1 / 49

Paper, Paper, Paper!

Paper, Paper, Paper!. Panelists: Bob Durgy , VP Sales & Business Development, Thomson-Shore. Tona Pearce-Myers, Production Director, New World Library. Tim Hewitt, Sales Representative, Friesens . Moderator: Shona Burns, Executive Director, Production & Content Management.

turnbull
Download Presentation

Paper, Paper, Paper!

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Paper, Paper, Paper! Panelists: Bob Durgy, VP Sales & Business Development, Thomson-Shore. Tona Pearce-Myers, Production Director, New World Library. Tim Hewitt, Sales Representative, Friesens. Moderator: Shona Burns, Executive Director, Production & Content Management. The current state of the industry and the implications for Publishers. MAKING CHANGE: Culture, Content, Commerce February 7–9, 2019 Santa Fe

  2. Inside the Paper Market. Bob Durgy VP Sales & Business Development, Thomson-Shore MAKING CHANGE: Culture, Content, Commerce February 7–9, 2019 Santa Fe

  3. A Current and Future Look at the Book Paper Market MAKING CHANGE: Culture Content Commerce Current Market Conditions Long-Term Trend in White Paper Volumes Producers Are Consolidating, Rationalizing & Repositioning ‎Sharp Rise in Fiber Costs Trade Battles Over Imports Implications for Book Manufacturers? February 7–9 2019 Santa Fe • Wall Street Looks at Your Paper Supply • Mark Wilde, Ph.D • Managing Director • BMO Capital Markets

  4. UFS-50-lb trade book, offset, rolls prices ($/s.ton) Current Market Conditions MAKING CHANGE: Culture Content Commerce Text February 7–9 2019 Santa Fe Source: Pulp & Paper Week

  5. Current Conditions MAKING CHANGE: Culture Content Commerce Key Factors Driving Recovery 1) Cyclically Strong Economy 2018 Shipments -3.7% Big Variations by Category 2) Recent Capacity Withdrawals GP (Camas, WA), Flambeau River (Park Falls, WI), PCA (Wallula, WA), Glatfelter (Chillicothe, OH), ‎IP (Selma, AL- '19) 3) Rapidly Rising Pulp Prices NBSK List Prices up 51% since January 2016 4) Anti-Dumping and Countervailing Duties on Imported White Paper Australia, Brazil, China, Indonesia, Portugal February 7–9 2019 Santa Fe

  6. Long-Term Trend of Printing & Writing Paper Total Uncoated Free Sheet New Supply (‘000s short tons) • Total Uncoated Free Sheet New Supply (‘000s short tons) MAKING CHANGE: Culture Content Commerce Volume Has Fallen in All Categories February 7–9 2019 Santa Fe Source: AF&PA. Note: new supply figures (Production + Imports – Exports)

  7. Long-Term Trend of Printing & Writing Paper Volumes Newsprint (‘000 short tons) • Newsprint (‘000 short tons) MAKING CHANGE: Culture Content Commerce It Hasn’t Just Been White Papers February 7–9 2019 Santa Fe Source: AF&PA. Note: new supply figures (Production + Imports – Exports)

  8. Long-Term Trend of Printing & Writing Paper Volumes Uncoated Free Sheet – Key Grades, Indexed (1998=100) • Newsprint (‘000 short tons) MAKING CHANGE: Culture Content Commerce Uncoated Free Sheet Volumes Vary by Category February 7–9 2019 Santa Fe Source: AF&PA

  9. Industry Restructuring Isn’t Complete • More Consolidation Among Commodity Producers • - Lots of Consolidation Has Occurred • Domtar: Domtar, GP, Weyerhaeuser, Willamette • IP: IP, Champion, Union Camp, Hammermill • Finch/Twin Rivers, Mohawk, Neenah • - Further Conversations Among Players Likely • Valuation: A Key Stumbling Block? • Valuations of Uncoated Paper Producers Are Quite Low (~5X) MAKING CHANGE: Culture Content Commerce Uncoated Free Sheet February 7–9 2019 Santa Fe

