 May 2001 Issue
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Introducing "Paper clips" Welcome to Webcom’s first issue of "Paper Clips". This short bulletin is intended to help you plan and budget for your projects in the face of volatility in the paper markets. While there is no shortage of industry data and analysis available, we hope to provide a concise summary of relevant information by simplifying trends, providing outlooks and highlighting the impact that these may have on you and your upcoming projects. We do hope that you find it informative and useful and, as always, we welcome your comments.
Webcom Paper Developments:Webcom Introduces Publishers’ Preference In order to provide an economical, high quality option for publishers, Webcom has recently introduced "Publishers’ Preference". This new paper utilizes the latest in paper making technology to combine Fine and Groundwood papers, producing an excellent offset alternative paper. "Publishers’ Preference" is a good alternative to our premium Book Opaque or Recycled Offset grades and has improved quality features vs. our Publishers’ Plus. With a cost savings of 4% and excellent print characteristics - opacity (92) and brightness (83) - Publishers’ Preference is an excellent alternative to Fine Paper. Publishers’ Preference runs extremely well on our web presses and achieves sharp line and halftone resolutions. Its advanced manufacturing process means it uses 50% less pulp than standard book papers and it is completely chlorine-free, making it a good choice for environmentally-concerned customers and an alternative to recycled offset.
Industry TrendsIn 2000, the paper industry saw takeovers, mergers and acquisitions, resulting in reduced flexibility and decreased availability in the uncoated text paper market. The number one producer of newsprint, Abitibi-Consolidated merged with the number three producer, Donahue, which will result in a 16% reduction in newsprint production as they rationalize cost. In April 2001, the number two producer, Bowater Inc., bought the number four producer, Alliance Forest Products. The Bowater/ Alliance plans are to remove 20% of their newsprint capacity over the next four years. The suppliers of Fine Paper grades (High Value Text, Economy Offset, Book Opaque, Performance Text, etc.) went through two major mergers; International Paper merged with Champion, and Georgia Pacific merged with Fort James. A third merger, between Weyerhauser and Williamette is being considered. This means consolidated supply and fewer suppliers of Fine Papers. These moves were driven by globalization of the paper industry, current declining market demand and poor industry profitability. These industry trends translate into the need for more long range planning in the publishing industry, due to the decreased flexibility in the paper markets and the reduced supplier options of uncoated text papers.
Paper SupplyPaper supply has decreased industry-wide over the past year as large suppliers consolidate or shutdown capacity. Due to changes in production policy by the suppliers of Fine Paper, North American Fine Paper capacity has dropped from 14mm tons in January of 2000 to 12mm tons in January 2001 (a decrease of approx. 15%). With the paper industry balancing supply and demand through capacity management many papers still require advance planning to meet production schedules. Webcom’s close paper supplier partnerships protect our customers with standard inventory backup and a sensitivity to unusual customer needs.
Pricing TrendsThere are two distinct pricing trends affecting Webcom’s publishing customers in the North American market for uncoated paper. Groundwood price increases of +4% to +6% for Hi-Brite, Book Brite, Paperback, Hi-Bulk have been announced effective May. In March 2001 there was a newsprint price increase of +5% passed through to publishers and printers. Webcom has asserted that current business and publishing markets cannot absorb these paper cost increases. We will continue this strategy and keep heavy users of these grades updated throughout May. Fine Papers, such as Book Opaque, High Value, Performance Text, Economy Offset, Reference Opaque, Recycled and Trade Book have remained static throughout the first half of the year. Current declining demand for some of these grades in non-book markets (i.e. commercial printing) is creating an unstable pricing base. Larger publishing projects may benefit from short term pricing concessions. Webcom’s sales, estimating and paper management teams are proactively working with customers to develop efficient paper plans.
Projected Trends for May and June ’01
Paper TipRevised to reflect recent changes, Webcom’s Text Paper folder provides a quick overview of our extensive inventory of text paper options and costs. Use it to help guide you to a less expensive paper grade without sacrificing quality. For instance, consider our new Publishers’ Preference as a substitute for Book Opaque for average project savings of 4%. |
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WEBCOM LIMITED – books and beyond
3480 Pharmacy Avenue, Toronto,
Ontario M1W 2S7
1-800-665-9322 Sales
Offices in Canada and the U.S. Head Office: Toronto, ON
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