China, South Korea and Indonesia lose tariff fight

A landmark decision was handed down today by the U.S. Commerce Department adding punitive tariffs on coated paper imports into the U.S. by China, South Korea and Indonesia. Below are the schedules of duties.

• Chinese coated papers to add 10.9% to 20.3% tariff
• Indonesia coated papers to add 21.24% tariff
• S. Korea coated papers to add 1.76% tariff with some companies exempted from the tax

This ruling reverses decades of policy by the U.S. Commerce department who previously only add anti dumping tariffs. This ruling is thought to pave the way for other industries and companies to bring similar actions to protect USA manufacturing from cheaper Asian imports. As well, as of lately with the new Congress in power increasing loud rumbles have increased about penalizing China for its trading practices, unfair subsidies and a weak currency. It appears the tide is turning.

Unfounded Concerns about China's Debt holdings.

Some voices of Wall Street reacted negatively to today's ruling sending the Dow Jones down a fraction. Concerns have been voiced about China's reaction given that they are the USA's second largest trading partner, next to Canada, and with the amount of U.S. Bonds the Chinese hold. Most of these concerns will most likely be shrugged off. For one, China will not stop exporting to the USA, so no worries about the trading partner status. Second China holds $350 +/- billion in U.S. government debt. While this sounds like a lot, the debt market is a $4 trillion a day market. $350 billion dollars can easily wash through this system in a matter of a few days. No worries on that front either.

Stopping Asian Coated Paper

New Page Corporation Takes a Stand

Friday March 30th is the expected day a court decision is to be announced regarding imposing tariffs on Asian coated paper coing into the USA. This past year, New Page Paper had filed a suit charging Asian paper producers with dumping coated paper here in the North America, the most coveted paper market in the world, at below market prices through foreign government subsidies and cheap labor.

It's about Money

The Asian paper issue has been brewing for a number of years. Starting on the west coast mainly Chinese, S. Korean and Indonesian paper producers have been pumping out cheap paper and dumping this paper into USA markets. The affect, not surprising, has been to force USA coated paper manufacturers to artificially hold down prices. Sometimes the differential between domestically produced and Asian coated papers has been reported to be as much as $20 cwt. Grouping the Asian producers in one group, they are commonly regarded as having very low service levels and unreliable shipping habits. However, such a huge price discount still creates demand for these products here from those looking to purchase paper as cheaply as possible regardless of service, reliability and environmental concerns.

It's About the Environment

USA and North American paper mills have been leaping forward in new environmentally sound initiatives one after the other. The Asian producers have mostly ignored this environmental call to action and maintain practices of using wood harvested from non certified forests, do not provide many recycled options if any and seem to be unconcerned about Global climate change and the emissions of C02. I have yet to see an Asian paper mill boast of using a renewable energy source.

The Court will Decide

Is it right or wrong to levy tariffs on a low cost producer? Sometime, hopefully today, a USA court will make that decision in a legal sense. If this action succeeds it will be very good news for USA coated paper mills and it will have ripple effects throughout the paper and graphic arts industry. More to come. Stay tuned.

Specialty Paper Bonanza

I was looking through my collection of fine paper swatch books the other day and the huge availability of extraordinary specialty papers in North America shocked me. I've been intimately involved in distributing and designing specialty papers for 18 years. The number of specialty papers available today just crept up on me and took me by surprise in retrospect.

When I first started the CTI Paper Group back in 1989 specialty papers were relatively rare in the main stream commercial printing markets of North America. The really beautiful papers were almost all made in Europe. A few European companies, Zanders and Fedrigoni, had some small distribution here in the USA. The sheet sizes were weird (metric), the packaging was weird (package wrapped no cartons) and the prices were, well out of sight by the standards of the day. The fact was at that time that if you wanted a really unique printing paper you had to source it from a European paper mill. My theory has been that because of Europe's older paper mills, less efficient machines, together with their inherent understanding of design and fashion and the need to add as much value as possible to the fiber coming off of the older less efficient machines that this led European manufacturers to create the large variety of specialty papers they still offer today.

