Last week, Milford-based Hasler Inc. took the wraps off a new line of automated letter openers that can open as many as 40,000 letters an hour.
The question becomes how many companies can still afford to send that many pieces of mail.
Even as many marketing agencies grapple with how best to use emerging digital media, they are grappling with margins on their cash cow businesses of more traditional paper-based materials. Companies that rely on mailings for direct marketing and advertising are being cut to the quick by historic highs on the cost of paper, with no signs of a letup, most unwelcome news for an industry already grappling with increases in postal rates.
On June 24, the cost of light-weight coated magazine paper hit $1,050 per metric ton, according to FOEX Industries Ltd., up more than 1 percent since April. Schweitzer-Maudit International Inc., an Alpharetta, Ga., company that sells cigarette paper made in New York, New Jersey and Massachusetts, became the latest to force customers to inhale a price increase, announcing two weeks ago a 20 percent bump for North American customers.
The increases are being driven by hikes in the cost of chemicals, wood pulp, energy and transportation ”“ despite a decline in the dollar against other currencies that is having a positive impact on prices for some U.S. companies.
In the past year, paper companies have passed on better-than 10 percent increases to consumers on many paper products, impacting schools, publishers, marketing agencies and other businesses. Perhaps as a result, U.S. companies are investing once more in domestic production capabilities, which after a predicted 0.7 percent decline last year are expected to recover most of that capacity by 2010.
Connecticut”™s own pulp and paper industry employed 5,450 people at last count in nearly 80 manufacturing facilities, according to the American Forest and Paper Association (AFPA), generating $1.8 billion in revenue.
In recent years, two major paper and packaging companies have relocated their headquarters out of Fairfield County: International Paper Co. and MeadWestvaco Corp. At the same time, commercial printer Cenveo Inc. relocated its head office to Stamford from Colorado, and Fairfield County remains home to a few companies that act as brokers for paper consumers to negotiate better prices, including Stamford-based A.T. Clayton & Co. Inc. and Paper.com Inc.
In 2007, American consumers and companies recycled 56 percent of the paper consumed nationwide, according to AFPA, equal to 360 pounds for every person in the nation.
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With recycling mills in China running at capacity, the price of recycled paper will reach new highs in 2009, according to David Clapp, a recycling analyst with Bedford, Mass,-based RISI Inc. Clapp said paper product manufacturers are seeking alternative sources of fiber, such as fir forests in Russia and bamboo groves in Asia and South America.
If there is a silver lining, it is that the sluggish U.S. economy could force paper vendors to cut prices. According to the Pulp and Paper Products Council, coated paper shipments favored for direct-marketing mailings were down 5 percent in the first quarter, which could encourage paper vendors to cut prices in order to stimulate demand. Shipments could decline further in the just-concluding quarter, thanks to the shutdown of a major plant producing such stock.
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