Friday, September 21, 2012

What's the Future for the Paper Industry? Depends

The paper market's long-term decline has now spread to the fictional Dunder Mifflin Paper Company: "The Office" had the worst premiere in its nine-year history last night.

The episode had the show's second-lowest audience ever, attracting "just 4.32 million viewers, down 46 percent among 18–49-year-olds from its premiere last year," reports In other words, the once-hot comedy centered around a dysfunctional paper company (Aren't they all dysfunctional?) is dropping as fast as newsprint demand.

It's not just newsprint that's shaky. A deal to restart the NewPage supercalendered machine in Port Hawkesbury, Nova Scotia fell through today (Sept. 22 update: and then was resurrected); its shaky status means that North America's only world-class, magazine-quality paper machine is in danger of being shipped to another continent or scrapped. And North America's second-largest player in the magazine category (Verso Paper) is at a competitive disadvantage not because it may be on the verge of bankruptcy reorganization but because several competitors have already been through or are in the Chapter 11 debt-cleansing process.

Declining demand means fewer paper machines are needed, but fortunately some of the idled machines are being put to good use. Several that once made copy paper have been converted recently to producing fluff pulp, the main ingredient in diapers.

Here's how to understand the trends: The bad news for pulp and paper companies is that Baby Boomers are reaching senior-citizen status, leaving fewer dinosaurs in the workplace who still print out their emails to read them. The good news is that the aging of the Baby Boom means more people on the continent are incontinent, which is boosting demand for hygiene products that rely on fluff pulp.

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NotATeabagger said...

This is great news for Verso if Port Hawkesbury gets bulldozed now. Lot of SC capacity goes off line.

Anonymous said...

Port Hawkesbury is back in play thanks to the Province of Nova Scotia --

". . . should be repaid in as early as 12 years" -- what are they thinking??

BoSacks said...

Paper is settling into its new roll (pun intended) as a communicator among many other communication tools. Yes. Now there is now a multitude of paths to distribute information. The days of smoke and mirrors is near over for printed products. It is not they will go away, because they won’t. But there will come a time soon when the antique and deceptive rate based publishing formula will be dead and with it the over-production of mass printed products based on meeting unrealistic advertising promises.
What will be left in the printed world will be higher accountability and lower printed numbers for newsstand products. This process will contain the bonus of higher quality products with superior editorial. That will be the new keys to success in print. Increasingly higher quality products with increasingly superior editorial content that justifies its expense with a luxury experience.