  10. Industry Restructuring Isn’t Complete MAKING CHANGE: Culture Content Commerce Uncoated Free Sheet Repositioning of Assets Domtar: Closures at Dryden, Conversions at Plymouth, NC and Ashdown, AR to fluff pulp. Currently Studying Conversion Strategy to Containerboard. IP: Closures/Conversion at Franklin, VA, Closure of Courtland, AL and Pending Conversion at Selma, AL. PCA: Pre-Deal Closures at International Falls‎, MN, Conversions at DeRidder, LA and Wallula, WA. Prospective conversion at Jackson, AL? GP: Closures at Crossett, AR and Camas, WA Glatfelter: Machine closures at Spring Grove, PA and Chillicothe, OH. Pending sale to Lindsay Goldberg could set-up conversion at Chillicothe. February 7–9 2019 Santa Fe

  11. Industry Restructuring Isn’t Complete MAKING CHANGE: Culture Content Commerce Conversions Beyond Uncoated Free Sheet Catalyst Paper sold to Paper Excellence (APP) Catalyst Biron, WI and Rumford, ME sold to Nine Dragons - production shifting toward packaging Resolute sells Catawba, SC to New Indy - production shifting toward packaging Sappi at Somerset, ME shifting toward packaging Verso at Jay, ME converting to kraft linerboard February 7–9 2019 Santa Fe

  12. Rising Fiber Costs Will Force More Change • NBSK (Canada) and Eucalyptus (BEK) Prices - (US$/mton) • Total Uncoated Free Sheet New Supply (‘000s short tons) MAKING CHANGE: Culture Content Commerce Pulp Prices Have Been Rising Globally and Could Continue Into Early 2020's February 7–9 2019 Santa Fe Source: RISI

  13. Rising Fiber Costs Will Force More Change MAKING CHANGE: Culture Content Commerce Global Economy Is Healthy in Most Regions Chinese Restrictions on Imported Wastepaper Have Aided Pulp Demand Next Wave of New Pulp Capacity Doesn't Begin Until 2021 See following page In the Meantime, Higher Pulp Costs Squeezing Nonintegrated Producers Forcing More Global Consolidation and Rationalization February 7–9 2019 Santa Fe

  14. Rising Fiber Costs Will Force More Change MAKING CHANGE: Culture Content Commerce February 7–9 2019 Santa Fe • Source: Brian McClay & Associates

  15. Trade Battles Over Paper Imports MAKING CHANGE: Culture Content Commerce Since 2015, US Duties in Place on Uncoated White Paper Imports Current Tariff Rates: Australia: 138.9% to 222.5% Brazil: 18.8% to 41.4% China: 91.3% to 325.8% Indonesia: 22.5% to 126.6% Portugal : 1.8% Could Trade Constraints Increase? February 7–9 2019 Santa Fe

  16. Paper — What Is a Publisher to Do? Tona Pearce Myers Production Director, New World Library MAKING CHANGE: Culture, Content, Commerce February 7–9, 2019 Santa Fe

  17. Paper — What Is a Publisher to Do? MAKING CHANGE: Culture Content Commerce December 2018 New York Times article “Bottleneck at Printers Has Derailed Some Holiday Book Sales” February 7–9 2019 Santa Fe

  18. Paper — What Is a Publisher to Do? • Several of this year’s most critically acclaimed novels, were listed as out of stock on Amazon the week before Christmas after inventory ran low because publishers could not to reprint copies quickly enough. MAKING CHANGE: Culture Content Commerce December 2018 New York Times article “Bottleneck at Printers Has Derailed Some Holiday Book Sales” February 7–9 2019 Santa Fe

  19. Paper — What Is a Publisher to Do? • Several of this year’s most critically acclaimed novels, were listed as out of stock on Amazon the week before Christmas after inventory ran low because publishers could not to reprint copies quickly enough. • Did this happen to anyone present? MAKING CHANGE: Culture Content Commerce December 2018 New York Times article “Bottleneck at Printers Has Derailed Some Holiday Book Sales” February 7–9 2019 Santa Fe

  20. Paper — What Is a Publisher to Do? MAKING CHANGE: Culture Content Commerce It happened to NWL in a smaller way. February 7–9 2019 Santa Fe

  21. Paper — What Is a Publisher to Do? • Missed schedules MAKING CHANGE: Culture Content Commerce It happened to NWL in a smaller way. February 7–9 2019 Santa Fe

  22. Paper — What Is a Publisher to Do? • Missed schedules • Short shipments MAKING CHANGE: Culture Content Commerce It happened to NWL in a smaller way. February 7–9 2019 Santa Fe

