In the face of ongoing paper price increases, paper and print lobby group Two Sides Australia says printers need to have an open dialogue with their customers about how the industry will be affected.
Kelly Northwood, executive director, Australasian Paper Industry Association and Two Sides Australia says, “The paper sector is a key raw material supplier to the print industry and we need to understand the global issues as well as communicate clearly to our customers. Print marketing remains a strong advertising channel for all brands. Retailers, in particular, increased their investment in 2016 with an increased volume recorded across circulation and pagination for catalogue and print advertising.
“The price increases are being discussed with retailers who are facing their own challenges, however, with one of the highest audience reaches and a strong ROI over other channels, we do not expect the moderate price increases to impact the channel too adversely on volumes if managed with transparency.”
Pulp and Paper price increases are due to a range of levers being pulled and the increases will affect all grades. Two Sides says the banning of mixed paper imports and the closure of polluting pulp mills (small and old) in China, as well as import/export exchange rates and supply/demand ratio shifts are just a few of the driving influencers driving up the rise in prices.
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Two Sides says the overall price average, including the price increases being implemented throughout 2018, will still see buyers in front and buying very well for the market size, and in some cases at better prices than larger global markets.
The paper, print and mail industry employs 241,000 mainly made up of small to medium sized Australian businesses. Any shifts from the major raw material supplier could have ripples.
Tim Woods, Industry Edge says, “The price increases are a direct result of input and operating costs, combined with relatively tight markets and improving capacity utilisation rates. Paper prices are on an upward cycle for the first time in more than a decade.”
John Walker, chairman of the Australasian Paper Industry Association says, “In 2016 to 2017 we saw a significant downsizing of paper production globally. As economics go, when demand outweighs supply, prices go up and vice versa. The industry has enjoyed paper price declines for some years, however the market is now correcting. The pressure from the overseas mills and the industry must pass on the price increases to ensure sustainability of the sector.”
Northwood says, “Our industry must work in partnership with our customers to assist in the understanding of the price increases, as well as explore opportunities for our customers to innovate their paper usage and cost structures. We are working with retailers and print buyers to provide detail on the increases, the reasons for the increases and also developing for our members a ready reckoner of sorts to review grammages, pagination, size and more to develop solutions for their customers. If any printer needs access to our FAQs and Summary of the increases we offer our every assistance.”
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So in other words, bend over, take it, be happy about it and tell all your customers about it.
These price rises are the paper companies using their market power to pass their inefficiencies on to us.
We can “afford” to subsidise them because our businesses are backed by our houses and assets and theirs are backed by nothing but shareholders and VC trying to squeeze every cent out of us.
And now Two Sides is trying to tell us to make sure we’re happy about it and explain to our customers how we’re still really getting a good deal, much better than other markets. Like China, or Singapore?
If I went to the purchasing manager of one of my corporates and told them “here’s a 8% price increase but don’t worry we’re still getting a better deal than China” they’d laugh in my face. They know the rates in China.
You have to remember that every cent of profitability that the paper companies extract from us is a transferal of wealth from your house to their shareholder registry. And you know they’re not going to charge Blue Star the increases they are passing on to the rest of us.
I am surprised Kelli Northwood has decided to jump in front of this particular bus. Is this the kind of position she took on the PIAA board, encouraging well run companies like Spicers to get back on their feet by taxing us?