Anyone who is involved in publishing these days would have to be living under a rock if he or she were not the slightest bit aware of the various changes that are occurring in the paper industry. Some of the more powerful trends are price fluctuations, consolidation through mergers and acquisitions, globalization, information technology and exciting new innovations with alternative fibers and recycled paper.

The importance of paper is often highly underestimated by people who do not work in production or deal directly with the selection and purchasing process. This is very understandable, but the fact of the matter is that paper can make or break the quality of a magazine or book and represents a very significant portion of the overall production expenses. Several factors must come into play when choosing paper. There are the technical requirements, such as trim size of the publication, roll width required by the printer, and the quantity of paper needed for each job. Of equal importance is the aesthetic "feel" and impression desired. It is usually best to have a high quality paper stock in order to achieve a sophisticated look. Glossy, coated paper is a popular choice among many publishers because it allows for the colors to really "pop", while giving the printed piece a nice professional finish. Another advantage is that the advertisers, who pay thousands of dollars to run a single ad, will be more satisfied to see their it printed on a heavy stock, rather than a thinner see-through stock.

Probably the least glamorous part of paper selection is the tremendous effect that it has on distribution costs. Many magazines have annual postal costs that can reach over a whopping million dollars. Paper greatly impacts the cost to produce a magazine because it is priced by the pound , and that typically includes 3-5% spoilage, which might end up on the printing room floor. The heavier stock you use, and the more pages your product has, the more expensive it is going to be to ship or mail. Unlike distribution, fulfillment and other support services, paper is a global commodity. Due to this fact, it is no surprise that prices will often go up and down. A prime example is when paper prices skyrocketed back in 1995. Lightweight-coated papers rose by a whopping 30 to 50 percent. Fortunately prices gradually began to fall again as worldwide demand failed to keep up with capacity. Prices have been relatively stable to date, but this just proves that there are no guarantees, and that customers are basically at the mercy of the paper suppliers.

In recent years, paper pricing has become a serious headache for publishers. The future outlook is really somewhat of an unknown at this point. There are currently several paper manufacturers serving the book, magazine and catalog industry, but it is estimated that in a few years or less, that number will be reduced to only about four or five larger companies. As a result of consolidation, more than 55% of the European fine paper capacity is now held by only 5 producers. On the global scale, the top 5 companies hold over 25% of the world’s printing and writing markets (compared to 17% back in 1990).

While this is happening, the magazine industry continues to expand at a fast pace. Thousands of magazine titles are launched each year, and that does not even include the enormous amount of catalogs and books out there. Custom publishing is also becoming extremely popular and should not be ignored in terms of paper consumption. As a result, publishers are probably feeling uneasy because the dominating paper companies will have a firm grip on the availability and pricing of publication grade papers.

Instead of just sitting back and worrying, there are some steps the publisher can take to plan ahead. When preparing annual manufacturing budgets, printing costs are usually made crystal clear in the contract and are locked in over a set time period. Budgeting for paper is more difficult because mills will rarely announce any major changes in paper prices far in advance. By staying educated about the supplier’s market factors, internal needs and final costs, management can be aware of how to spend wisely. A reliable way to check accuracy is to compare the estimated vs. actual costs on a regular basis. Variance reports can detect where unexpected costs pop up. Good budgeting allows for "what ifs", such as increasing body stock, or changing trim size. It also doesn’t hurt to maintain good relationships with your supply chain and printer!

In addition to concerns about price increases, publishers also have to worry about paper availability. To them, consolidation in the paper industry could mean that the exact paper that they want to use might no longer be available. A common scenario would be if the "new" company replaces a preferred grade of paper with their own. Since the customer typically signs a long term contract with the printer or paper mill, they could potentially get stuck with something that they did not originally order. This may seem like a petty complaint, but once a magazine chooses a particular stock it has chosen an integral part of its image and cost. If the paper were downgraded even the slightest bit, the identity and consistency would then be lost to its readers and advertisers.

