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Feedback on The Perfect Storm

April 9, 2010
While the Comment feature on PIworld.com provides a way to share a quick thought on a blog post or article, we'd also like to encourage visitors to share longer points of view by submitting your own "Speak Your Piece" blog post. Posts can be in response to existing content on the Website or another topic that is a hot button for you. Please send an e-mail with an overview of your proposed post to webeditorpi@napco.com.
 
For example, the following post was submitted by Doug Rawson, CEO of Superior Lithographics, in response to the latest "Speak Your Piece" blog, "The Perfect Storm: Recession, Postal Changes and Now Paper?":

We believe the American papermakers actions are intended to stop competitors from offering products to U.S. printers and are simply an attempt to raise paper prices by restricting supply.

We have read their statements where they comment that they want to raise prices on paper but the presence of these competitors makes it impossible. As a printer we only dream about using the U.S. government to stop competitors from selling printing to our customers, but we do not seem to have the political influence of the paper companies. Let’s not forget that the holding company for NewPage, Cerberus Capital Management, has a former U.S. Treasury secretary and vice-president on their board
.

One seemingly ironic twist to their petition to stop off-shore competition is their failure to include printed materials. Using their logic, if its white paper it can’t come in, but if that same paper has ink on it can come to the U.S. without tariff. This appears to say, since the U.S. papermakers only sell unprinted paper and we have already lost the sale if it is printed in Asia, that paper can come in to the U.S. How is that fair. If it’s unfair competition for unprinted paper to come in the same applies to printed paper. We think this clearly shows the problem with their motives. They really do not care about their customer, U.S. printers, they only care about themselves, and their stockholder (Cerberus).

It would be shocking (and welcomed) if Cerberus ending up as a long-term player in the paper business because papermaking is a highly capitalized business that requires constant reinvestment of hundreds of millions of dollars - they have very deep pockets. However history has shown that these types of companies tend to buy low and sell high meaning that as soon as they can make a profit they will take the company public, profit handsomely if they can, and leave this industry without having made any substantial capital investment. As NewPage has continued a strategy of buying assets of U.S. competitors it has shown the tendency to reduce supply to prop up prices. Their attempt to stop Asian mills from sending unprinted paper to the U.S. is one more step in reducing supply to prop up sagging demand and pricing.
 

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