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Printers, paper suppliers competing

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Gerry Chisholm joined the paper industry in 1966 after taking a job in sales with Diamond International. He's been with Gould Paper since 1990 and now serves as senior VP-sales.

Media Business: Does the consolidation in the printing business have any effect on paper prices?

Gerry Chisholm: Printers have more and more become competitors of ours. It used to be that printers were pretty happy to just do the printing. Since the print market has shrunk, they've tried to offer a lot of extra services, such as providing paper. So it shouldn't change the price at all.

MB: So is there any demand for paper?

Chisholm: The overall demand for coated paper is way down over the last three years. So is the supply. Right now, the mills have pretty good backlogs, they've gotten through three price increases on the coated groundwood side, and they're cautiously optimistic about another increase this January. Most of them, though, are awash in red ink because the private equity companies have loaded them up with debt. It seems imminent that NewPage [Corp.] will file for Chapter 11. The problem, of course, is that the higher the price, the more people look for alternative ways to send their messages rather than putting ink on paper.

MB: So what should paper buyers be doing now?

Chisholm: Taking advantage of today's lower prices. The paper that we sell is still being discounted 25% to 30% off the list price. Eventually, the mills would like to get back to list price. The average paper buyer—although they don't like what's happened to prices in the last six months—should lock in at today's prices for as long as they can.

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