Acquisitions can sometimes lead to internal and external problems within the "new" company. If facilities are closed down, or if presses move into centralized locations, valuable printing time and capabilities can be reduced. This means scheduling delays and some very frustrated clients. For most printers, paper merchants are helpful because they can check inventory, manage damaged material and track shipments for clients. With consolidation, the privilege of carefully shopping among different mills for the best deal might be minimized and the personal service method could be jeopardized.

Despite drawbacks within the ever-changing paper market, many feel there are actually more benefits to be found. Consolidation is an opportunity for companies and suppliers to become more efficient, rationalize assets and to realize the possibility of global effectiveness. Fewer suppliers will reduce variation and make processes flow more smoothly. A combined company can mean an automatic increase in size and capabilities. This could result in a one-stop shopping situation with extended services. One of the oldest paper distributors, Zellerbach Papers, made some intelligent adjustments to serve their consumers better as a result of the shifting winds of paper consumption. They re-focused their organization to better suit well-segmented, customer driven markets. They also divided their channels between printing, packaging and industrial supply. The printing division re-defined its markets to cope with the graphics arts industry consolidation. They also implemented a fully automated computer network that would handle multiple orders, generate corporate reports and coordinate delivery for the large, diversified, multiple location accounts.

More good news is that there are plenty of opportunities sprouting up outside of the United States. Many publishers are looking into what benefit foreign paper companies might provide in the availability and pricing mix. There is an abundance of international paper companies and the European marketplace is eager to build American partnerships. Latin American mills are having the best years ever. They enjoy low wood costs, best economies of scale, and the highest global market penetration. The pooling of resources both nationally and internationally is considered vital in the years to come

Information technology is clearly having an impact on the business world and is continuing to evolve at a rapid pace. Major breakthroughs are bound to effect the pulp and paper industry. Some areas that may benefit from technology are raw materials manufacturing, process operations, product development, business systems and company operations. Another impact on the paper industry is the increased use of alternative fibers and recycled paper. Although it is a small, niche area of paper consumption, alternative fibers are growing in acceptance and use. This method incorporates an array of crops and plants for papermaking fibers. Crane & Company, one of the world’s oldest paper companies recently announced a new line of premium uncoated products. They are high brightness, cotton-content sheets, which target mostly traditional text and cover consumers. Quality is improving, and performance has been going smoothly on most printing presses. Availability is reasonable, but prices are higher than wood pulp based papers and things will remain that way until the proper volumes are in place.

The environment is becoming more subject to a number of issues concerning printing. It is estimated that about 40% of the paper made in this country is already recycled. As for recycled paper, I think everyone would agree that it is a good idea to utilize it whenever possible. International Paper for example, has invested $700 million to more than triple the amount of recycled paper its mills can handle. That shows an interest and commitment to protecting the environment. What is even better is that the quality of paper made from recycled content is almost indistinguishable from non-recycled paper. Also with regard to environmental concerns and paper, a new trend is to try and find more energy efficient method of distribution to minimize congestion and pollution.

One final notable trend is that there is a big growth area in the industry is printing on demand papers. Specialty coated papers are gaining more attention among designers, service bearus and printing machinery engineers. Wide format and odd size jobs lots are taking a greater share of commercial printing.

In conclusion, the world still needs lots of paper, but many people are not really interested in how it is made or where it comes from. The industry structure is changing and will continue to change. There is a need for the paper industry to operate as an international business in a global marketplace, in order to achieve improved financial performance. As for us, the customers, we need to sit back, relax and be patient because this is probably just only the beginning of more exciting things to come!

1. Click, J. William. Magazine Editing and Production. Dubuque: Wm.C. Brown Publishers, 1990.
2. Folio [Online] "Paper Consolidation: Pricing, Promises, Opportunity". Available http://www.foliomag.com
3. Paperfo [Online] "Coated Paper Prices on the Rise." Available http://www.paperfo.com
4. Pira International [Online] "Profit Through Innovation 2000". Available http://ataling.co.uk/pira2000/html

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