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Foreign paper and board producers gobble up U.S. industry giants as the market continues to tighten for commercial printers.
Typically, activity in the paper industry is about as gripping as a documentary on fast-drying paints.
But during a two-week period in February, two of the biggest names in U.S. paper and board manufacturing paired off with large, foreign counterparts in one of the biggest consolidation waves in industry history. When the smoke cleared:
The quick and short answer behind the consolidation: low stock prices of U.S. companies and high stock values for foreign manufacturers looking to become global competitors, along with access to attractive raw material regions.
William H. Frohlich, executive vice president of the National Paper Trade Association, Washington, DC, has been tracing the roots of consolidation among paper companies for 15 years. He believes paper mills and merchants have been experiencing printer and end user pressures to reduce the cost of paper as it flows through the distribution channel.
"Currently, merger activity is a result, at least in part, of a strong economy that has not benefitted the paper sector very much," Frohlich states. "These company performance pressures have made it difficult for paper companies to prosper."
Will it continue? "The simple answer is yes, from my perspective," he adds. "The paper industry is realigning itself and I don't think it is finished. Mills, merchants and their customers will see continued consolidation and the new wrinkle: alliances. Independent companies are coming together to complement each other, as in paper merchant marketing groups. Also, e-commerce alliances are taking hold that bring paper companies together with paper-related Internet sites. These activities must also be factored into the paper industry realignment equation."
Commercial printers are left to wonder what impact all this consolidation will have on the availability of various grades and on paper prices, which are still on the rise. According to Andy Paparozzi, chief economist for the National Association for Printing Leadership, 23 percent of its research panel polled in January believe paper is less available than it was three months ago while only 4.4 percent feel it is more available. In January 1999, 7.3 percent felt it was less available while 16.4 percent felt it was more available.
Typically, activity in the paper industry is about as gripping as a documentary on fast-drying paints.
But during a two-week period in February, two of the biggest names in U.S. paper and board manufacturing paired off with large, foreign counterparts in one of the biggest consolidation waves in industry history. When the smoke cleared:
- UPM-Kymmene, of Finland, purchased Stamford, CT-based Champion International.
- Finnish-Swedish manufacturer Stora Enso acquired Chicago-based Consolidated Papers, less than a month after buying Norweigan paper wholesaler Carl Emil A/S.
- International Paper purchased Shorewood Packaging, headquartered in New York.
- Canadian giant Abitibi-Consolidated acquired Canadian Donohue.
- Smurfit-Stone Container, of Chicago, picked up St. Laurent Paperboard, of Quebec, in a takeover bid.
The quick and short answer behind the consolidation: low stock prices of U.S. companies and high stock values for foreign manufacturers looking to become global competitors, along with access to attractive raw material regions.
William H. Frohlich, executive vice president of the National Paper Trade Association, Washington, DC, has been tracing the roots of consolidation among paper companies for 15 years. He believes paper mills and merchants have been experiencing printer and end user pressures to reduce the cost of paper as it flows through the distribution channel.
"Currently, merger activity is a result, at least in part, of a strong economy that has not benefitted the paper sector very much," Frohlich states. "These company performance pressures have made it difficult for paper companies to prosper."
Will it continue? "The simple answer is yes, from my perspective," he adds. "The paper industry is realigning itself and I don't think it is finished. Mills, merchants and their customers will see continued consolidation and the new wrinkle: alliances. Independent companies are coming together to complement each other, as in paper merchant marketing groups. Also, e-commerce alliances are taking hold that bring paper companies together with paper-related Internet sites. These activities must also be factored into the paper industry realignment equation."
Commercial printers are left to wonder what impact all this consolidation will have on the availability of various grades and on paper prices, which are still on the rise. According to Andy Paparozzi, chief economist for the National Association for Printing Leadership, 23 percent of its research panel polled in January believe paper is less available than it was three months ago while only 4.4 percent feel it is more available. In January 1999, 7.3 percent felt it was less available while 16.4 percent felt it was more available.
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What the Printer Should Know About Paper
