Paper Industry Analysts Ponder 2001 Price Hike

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Paper and printing industry experts are predicting that paper prices should remain stable next year. If a price hike is necessary, however, it may not happen until the second or third quarter of 2001.

"I'm a little cautious about further price increases because it's clear the economy is slowing down," said financial analyst Mark Wilde, managing director at Deutsche Banc Alex. Brown, New York. "It's also clear that the strength of the U.S. dollar is bringing in more imports into the country, making it harder for U.S. companies to export. I think it's a pretty tough environment to try to raise paper prices right now. The overall conditions are tough and probably will get a bit tougher."

Paper price stability would be welcome news for catalogers.

Todd M. Vallely, account executive at Horizon Paper Co., Stamford, CT, said it's very difficult to predict paper prices for the upcoming year. Historically, the first quarter in the paper and printing industry tends to be quiet. Vallely said that if there is a spike in prices, it probably won't happen until midyear.

"If business dictates that it's going to be a strong market, than maybe there will be an increase at one of those times," Vallely said. "We are of the belief that that's not going to happen, but that's the crystal ball stuff. We talk about the future all the time and we simply don't know what it's going to be."

Cataloger Marilyn B. Heise, president of Heartfelt -- a holiday and charity cards catalog in Northfield, IL -- said she will find creative methods to reduce paper expenditures if costs increase. Heise, faced with an increase in postage in January, found a way to manage expenses. She decreased the catalog's size from eight and a half inches by 11 inches to 8 inches by 11 inches. The move -- which took place in September in time for Heartfelt's fall catalog -- saved 22 cents in postage.

If there is a minimal increase in the cost of paper, up to 7 percent, Heise said she wouldn't be too concerned. However, beyond that point, she would find ways to limit her costs without sacrificing quality.

"We don't want to lose the quality image," she said. "Quality of paper is very important when you are selling a paper goods item. There might be other ways to cut costs like having few pages [and a] look at consolidating order forms. Going to a thinner grade of paper would be the last resort."

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