Paper Trends

Paper consumption has plateaued in North America. Individual personal consumption is going down but with the population increasing it’s maintaining its position. In addition, several North American paper mills have been phased out or temporarily shutdown for re-tooling – removing surplus capacity from the market.

In Asia there are several paper mills set to come online soon and provide additional paper production capacity; however the population boom in Asia will ensure that most if not all of the additional capacity will not leave the market and enter North America.

There is less supply and the cost of manufacturing is going up which lead some industry insiders to speculate that prices will increases this year but it’s not going to be anything drastic or dramatic.

In fact, an increase in paper prices may actually be good news. One trade printer views an increase in paper prices as a valid reason to raise printing prices and hopefully widen profit margins that have become razor thin.

Buying Paper

When it comes to buying paper there are three sources that printers turn to; the paper merchant, discount paper sellers/converters, and direct from the paper mill.

Most printers prefer to buy from a paper merchant. The merchant not only supplies stock but also provides the additional services of an order desk, a sample department, dedicated delivery services and a knowledgeable sales staff. Most importantly the paper merchant stands behind their product with a return policy for unsatisfactory stock.

Most printers deal with the same dozen stocks on a regular basis and they know exactly how it will print, fold and dry. With the plethora of papers now available on the market it is inevitable that a print customer will request a stock that the printer has never used before. This is where a good paper merchant can shine by providing the printer with expert advice on how to work with this stock.

Discount paper sellers/converters are able to provide stock at lower prices – often enabling printers to shave those few extra pennies off of a quote that will enable them to win a print contract. This savings is not just on the cost of paper but also the ability to supply unusual sized papers.

The discount paper seller is often dealing with end-of-line stock or older stock in order to pass the price reductions on to the printer. These stocks may have colour shifts throughout the same batch, size inconsistencies (leading to registration nightmares) or may crack when folding. The discount paper seller will try and deliver the best quality possible to the printer but they do not have the inventory or quality control of a paper merchant.

Buying direct from the paper mill is not to be undertaken by the faint of heart. It requires a capital investment in a sheeter, sufficient warehouse space and staff in order to create press-ready stock. Once a printer has these in place they can provide several house-stocks to print customers at a significant discount – giving them a pricing advantage and a profit center.

Printers used to enjoy the economies of scale when buying paper and could count on reduced prices on stock when buying in specific volumes. The printer would supply this stock to print customers and brokers at a marked-up cost and make a profit. That has changed as more brokers and some customers are supplying their own stock.

With brokers and customers buying stock in addition to printers there is the impression that pricing is chaotic at times and that the economies of scale do not always apply. From a paper merchants perspective pricing is very rigid and segmented by actual and potential purchases. It’s the calculation of potential sales that can lead to the misconception that pricing is erratic.

One trend that is growing in popularity in Canada, directed buying, is an instance where economies of scale do not apply to the printer. Directed buying is when a large corporation arranges with paper manufacturers and merchants to buy a certain number of tons, and directs the printer to buy/use that stock which is bought at the pre-arranged set price.

While Ontario-based Willow Printing Group has not encountered directed buying to date, president Jeff Ekstein has given the matter some thought. “In an ideal world directed buying might make sense, but this isn’t an ideal world,” says Ekstein. He has two worries about directed buying – the loss of a revenue stream and quality control. If the paper is not running well on press due to a problem with the supplied stock then time must be spent dealing with the print client and the directed paper supplier to resolve the issue. “That is time spent on fixing something that we are not responsible for and we are not making a dime on,” concludes Ekstein.

Environmental Costs

In the cut-throat print industry a printer who is knowledgeable about all of the eco-friendly paper options can distinguish themselves from other bidders on a RFP.

There are a myriad of environmental certifications (FSC, SFI, Terra-choice, ISO, CFA etc.) from which a printer can recommend. Each has its own specific interests (for example one accreditation may be concerned about preserving old-growth forests while another accreditation may be geared more towards protecting indigenous peoples and wildlife).

Environmental groups demand a credible third-party certification that the fiber came from a responsible source. In order to prove that it comes from a responsible source the forest lands have to be analyzed and engineers have to go in and make sure forestry standards are being upheld. Fiber sources have to be quarantined and segregated during shipment to the mill, the mill has to set up manufacturing processes and procedures which must be audited to maintain that accreditation. The merchant also must go through the auditing process and get certified in order to carry that chain of custody. And with some accreditations the chain continues to the printer.

With all of these people paying for the accreditation and auditing the end result is that the paper is more expensive. One printer who is going through the accreditation process is Metropolitan Fine Printers of B.C. and according to president George Kallas, the experience is quite easy, especially if you have a well organized workflow in place. And print buyers aren’t adverse to paying for that additional cost.

Fiber source is only one aspect of the environmental impact of paper production. Other factors include the wildlife protection, water consumption and affluent, waste reduction, and green house gas emissions.

Recycled paper is another issue. The main challenge in producing recycled paper is obtaining properly sorted waste stock that can be turned into a high-quality sheet suitable for printing. However improper recycling can degrade the quality of the fiber from recycled paper and it can end up suitable only for tissue or cardboard use.

This would be an excellent opportunity for printers to take an active role in their communities and promote responsible recycling, whether at the curb-side or in the office. This will ensure more useable fiber for paper mills which will lead to an increase supply of high-quality recycled stock and hopefully a reduction in cost.

Final Cut

Paper prices will rise, and paper buying options will remain for printers to find the paper supplier for each job. The selection of environmentally friendly stocks will continue to expand and printers who invest in learning the unique features of these stocks will have a point of differentiation.