  23. Paper — What Is a Publisher to Do? • Missed schedules • Short shipments • Missed sales MAKING CHANGE: Culture Content Commerce It happened to NWL in a smaller way. February 7–9 2019 Santa Fe

  24. Paper — What Is a Publisher to Do? MAKING CHANGE: Culture Content Commerce How did NWL mitigate the damage? February 7–9 2019 Santa Fe

  25. Paper — What Is a Publisher to Do? • Communication MAKING CHANGE: Culture Content Commerce How did NWL mitigate the damage? February 7–9 2019 Santa Fe

  26. Paper — What Is a Publisher to Do? • Communication • Prescheduling MAKING CHANGE: Culture Content Commerce How did NWL mitigate the damage? February 7–9 2019 Santa Fe

  27. Paper — What Is a Publisher to Do? • Prescheduling • We scheduled new titles 4 months in advance MAKING CHANGE: Culture Content Commerce How did NWL mitigate the damage? February 7–9 2019 Santa Fe

  28. Paper — What Is a Publisher to Do? • Prescheduling • We scheduled new titles 4 months in advance • This locked in the date and price – most our new titles weren’t affected and a few just a matter of days MAKING CHANGE: Culture Content Commerce How did NWL mitigate the damage? February 7–9 2019 Santa Fe

  29. Paper — What Is a Publisher to Do? • Communication • Prescheduling • Preplanning MAKING CHANGE: Culture Content Commerce How did NWL mitigate the damage? February 7–9 2019 Santa Fe

  30. Paper — What Is a Publisher to Do? • Preplanning • More lead time MAKING CHANGE: Culture Content Commerce How did NWL mitigate the damage? February 7–9 2019 Santa Fe

  31. Paper — What Is a Publisher to Do? • Preplanning • More lead time • Print and hold MAKING CHANGE: Culture Content Commerce How did NWL mitigate the damage? February 7–9 2019 Santa Fe

  32. Paper — What Is a Publisher to Do? • Preplanning • More lead time • Print and hold • bestselling titles printers are willing to print in large qtys (25-50K) and hold until we need them MAKING CHANGE: Culture Content Commerce How did NWL mitigate the damage? February 7–9 2019 Santa Fe

  33. Paper — What Is a Publisher to Do? • Preplanning • More lead time • Print and hold • bestselling titles printers are willing to print in large qtys (25-50K) and hold until we need them • Forecast reprints earlier MAKING CHANGE: Culture Content Commerce How did NWL mitigate the damage? February 7–9 2019 Santa Fe

  34. Paper — What Is a Publisher to Do? • Communication • Prescheduling • Preplanning • Flexibility MAKING CHANGE: Culture Content Commerce How did NWL mitigate the damage? February 7–9 2019 Santa Fe

  35. Paper — What Is a Publisher to Do? • Flexibility • Using the same paper in most of our titles allowed us to move titles around as needed. MAKING CHANGE: Culture Content Commerce How did NWL mitigate the damage? February 7–9 2019 Santa Fe

  36. Paper — What Is a Publisher to Do? • Flexibility • More Using the same paper in most of our titles allowed us to move titles around as needed. • Using the same size paper rolls also allowed movement of titles MAKING CHANGE: Culture Content Commerce How did NWL mitigate the damage? February 7–9 2019 Santa Fe

  37. Paper — What Is a Publisher to Do? • Flexibility • More Using the same paper in most of our titles allowed us to move titles around as needed. • Using the same size paper rolls also allowed movement of titles • Communicating our needs and accepting smaller printings allowed us to keep more titles in stock MAKING CHANGE: Culture Content Commerce How did NWL mitigate the damage? February 7–9 2019 Santa Fe

  38. Paper — What Is a Publisher to Do? MAKING CHANGE: Culture Content Commerce What are we looking to do in 2019? February 7–9 2019 Santa Fe

  39. Paper — What Is a Publisher to Do? • More of the same MAKING CHANGE: Culture Content Commerce What are we looking to do in 2019? February 7–9 2019 Santa Fe

  40. Paper — What Is a Publisher to Do? • More of the same • Already scheduling Fall titles MAKING CHANGE: Culture Content Commerce What are we looking to do in 2019? February 7–9 2019 Santa Fe

