It's not just magazine publishers crying the blues over the weak U.S. economy, which inspired advertisers to cut ad page placements 9.3 percent in 2001, and 10.4 percent this year, according to a recent report from market researcher Nielsen/NetRatings.
Magazine publishers have responded by tightening ad/edit ratios, decreasing trim sizes, and going with lighter basis weights. Cataloguers have also cut back, shifting promotions to the Internet and other electronic media, while pruning mail lists and slashing page counts. Corporations outside the publishing industry have also pulled back, trimming the number of brochures and other printed matter produced annually.
It all adds up to a major reduction in paper consumption in 2002-and paper manufacturers aren't optimistic the trend will reverse significantly anytime soon.
"When the economy isn't doing well, the paper market doesn't do well," says Barry Polsky, spokesperson for the American Forest and Paper Association (AF&PA) in Washington, D.C. "Publication papers are particularly sensitive to economic swings. Time, Newsweek; their advertising is down, because the economy was in the tank."
STRONG DOLLAR, WEAK MARKET
A bad economy and reduced consumption weren't the only issues challenging paper manufacturers this year. The strength of the U.S. dollar paved the way for foreign paper producers to discount their products domestically, while driving up prices of American-made papers overseas.
"Exports to Europe [have been dropping] considerably over the last three to four years," Polsky says. "The U.S. dollar was overvalued. Publishers [were] able to buy product more cheaply from overseas suppliers, [and that] hurt U.S. producers."
Paper producers have had to rethink their business practices to survive in this climate, says Normand Lecours, VP of sales with Domtar of Montreal. "It's not business as usual," he says. "To offset the struggling economy, we've reduced our number of offerings, and focused a lot on service."