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Paper Increase

 

With a constant barrage of news concerning a softening economy, anecdotal evidence of printing plant slowdowns and USPS published statistics of reduced mail volume, one would logically conclude that paper costs should be lower due to softening demand.

 

As you may have heard, this is not happening, and in fact paper has and likely will be going up in price.

 

The reasons are varied and intertwined:

 

Operating costs at the paper mills have increased due to the cost of energy and labor.

 

The price of oil increases the costs to ship the raw material to the mills and ship the
finished paper to its user destination.

 

The weak dollar and the stronger Canadian dollar (Canada is a major source of raw material for U.S. paper mills) increases the cost of timber and pulp.

 

Conversely, the weaker dollar makes it more economically feasible for foreign purchasers to import U.S. pulp and paper, thus increasing demand.

 

Conversely, the U.S. Department of Commerce, in order to make U.S. paper more competitive against imported paper has placed tariffs on foreign paper to combat unfair cost advantages due to foreign government subsidies.

 

Merger and acquisition activity has resulted in reduced mill capacity, temporarily or permanently. When one paper company buys another, the assets may simply have different ownership; when private investment companies make the acquisition, the need for return on investment often makes it more profitable to simply shut down the less profitable equipment.

 

The increases, which have generally been in the $3.00 cwt range, started in January 2008 and more are already scheduled throughout the year.

 

The issue is inescapable, but Service Graphics can help you research your paper needs and make sure your projects are printed on the right equipment. Contact your account representative or production manager in advance of your next project.