  41. Paper — What Is a Publisher to Do? • More of the same • Already scheduling Fall titles • Preparation for the same paper issues as last year MAKING CHANGE: Culture Content Commerce What are we looking to do in 2019? February 7–9 2019 Santa Fe

  42. Paper, paper and less paper Tim Hewitt, Friesens. MAKING CHANGE: Culture, Content, Commerce February 7–9, 2019 Santa Fe

  43. What does this mean for printers and ongoing business? MAKING CHANGE: Culture Content Commerce Less printers = more planning The last few years have seen 2 large book manufacturers close their doors, and many mergers that have had a direct impact on the amount of available print and bindery hours. We are still a relatively small community and I don’t know of anyone that is happy when the news of a closing is released. The remaining printers are picking up as much of the capacity load as is available. However, in an upturn year, like 2018, with a constrained paper supply, the capacity is far from limitless. What this means to publishers is a serious reassessment of mid to long term plans, keeping an open line of communication so that pre-planning can take place as early as possible. February 7–9 2019 Santa Fe

  44. What does this mean for printers and ongoing business? What types of paper have been impacted most? Mostly uncoated stocks, both freesheet and groundwood. Coated sheets are less impacted since clay accounts for most of the weight of the sheet, and pulp has been a large part of the problem, though not the only problem by any means MAKING CHANGE: Culture Content Commerce February 7–9 2019 Santa Fe

  45. What does this mean for printers and ongoing business? First to the gate mentality, what will this mean? As book manufacturers we do our best to maximize the amount of personnel and equipment to best suit the current market demands. In 2018 we reached a place where 24/7 was not enough. What that means to you is extended schedules, and as the influx continues those schedules extend until we have room to print/bind. The first past the gate mentality simply means that we will schedule and manufacture the titles that we receive pre-planning, files and approvals for, first. Again, this requires a very open line of communication between us all and a stricter adherence to timelines. MAKING CHANGE: Culture Content Commerce February 7–9 2019 Santa Fe

  46. What does this mean for printers and ongoing business? How printers have approached ways to help I can mostly speak to what we have done to mitigate some of the paper and heavy loading concerns. In early 2018 we added a new, more efficient, bindery line. In late 2018 we committed to a second new bindery line, that is currently being installed. In 2019 we already committed to a 3rd. We have added new presses and continue to commit large amounts of capital to increasing capacity. To operate that equipment we have both added several new staff and realigned existing staff to make certain the busiest work centers are running at maximum capacity at all times. Bought paper in much heavier volumes as soon as it is available, and assumed the risk that demand will continue to be high. Aligned with foreign and different paper manufacturers to balance options. MAKING CHANGE: Culture Content Commerce February 7–9 2019 Santa Fe

  47. What does this mean for printers and ongoing business? A quick note about tariffs So far the renegotiation of NAFTA has shown little impact on our day to day operations. Paper price increases have not been impacted by tariffs, but rising material costs. One area that has been impacted are the import of printing plates. Though the cost is up it has a small impact on the overall cost of a book. MAKING CHANGE: Culture Content Commerce February 7–9 2019 Santa Fe

  48. One last thing - Tariffs in China Section 301 Tariffs. 6,031 subheadings of items subject to tariffs. only about 25-30 applied to CB and CB Distributed products: Address Books | Notecards/Correspondence Cards (including a best selling series - Letters to My | Blank Journals | Guided Journals & Diaries |  Notepads/Notebooks | Miscellaneous Paper items that fall under heading 4823 (Other items made of paper or paper pulp).   E.g. Garlands, Coasters, Origami/Papercraft Kits. | Bags/Pouches 10% tariff currently in place. Journals & Notecards being the largest impact at Chronicle Books. We are investigating with our McEvoy sister companies (Galison Mudpuppy and Princeton Architectural Press) other offshore and onshore print partners. Tariffs are charged at Customs, paid by our freight-forwarder and is charged back to us as part of the freight invoice. MAKING CHANGE: Culture Content Commerce February 7–9 2019 Santa Fe

  49. Questions for all of us. MAKING CHANGE: Culture Content Commerce Your Supplier Base Will Continue to Shrink - what are other publishers doing to mitigate problems with paper and printing capacity crunches? Suppliers Will Continue Repositioning Assets – what will this mean? Who Do You Align With? (Why and how?) ‎Which Suppliers Do We Support? February 7–9 2019 Santa Fe

More Related