Paper Supply Constrains Industry
SOURCE - The Hyde Opinion
Recent feedback from owners of printing and graphic communications companies have led me to reflect on business viability implications of shortages in the paper marketplace.
Over the past several decades, printers have come to rely on and trust that a steady source of quality paper will be available on demand. This assumption has been changed, maybe forever, as a new reality confronts decision-makers across the spectrum of print-centric companies.
Paper supply has recently become a challenge regardless of a printing company’s annual revenues, or whether the company ownership consists of family members, business partners, or investors. “A refrain is now heard throughout the printing industry,” wrote Mark Hahn in The Target Report (See Printing Papers Get Squeezed Out – February 2022 M&A Activity), “paper supplies are very tight, allocations limit the ability to take on new customers, discounts and rebates are a thing of the past, shipments are delayed until price increases take effect, and printing and packaging companies increase paper inventories at every opportunity. The supply and demand curves have crossed, and the mills are in charge.”
According to Mark Hahn, my partner at Graphic Arts Advisors, “There are several reasons pricing leverage has shifted to the mills, including a labor strike at Finnish papermaker UPM, Covid-related supply chain disruptions, shortages of drivers, all in addition to the numerous closures of paper mills over the past several years.