The Tide is Turning

Our company began creating specialty papers by designing papers in partnership with Euro paper mills in the mid 1990's. We developed, for commercial printing markets and broad distribution, the first and most widely recognized naturally translucent paper, Glama Natural and it's companion Glama-lope envelope in 1994-ish. We later decided to bring some of our efforts home when we designed and manufactured Aspire Petallics, the first ever mica coated colored paper to be manufactured in North America. We have subsequently redesigned our Currency metallic paper and we continue to manufacture Currency here in the state of Wisconsin. I assure you that other great papers are in the hopper.

In the last 4 to 5 years other leading North American paper mills, previously only uncoated text and cover mills, have begun to develop interesting value added specialty papers in the European tradition, probably for the same reasons I mentioned previously. Some examples of these more progressive mills are; Wausau Paper who now has some great metallics, Fox River Paper (now Neenah Paper) developed a very nice metallic line and Smart Papers has for years has manufactured Kromekote cast coated paper and now in more recent years has added some very nice additions to its flagship line with foils and patterns.

Land ho

The biggest advantage of North American made value added specialty papers to the consumer is availability. Early on in my sales career I was fond of saying, "You can have a great paper at great prices and if you can't get it when you need it, who cares." This statement remains true today. Lead times for papers made here are generally faster and inventories tend to be higher. The fact of the existence of the Atlantic ocean sitting between supplier and consumer can't be changed and vessels only sail so fast. Another factor favoring North American paper mills versus European paper mills is the dollar /euro conversion. As the euro goes up against the dollar European papers can tend to become more expensive. Domestic paper mills prices tend to move up only when the market as a whole moves keeping most domestic papers in line with each other.

Europeans will continue to create gorgeous papers and now they will have more competition from domestic paper companies which is always good for the consumers.

Housatonic Paper Mill (Rising Paper) to Close by June 07

Another one bites the dust could be an appropriate epithet for the tombstone of this latest closing of a fine paper mill. The Rising paper mill located in Housatonic Massachusetts is being closed as a result of it not being a profitable paper mill. The new owners, Neenah Paper, have made a solid business based decision to close the Housatonic paper mill.

A lot of emotions surround the closing of the Housatonic mill. First, for me, this paper mill is the most beautiful paper mill that I have every visited. It's brick exterior and white wood trim depict an architectural style used in the construction of factories back in the 1870's when the mill was built. The building provides a visually pleasing landscape to all who pass by the curving road winding alongside the Housatonic River. The mill structure itself is listed in the National Register of Historic Places. Perhaps more meaningful is the loss of approximately 140 good paying jobs in the Berkshires where good factory jobs are not plentiful.

During a visit to a framing shop in Madison, WI on St. Patrick's day I realized another concern about the closing of the Houstatonic paper mill which is the unknown future Rising Museum Board. Yikes, this hits home with me again. Practically every framed piece in my home and in our company offices are framed with Rising Museum Board.

I'm sorry to see the loss of jobs, the loss of craftsmanship and the possible loss of great paper products. The truth is that Neenah Paper is making a sound business decision that will serve to strengthen the company and protect more jobs and more great papers. Time moves on.

The Eco Rush is On

The paper industry has heard the cry for eco-friendly practices loud and clear. There is much opportunity for the paper industry to provide products and services that lessen the negative impact of the industry's activities on the environment.

Over the past couple of years two environmentally beneficial initiatives have taken hold in the paper industry, Forest Stewardship Council (FSC) certification of forests and renewable energy. Both of these initiatives provide substantial benefit to lessening the impact of paper manufacturing and distribution on the environment. What I find intriguing is that both of these initiatives are voluntary and can be economically beneficial to the companies supporting these programs.

Briefly FSC certification, with the consumers support, increases demand for FSC products and therefore adds value to these products throughout the manufacturing and distribution channels. Renewable energy and most commonly wind power offer an opportunity for companies to purchase Renewable Energy Credits (REC) that in effect subsidize the growth of renewable energy production, more wind farms, etc. Purchasing REC also adds value to a company's marketing profile and reduces quantifiable amounts of carbon from our atmosphere.

FSC and REC represent two programs which provide significant environmental benefits, significant economic benefits and for those of you preferring less government regulation the programs are 100% voluntary by industry. Consumers are the driving force behind this movement. If you are interested in seeing these and other beneficial environmental steps move forward support companies and products that support these programs. You might find yourself amazed at the power the consumer has today. Company executives are listening in unprecedented numbers.