Q2 Paper Forecast — Paper Losses

While NAPL's survey is made up of more than 100 printers across the United States, there are some printers who believe that prices and availability have not yet stabilized. Bill Orndorff, Perry Judd's vice president of materials management, characterizes the current paper market as being unsettled, especially when it comes to pricing. "Lower-end grades are experiencing increases, top-end grades have already decreased and middle-value grades are becoming a little more flexible." He also reports that paper availability has followed the pricing curve.

Orndorff isn't the only one taking issue with the belief that prices and availability have stabilized. Michael Dubowitch, president of Philadelphia-based Oak Lane Printing, claims that the availability of uncoated paper has become tighter and prices have continued to increase.

"Prices of uncoated paper have just increased by approximately 8 percent. In the direct mail market, in which we print both sheetfed and continuous web, this has presented an obstacle due to the fact that our customer base has been very resistant in accepting price increases. As the paper mills continue to merge and take machines off-line, it seems that the situation is only going to continue for the foreseeable future," states Dubowitch.

Jeff Harris, supply chain product manager for R.R. Donnelley & Sons, agrees. "There is a lot of uncertainty out there about the health of the economy. The paper companies are interested in long-term opportunities that fit them strategically. In the short run, they have shown a willingness to take production downtime rather than simply drop prices," he remarks.

This movement toward paper-making machine downtime is not surprising given the economy, claims Paparozzi. "You now have an economy that is very resistant to price increases and, therefore, any inefficiencies and cost excess comes straight out of the bottom line. In this type of economy, productivity becomes the key. You want to operate as efficiently as possible, because it's very unlikely you are going to be able to pass those costs along to your customers."