp mills need for household products, he said. Panic buying has already caused shortages of toilet paper and other hygiene products in supermarkets around the world.

“The demand from pulp mills has gone up at a time when we’re starting to see the chip supply become more scarce from the sawmills,” Nighbor said in a telephone interview. “It could drive the cost up or there could be product constraints for sure in the months ahead.”

High production costs in Canada squeezed profits for sawmills. The U.S. housing market remains under pressure as the coronavirus spreads, and lumber futures plunged a record 32% in March.

The industry is optimistic that Canada’s government can tweak its wage subsidy program to help forest operators qualify and bolster their access to cash to help them survive the coming quarters, Nighbor said. Canada exports the bulk of its pulp, paper and packaging products and the U.S. is one of its major markets, he said.

“We’re in a crisis here,” Nighbor said. “We need more of our sawmills running.”

Toilet paper at most stores is still in very limited supply. Shoppers are often restricted to small packages that now cost two or three times the previous cost. Baby wipes are all but gone.

— Bloomberg

Disney cuts pay to 100,000

Walt Disney Co. will stop paying more than 100,000 employees this week, nearly half of its workforce, as the world’s biggest entertainment company tries to weather the coronavirus lockdown, according to reports.

Suspending pay for thousands of so-called cast members will save Disney up to $500 million a month across its theme parks and hotels, which have been shut in Europe and the U.S. for almost five weeks, the Financial Times reported.

But slashing fixed costs in a more severe way than other theme-park owners, such as NBCUniversal and Warner Media, poses significant risks to the reputation of the century-old empire behind Mickey Mouse.

The decision leaves Disney staff reliant on state benefits — public support that could run to hundreds of millions of dollars over coming months — even as the company protects executive-bonus schemes and a $1.5 billion dividend payment due in July.

By contrast, some big multinationals, including L’Oreal and Total in France, have vowed to forgo state aid in a show of solidarity with taxpayers.

Disney over the past month has raised debt and signed new credit facilities, leaving the company with about $20 billion in fresh cash to draw upon for a downturn. “They could afford” not to furlough staff, said Rich Greenfield, analyst at BTIG, The Times reported.

He cautions, however, that Disney is probably braced for a “very prolonged shutdown.” Disney made nearly $7 billion in operating income from its parks, experiences and products business last year, making up nearly half of all operating profits. Shares in Disney have fallen by a quarter since the outbreak of the virus.

— City News Service