By Ed Avis
The APDSP survey that identified optimism among reprographics firms despite anxiety about finding staff (click here to read about that) also identified another major concern: rising paper prices.
Nearly 80 percent of respondents to the survey reported that they are “very concerned” about rising media prices and another 21 percent said they are “somewhat concerned.” Going hand-in-hand with rising costs is low supply – about 47 percent of respondents said they are “very concerned” about availability of media and 53 percent are “somewhat concerned” about it.
“Prices have increased numerous times and we are stocking up because of availability concerns,” says Mike Carter, president of Lynn Imaging in Lexington, Kentucky.
Matt Ahern, owner of Ahern Printing in Manasquan, New Jersey, echoes that concern: “We’ve had several price increases this year across the board for all of our paper stocks. Seems to be no problem with availability on the lighter stocks. Plenty of 20lb bond to go around, they just keep raising prices! The heavier stocks, 80lb-130lb cover, are getting harder and harder to find.”
There are several causes to the higher prices. First, supply is a problem. Mills have been closed or converted to other types of paper for the past several years. And some of the remaining mills and coaters are focusing on higher-margin products rather than xerographic papers.
“The domestic mills are looking at their assets and they're saying, ‘Where are we going to make the most margin on what products?’” explained Jim Walsh, vice president of sales and marketing for paper supplier Felix Schoeller, during an APDSP panel discussion on paper prices in late September. “And the bond business, being a very mature business with costs having been taken out … has created a situation where the margin associated with that business has the mills looking at their assets …. What's more appealing to them are the products that are attached to the higher margin.”
Second is a transportation problem. Covid reduced the workforce throughout the worldwide transportation system, but demand shot up as soon as Covid eased. That created a situation where the price of getting product from one country to another skrocketed. For example, a container shipping from China that cost $3,500 in 2019 cost $20,000 by fall 2021. That means products with relatively low margins, such as many types of media, could not be shipped affordably.
Finally, demand has outstripped the limited supply. Paper products of all types are in demand as the world economy recovers from Covid, driving up prices even higher.
When will things get better? Some of the problem should ease as worldwide supply chain problems resolve, which experts predict will happen in the second half of 2022 as more and more companies upgrade their supply-chain logistics and government efforts to ease worker shortages and transportation infrastructure problems kick in.
How Are Reprographics Shops Responding?
Most reprographics firm owners can’t wait for things to suddenly get better; they need to take action. Some are taking the obvious step of raising prices to keep up with their increased costs.
“We have increased prices and review things regularly,” Carter says.
There is always a risk that customers will resist the higher prices, but in general, business owners understand that inflation is affecting everything and they aren’t surprised when suppliers – including printers – increase their prices.
Ahern Printing, on the other hand, has absorbed the higher costs, at least so far. “We haven’t done anything yet to respond to the higher paper prices,” Ahern says. “We’ll tough it out for a few more months and see what happens.”
Another strategy to deal with higher prices and shaky availability is to stockpile media when possible. For example, Ahern says he has been buying up supplies of cover stock whenever he finds it. “I have enough cover stock in house to last me a year!”
Reducing paper waste is another way to ease the problem. Printers are working to reduce paper jams; trimming the quantity of overruns; and making sure prints are properly nested when possible. If something happens that results in a print that does not get paid for, the printer should try to fix it.
Feeling Good Anyways
Despite the challenges of increased prices, many reprographic firm owners are optimistic about 2022. Nearly 90 percent of respondents to the survey said they were “pretty optimistic” or “very optimistic” about the direction of their business in the coming year.
“We have numerous contracts for printing and construction document management in place,” Carter says. “Many are with municipalities, states for building and highway departments, sewer districts, universities, etc. I feel like money will continue to be available for these agencies and infrastructure.”
Ahern also is feeling good about next year: “AEC printing is back to pre-COVID levels. Actually we were only slow for 2-3 months in the beginning of COVID. So that side of the business kept us going strong for the last 18 months. The rest of our print business started coming back strong in the last 6 months and I feel that 2022 should be our best year yet.”