Business Brief: In a global tech outage, paper’s enduring role unfolds

No one is saying Friday’s global tech outage means office paper is about to disrupt screens, but the meltdown showed how the centuries-old technology still has an important place in the cloud-storing, AI-innovating, quantum-computing year of 2024. Today, ahead of a Bank of Canada rate announcement, a debate about artificial diamonds, and a surprise hero in a 2,000-year-old technology, we play rock, paper, scissors.

In the news

• Legal battle between Dye & Durham’s founding brothers could upend board
• TD Bank hires financial-crimes expert to strengthen risk controls
• Climate-related extreme weather puts oil and gas assets, production at risk

At the top

What to expect when you’re expecting a rate cut

The pieces appear to be in place for the Bank of Canada to make a second-straight snip to its overnight lending rate on Wednesday.

Economic growth is slowing, inflation is easing and unemployment is edging higher. All but a small minority believe that means the central bank will move its key lending rate down another 25 basis points from 4.75 to 4.50 per cent.

Last month’s cut marked a turning point for the Canadian economy after a series of rapid hikes drove the lending rate to a two-decade high of 5 per cent last summer. Many are predicting one or two more cuts could bring the rate down to 4 per cent by the end of the year.

A second-consecutive cut could have more impact than the first, as analysts predict the move will give consumers more comfort borrowing to buy a house, opening their wallets ahead of upcoming mortgage renewals, and taking out loans to buy new cars.

You can read more about the upcoming decision here.

In focus

The paper chase

Major airlines, banks, broadcasters and all manner of industry were brought to their knees by an errant software update. Around the world, an unlikely plant-based hero emerged.

Many companies on Friday turned to graphic paper – the genus encompassing the species of newsprint, office and writing paper – as a workaround while harrowed IT staff raced to catch up from the catastrophe that was a CrowdStrike update to Microsoft’s Windows system.

Firefighters were keeping track of calls in logbooks, airlines were handing out paper boarding passes, fast-food restaurants were taking orders with paper and pen. Health-care systems around the world reverted to paper patient records, lab requests, meal orders and more.

It was a moment, of course, that laid bare the perils of moving the world’s information online. But for the pulp and paper industry, the outage served as a moment to highlight the enduring place of print and paper in the tech-disrupting, AI-innovating, quantum-computing year of 2024.

Larry N. Montague, president of the Atlanta-based Technical Association of the Pulp and Paper Industry, said the global outage highlights the importance of print and paper as “a useful, reliable and sustainable way to archive critical information.”

“Connected, cloud-based technologies are tremendously useful – pulp, paper, tissue, and packaging manufacturers also employ amazing digital capabilities! – but there will always be an important role for paper to play in supporting our public and personal endeavors,” Montague wrote in an e-mail. (Traditional mail would not have been conducive to reaching my deadline.)

He noted there are populations around the world that continue to rely on paper. Not everyone has the access, experience or trust in a “completely digital experience,” he said.

“With that in mind, even an impactful outage like this is not likely to have a long-term effect on the market. However, it does spotlight the criticality of tangible records and resources.”

His sentiments echo those shared across the pulp and paper industry: The world lives on screens. The days of graphic paper are getting shorter in a decades-long trend that has ripped apart the way we live, work and play. Papermakers have long made peace with that as companies have moved their products online.

And while moments like Friday’s outage underscore the enduring vitality of a trusty technology invented several centuries ago, the pulp and paper industry is making reams of money elsewhere. The great run on toilet paper at the onset of the pandemic was an added boon to the industry as population growth, increasing demand from China and hygiene-conscious consumers power demand for paper towels, facial tissues and disinfecting wipes.

But perhaps a more obvious benefit to the industry from the world’s accelerating digital shift is sitting right now on millions of front porches. Brian McClay, a global pulp market analyst based in Quebec, said the rise of online retail has spurred an increased need for paper packaging that is poised to spike over the coming years.

“The boxes, the paper in the boxes, the paper tape, the labels – it’s all paper,” McClay said.

The “paper and paperboard” segment of the packaging market is already dominant as companies prioritize sustainability amid concerns about pollution from plastic, he said. And the industry is making headway in its ambitions to replace plastic with pulp-based innovations. “These guys are really clever,” he said. “Anything made of plastic could be replaced by paper and we see that in cups, car parts, you name it. That’s the goal by the end of the decade.”

So, the wider industry projects to be healthy over the coming years. That could be especially good news for a Canadian economy whose roots run deep in forestry and the pulp and paper industry.

But there are those who argue digital storage will never match the dependability and security provided by the printed page. Robert Jan van Pelt, an internationally recognized expert on architecture, the Holocaust and historiography – the very study of history as a discipline – said printed sheets of paper bound into a book provide a “much more stable medium than a hard disk or the cloud.

“But also, assuming we continue to teach both language and reading, the human “software” necessary to decode a printed text will not become obsolete, unlike the text files I wrote in the 1980s and 1990s in now superannuated word-processing programs: I cannot open them anymore.”

“The book remains in almost every aspect a superior technology, because it is efficient and stable,” Van Pelt said, pointing to a reflection by French philosopher Jean-Paul Sartre, who wrote about how books and libraries “would outlive man.”

And while McClay said the industry knows the “the world is screen-based now,” there are outliers like books, which have survived the advent of e-readers, and niche magazines. “Quarter-Horse News is going nowhere,” he said.

But what about faxes? Patient health data? Classroom notes? Love letters?

“One of the things that paper does give us with greeting cards and personal mail, direct mail – because it is a personal thing – it’s much more personal than screens,” McClay said. “When someone takes the time to put it in a nice envelope and all that stuff. That still connects.”

🤔 Apropos of nothing: You can subscribe to The Globe’s many fine products in pixels and in print here.

The outlook

On our radar and reading list

What’s the difference between a natural diamond and one grown in a lab? At the moment, a major gap in prices – and that’s causing a massive disruption in the diamond market. Scientists in facilities around the world are creating diamonds that are identical to the rocks that take nature millions of years to produce. (Pick up the pace, nature!) But there’s still a heated debate over what this means for an industry in a state of chrysalis: long-term threat, or merely a passing fad?

Ahead this week: Earnings include Canadian National Railway Co. on Tuesday, Rogers Communications Inc., on Wednesday; Loblaw Cos. Ltd. and Bombardier Inc. on Thursday.

Morning markets

Global shares steadied after U.S. President Joe Biden’s decision yesterday to bow out of the election race injected a degree of optimism into the markets, while a surprise rate cut by China’s central bank failed to give Asian markets a lift. Wall Street and TSX futures pointed higher.

Overseas, the pan-European STOXX 600 was up 1.15 per cent in morning trading. Britain’s FTSE 100 advanced 0.73 per cent, Germany’s DAX rose 1.4 per cent and France’s CAC 40 added 1.4 per cent.

In Asia, Japan’s Nikkei closed 1.6 per cent lower, while Hong Kong’s Hang Seng gained 1.25 per cent.

The Canadian dollar traded at 72.73 U.S. cents.