Paper mills close as overall printing volumes decline

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.