Archive for the ‘Paper Outlook’ Category

Fall 2011 Manufacturing and Paper Update

Thursday, August 25th, 2011 by Autumn Jones

It is not too early to start thinking about manufacturing increases for 2012 budgets.  There are some interesting trends in the industry that have occurred over the summer that may help publishers in their planning process.

Print Market

Printers are reporting that business is slightly better than 2010.  Advertising sales were up during the first half of the year and they look to be leveling off going into Q4.  Page counts and print runs continue to fall from previous levels and that is contributing to additional capacity on the print side.  It is still a buyer’s market for those publishers considering going out for bid.  There is competition for new business and holding existing accounts is a priority for incumbent printers.

Many printers continue to diversify their portfolios by adding non-print services.  Several printers have partnered with companies that provide digital solutions.  This allows printers to become full service partners as more publishers move to an outsourcing model.  Printers with membership or association titles are looking to offer services that will enable them to learn more about their publisher’s customers by providing additional value.

Commercial printers are providing more digital offerings particularly on the direct marketing side of the business with personal URLs and one-to-one campaigns.  They are also looking to upgrade their IT departments with the new focus on software technology solutions and digital products.

All printers are finding ways to be more efficient at a lower cost through workflow changes, new equipment purchases and diversification.

Paper Market

Paper prices stayed flat or increased by a small amount in July.  The third quarter is usually a strong time for paper purchases due to the fall and holiday season catalogues; this is not the trend this year due to tighter planning on page counts and print runs.  The market is soft and should remain that way for the balance of the year.

It is a little harder to predict the paper market in 2012 as there may be capacity challenges if some of the mills that have been shut down do not come back on line.  There is still talk about additional mill consolidation as well that will impact the capacity levels.

The good news for 2012 budgets is that the USPS did not pursue the exigent (higher than inflation) rate case.  The January 2012 increase will be based on the CPI and is expected to be slightly higher than 2%.

Tags: , , , , ,
Posted in Bottom Line, Paper Outlook | 2,898 Comments »

Q2 Print Outlook

Thursday, March 17th, 2011 by Joanne Harap

Your print sales representative has probably been the bearer of bad news over the past two weeks.  Ink and paper price increases have been announced, effective as early as April 1.

The majority of print contracts specify that prices are in place on an annual basis with increases based on a national index such as the Consumer Price Index.  These prices do not include any increases for commodity pricing that can change at any time based on market conditions.  Ink and paper are considered commodities.

The major ink manufacturers have announced increases that average 8% for sheetfed presses and 10% for web press products starting April 1.  The major driver of this increase is the cost of petroleum and gas.  Ink usually represents 8% to 12% of your total print invoice.  Your print sales representative should have already alerted you to this increase.  If not, contact your representative to confirm the exact price increase and timing.

The industry has not seen a paper increase since October 2010.  Paper mills passed on a January 1 increase, but all of the major players have announced price increases of $2.00 to $3.00/cwt  starting as early as April.  This increase was not unexpected, and it shows that paper mills see an improvement in demand for the remainder of the year.  The paper mills have succeeded in eliminating paper supply through consolidation and shutting down paper machines that are no longer efficient.

This is an important time to work closely with your print sales or customer service representative.  Make sure he or she is keeping you up to date on the timing and implications of these increases.  Reach out to your printer if you have not heard anything.  You do not want to be surprised when you receive your May or June invoices that include unexpected price increases.

Any price increase is difficult to explain, but framing the discussion in the context of market changes will help to put it in perspective along with an accurate projection showing the impact to the bottom line.

Joanne Harap is the president of Production Matters, a consulting firm that provides evaluation, management and problem-solving services related to publications production and printing.  She specializes in producing cost-efficient and cost-effective association publications.

Tags: , , , ,
Posted in Paper Outlook, Print Outlook | 1 Comment »

Understanding the Paper Market

Wednesday, November 10th, 2010 by Joanne Harap

The paper mills have just announced another paper increase effective with October 1 deliveries. This is the third increase in 2010 after a run of reduced paper pricing that started in late 2008.  It is difficult enough to understand the paper pricing swings when you are a seasoned publications manager and even more difficult to articulate the reasons for the change in quick sound bites for your management team.

Let’s break it down a little.

  • The paper mills are trying to hold on to their profits by shutting down inefficient paper machines.  This is resulting in lowered paper supply.  At the same time, ad sales are picking up for many magazines … increasing paper demand.
  • There has been a great deal of mill consolidation over the past two years and this trend will probably continue in the next several months.  The capacity levels will continue to drop as mills are acquired by their competitors.

It is still very difficult to predict how to budget for paper increases in 2011. Demand traditionally drops during the last and first quarter of the year.  When planning for Q1, it is probable that the latest price increase will hold; however anything can happen.

The best information you can get when budgeting is from your printer or a paper merchant.  Ask if you can contact their paper buyers directly for more paper intelligence. You may want to schedule a meeting with a paper merchant or broker if you receive a marketing call. These paper specialists can explain the latest paper trends, statistics and mill activity in user friendly terms for you and your management team.

Keep your eyes on industry newsletters and blogs as well. You may be the messenger of bad news, but you will be able to articulate the information in real time economics terms.  It is also important to remind your management team that paper pricing is cyclical and that there are years where the paper price decreases have contributed to your organization’s bottom line.

Posted in Paper Outlook | 2 Comments »