Tuesday, June 19, 2007

BoSacks Readers Speak Out: The Price of Paper: Publisher's & Mill Reactions

"Don't try to buy at the bottom and sell at the top. It can't be done except by liars."
Bernard M. Baruch (American Economist and adviser to US presidents, 1870-1965)

BoSacks Readers Speak Out: The Price of Paper: Publisher's & Mill Reactions

Re: BoSacks Speaks Out: The Price of Paper is on the Rise

Bob: If you are going to ask whether the announced price increases were accounted for in your reader's budgets, perhaps you should earlier have asked whether the price reductions they have already benefited from were also accounted for.

Paper prices have been dropping while production and raw material costs continue to rise.

(Submitted by a Paper Person)

Re: BoSacks Speaks Out: The Price of Paper is on the Rise

Gee, what happened to that guy who wrote to you saying that the purpose of the tariff was NOT to raise prices? Of course it was. Now that a competitor has been neutralized, prices can go up, and this will not be the end of it. Don't be surprised if there's not another round by the end of the year. It's nice when you can get the government to do your dirty work for you.

(Submitted by an Industry Consultant)

Re: BoSacks Speaks Out: The Price of Paper is on the Rise

Bob: The real story is why these prices are increasing. It's certainly not demand.

This price increase is brought to you by your friends at NewPage owned by private equity firm Cerebus. In 2006, they filed an anti-dumping/illegal subsidies suit against Chinese, Korean and Indonesian paper manufacturers and have been successful in gaining a very favorable and, in my opinion, political ruling from the US Government specifically against Chinese paper makers.

As a result, supply from China (which is very significant) is drying up and the supply/demand advantage goes from the end-users to the Domestic and European paper manufacturers (less so Europe because of exchange rate issues).

Brilliant move by Cerebus/NewPage? Absolutely! They have zero interest in the well being of the Magazine/Catalog/Retail/Direct Mail business. They are only concerned with an exit strategy. Getting the price of paper up will go a long way towards that end.

Now, if I was an end-user, I would boycott Cerebus/NewPage to the extent that this is possible. Since they've decided to play in our industry, let's make it more painful to exit.

(Submitted by a Paper Person)

Re: BoSacks Speaks Out: The Price of Paper is on the Rise

Bob- this is exactly why there is no trust and no positive relationships (for the most part) between Publishers and Paper Mills. No sooner do some paper mills and machines reduce the tonnage available than the rest of them raise their prices to take advantage of the anticipated panic over shortages.

Rest assured, more magazine titles will be threatened due to the USPS increase and this escalation in paper pricing. Nice job guys! Great way to keep the industry at the precipice.

(Submitted by a Senior Director of Manufacturing and Dist)

Re: BoSacks Speaks Out: The Price of Paper is on the Rise

Bo:Did you know that the price of woodchips is going up for the making of paper? One of the biggest reasons is the downturn in the construction business shrinking orders for lumber and cutting the supply of woodchips coming out of saw mills to the paper companies. This is very acute in the Northwest where much of our lumber is manufactured.

Don't forget the price of ink is going up again at about 10%. Might not be a huge percentage of the printing job but it still adds cost.

In your presentation about prices going up, it is good information but what sticks is what counts. School is still out on that one. If you notice, not too much bull in the LWC price increases. Those guys are really hurting.

(Submitted by a Paper Person)

Re: BoSacks Speaks Out: The Price of Paper is on the Rise

Bob: We are carefully monitoring Domtar's freesheet coated mill in Ontario and Catalyst's coated groundwood mill in Vancouver. The Canadian dollar's strength is reeking havoc with the Canadian forest product industry.

Bottom line still is that it takes demand to get prices up and keep them up. This upcoming catalog season should be a watershed event.

(Submitted by a Paper Person)

Re: BoSacks Speaks Out: The Price of Paper is on the Rise

About time. Maybe we can begin to make a profit like other businesses.

(Submitted by Paper Person)

Re: BoSacks Speaks Out: The Price of Paper is on the Rise

Thanks for sending Bob - I've read all the various mill announcements, but this puts it in a clear, concise format - one that I can share easily with clients. Thanks.

(Submitted by an Industry Consultant)

Re: A Private Dow Jones?

I'd put in some money if it would keep WSJ out of Murdoch's hands. Where do I sign up? What he's done with tabloid journalism is about criminal.

(Submitted by a Publisher - Retired)

RE: All-out outsourcing

this is absolutely despicable. Anyone who is outsourcing overseas and taking jobs away from Americans deserves to go out of business.

(Submitted by A Director of MFG and Dst)

RE: All-out outsourcing

Hey Bo, After all of our jobs have been outsourced, where will the "customers" come from that can afford to by all of these products?

(Submitted by a Printer)

RE: All-out outsourcing

Here we go again. Would someone please explain to me when all the editorial, production, sales, and advertising jobs are in Mumbai who exactly is going to be left

to *read* our magazines? Or will we be selling them to the Indian market (which is undoubtedly already well-serviced by its own media.)

This is the ultimate commodification of our industry: outsource

*everything*. I first wrote an outraged letter to Folio three years ago

when I was solicited to "save 50%" by outsourcing my design and editorial

work. As I'm a tiny niche publisher and do this work myself (I know,

radical idea) I was, in effect, being asked to outsource my own job.

Needless to say, I didn't bite.

Has anyone considered that if everything is written and designed in one

place, by one giant staff of (presumably expendable) low-wage workers, that

all the titles will start to look and sound the same? Why should readers

*pay* to read lowest-common-denominator content cranked out by the

mega-load? No wonder readers continue to march off to the land of free

online content; at least user-generated content has *passion* behind it, if

nothing else.

P.S. One last note: publishers wouldn't be so eager to outsource if the

industry weren't so bloated in the first place. I read Folio regularly and

laugh until I cry every time I come across the "industry salary reviews"

that they periodically trot out. According to them, as the publisher,

editor, advertising sales manager, circulation director and art director

(of three quarterly titles, no less) I should be pulling in around $200K a

year for my work -- don't I wish. (I make about a quarter of that.) My

conclusion is that our industry is astonishingly overstaffed and

inefficient. Of course, not everyone wants to put in the hours I do, and

many markets are much more complex than mine, but honestly, the level of

puffery, self-importance, and rockstar-ism that seems to characterize most

of the publishing industry is leading to its own demise.

(Submitted by a Publisher)

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