News of paper mill closings continues to come in and the reason is clear, according to industry experts: The overall volume of printing is down.
Bill Lamparter, president of printing industry consultancy PrintCom Consulting Group, pointed out that while the overall volume of direct mail is still rising, its growth is far from being at historical rates.
Recently, NewPage, Domtar and Fraser Papers have all announced they will soon close paper mills. NewPage, which is a major supplier to the direct marketing industry, will shut down paper machines and close a mill and converting facility this year.
The move follows its recent acquisition of paper maker Stora Enso. The company contends closing slower, lower volume machines will actually increase its production in North America this year by between 3% and 8%. It also expects to offer customers faster turnaround and delivery times for custom size and a wider range of sheet sizes.
Last year’s postage increase had an impact on printing volumes, with catalog and credit card acquisition mailings down as a result. Credit card acquisition mailings “are a huge portion of overall direct mail volumes,” but as postage and paper prices have gone up, “some of it is being replaced by TV advertising, Web activity and targeted direct mail,” Lamparter said.
“The Internet is taking a big chunk of the [paper industry’s] business,” said Brian McClay, principal at TerraChoice Market Services Inc., which publishes an industry newsletter that tracks pulp and paper volumes around the world. Specifically, McClay points to the move of classified advertising to the Internet and a growing number of consumers signing up for electronic statements.
The February 2008 issue of MarketPulp Monthly reports that FSI volumes were 5% lower in the fourth quarter of 2007 compared to the previous year while mail volume was down 3%. Overall demand is expected to drop an additional 5% in 2008 and, as demand diminishes, paper mills are responding by reducing their capacity.
By reducing capacity, however, prices are likely to rise, causing marketers to reconsider their printing volumes once again, according to Lamparter.
Rick Willett, president/CEO of NewPage, said in a statement, “Right now the market is strong and we do not anticipate taking any market-related downtime.” The company didn’t have any comment on possible price increases.
