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Oct 31, 2001 12:00 AM
In an unsure economic environment, the future of publishing papers is a hotly contested topic. Many industry players are having difficulty predicting what's in store for the fourth quarter, much less for the next four years.
At this year's Publishing and Communications Papers Conference, held Sept. 10-12 in Montreal, producers, end users and analysts tried to predict what's in store for the North American paper industry.
“Demand for all types of publishing papers has fallen off markedly over the past year, and consumption in all grades is in negative territory,” said panelist Mark Wilde, managing director at investment banking group Deutsche Bank Alex. Brown (New York City).
The biggest problems facing the industry lie in slowing demand and rising capacity for grades other than newsprint, according to Wilde. More than 1.4 million tons of newsprint have been or are scheduled to be converted into supercalendered (SC), lightweight coated (LWC) and coated newsprint grades between Q4 2000 and Q4 2002, according to Wilde. This is good news for the newsprint sector, but could cause some serious competition and over-capacity issues in SC, LWC and coated grades, he said.
So far, this year has been tough for the publishing papers industry, with newspaper ad space suffering after three years of stability. Magazine advertising pages are also down, and catalogs are in negative territory for the first time since 1995, according to Wilde.
Some panelists, however, forecast a better future for producers and end-users. Specifically, newsprint and SC grades, which have both experienced tremendous drops in consumption and demand, are expected to see an upturn in the next four years.
SC grades, such as SC-A and SC-B, have not seen the sharp drops in demand and consumption that newsprint has this year. Rather, these grades have seen comparatively good consumption numbers, and will remain strong in the coming years thanks to new SC technology and capital investments, according to Paula Smith, manager of Abitibi-Consolidated Inc.'s (Montreal) value-added papers group.
“SC-A and SC-B have seen a lot of growth in the last decade. New technology offers better quality, and has allowed the evolvement of those grades,” said Smith.
More than $1.3 million has been spent in recent years on capital investments designed to upgrade the quality of SC papers, Smith noted. Investments include upgraded and rebuilt machines, as well as the installation of hybrid soft-nip calendering technology, which produces a new generation of glossy SC-A grades using high heat and high pressure.
In addition to new technological advances in the SC market, printers' movement from higher-cost LWC groundwood grades to less expensive SC grades for coupon printing has allowed SC-A and SC-A+ to penetrate a whole new market segment.
“The rationale behind SC use in coupons is fairly simple: It's a lower-cost proposition. Also, some new technology that adds starch to the sheet offers better reprographic quality for less money,” said Smith.
One potential threat to SC grades, however, is a new line of coated paper from Bowater Inc. (Greenville, SC) that is expected to compete directly with some SC grades, specifically SC-A.
Bowater's Nuway plants manufacture the coated paper, which can be designed to meet an individual customer's needs, according to Dan Haight, vice president of coated paper sales at Bowater.
“Basically we use an uncoated groundwood stock, and thanks to a flexible manufacturing platform, we can create what is essentially a custom grade,” said Haight. “We are able to switch to different customer orders quite easily, creating a reduction in order-fulfillment time. We can create anything from a matte to a gloss to a super-glossy finish in a very short amount of time.”
Bowater currently operates one Nuway plant in Benton Harbor, MI, but has begun construction on a second in Covington, TN, and has one more planned for the Mid-Atlantic region. When all three are running at full capacity, they will be able to produce approximately 300,000 tons of coated paper with basis weights from 38 lbs. to 45 lbs. — which could amount to problems for the SC market.
Another threat to uncoated groundwood grades that has been extensively discussed and analyzed is the Internet. The end of the printed word has been predicted since the Internet revolution began. According to Sandy Muir of The Globe and Mail (Toronto), however, newspapers — and newsprint — will continue to be profitable ventures, as long as the industry is willing to evolve with the times.
Muir believes that newspapers and the Internet can coexist successfully. It is possible for a newspaper to run a successful print business as well as an informative, non-threatening website. The key to the success of each is having a very specific website strategy that leverages the inherent strengths of printed paper.
“What we wanted to do was build a strong website that is reflective of, but not necessarily in direct competition with, the newspaper itself,” said Muir.
Of course, newsprint consumption is down, and, according to Muir, will continue to drop in the next few years as advertisers tighten their budgets in response to a weakening economy. As a result, print runs will be scaled down and newspapers will be forced to deliver the same content on fewer pages. This drop in consumption, however, is not so much related to the growth of on-line news delivery as it is to a general drop in the overall economy, said Muir.
Want to know the outlook for printing and business communication papers? The next Publishing and Communications Papers Conference is scheduled for 2003. The conference has been held biennially since 1980. Attendees include executives from pulp and paper manufacturing companies as well as end users — including printers, publishers, financial analysts and consultants. Participants review groundwood, free-sheet and newsprint market trends. For more information, contact Dana Jacoby, conference director, at (415) 947-3608.
The 2002 Paper Summit is scheduled for March 4-6, 2002 at the Georgia World Congress Center (Atlanta). Established in the 1960s, the Paper Summit — formerly known as “The TAPPI Show” — attracts more than 500 exhibitors and 9,000 attendees. Held every three years, it's an opportunity for paper company management and technical personnel to talk with suppliers, view equipment and make purchasing decisions. For more information, contact Jane McDermott, show director, at (212) 268-4160 ext. 102, or e-mail email@example.com.