The primary businesses of Clearwater Paper includes pulp and paperboard production which holds 40% of 2014 net sales, as well as consumer products which holds 60% of 2014 net sales. Clearwater Paper Corporation is among the largest manufacturers in North America for both of the previously stated segments.
Bleached Paperboard Business
Bleached paperboard manufactured by Clearwater Paper holds the fifth largest capacity in North America with 12% of the market share. They are also the largest manufacturer of Solid Bleach Sulfate Paperboard (SBS) in the United States. This business includes producing the finished paperboard and selling the product to companies who will turn the paperboard into finished containers for their own products. These products include but are not limited to consumer goods, pharmaceuticals, food, and liquid containers. The top ten customers of Clearwater account for 50% of paperboard shipments.
Consumer Products Business
Clearwater Paper Corporation also has one of the largest consumer product manufacturing businesses in private label tissue. Clearwater paper puts much of their effort towards assuring competitive quality and value of tissue in all of the different types of private label products they offer. The three largest customers they retain for these products consists of Safeway, Albertsons, and Kroger. Business with the three of those companies makes up almost a quarter of the total revenue for Clearwater Paper. The amount of business Clearwater receives from these companies mirrors the time they have had together. Clearwater has been supplying those three companies for over 25 years. Also to be noted, Clearwater has an average customer relationship span of 19 years.
Competitive Rivalry in the industry
We believe the competitive rivalry in the industry is high. Clearwater Paper Corporation is competing with good standing in Western U.S.A. but facing high competition on Mid-West and East U.S.A. CLW Corporationâs major competitors on consumer branded tissue and private level products are Procter & Gamble, Georgia-Pacific, Kimberly Clerk, International Paper, MeadWestvaco, and RockTenn. Most of the major competitors are larger in size and have significant market share in U.S. We assess the threat of competition as high.
Threat of new entrants
The threat to new entrants for this industry is moderate. Despite the capital-intensive manufacturing process of private label tissue and bleached paperboard products, foreign manufacturers of paperboard from Asia are increasing and expected to increase their presence in the U.S market. Long-standing customer relations with some contact customer can decrease certain level of the threat. Another strength for reducing threat of new entrant is strategically positioned pulp and paperboard facilities for efficient distribution and availability of corporationâs manufacturing inputs.Â We assess a moderate threat of new entrants due to some barriers to new entrant to the industry.
Bargaining Power of Customers