how
is the
PAPER

shaping
up?

The situation

is worsening rapidly,
and it won't

improve for some time

by Richard Dupre, Editer
Graphics in Engineering

n the June issue of Business
Grapuics I indicated that the
paper shortage is a function of prof-
itability and that it is an odd short-

age, since overall] tonnage will be —

up, but special and unpopular pa-
pers and inexpensive sheets will be
difficult to obtain. While this situa-
tion has not changed, it now ap-
pears to be far more immediate in
its effect—particularly in reproduc-
tion areas—than anticipated.

Offset and Copying Papers

Supplies of the less expensive
paper for OSM and office copying
operations are critical, particularly
16 Ib. weights. Xerox Corp. has in-
dicated that over 75% of its fore-
casted yearly mill supply was sold
in the first six months of 1973, in
spite of a May 1 price increase.
Xerox attributes the additional de-
mand for its 1524 and OSM bond
papers to four factors:

1. Competitive paper prices have

27

SHORTAGE

risen dramatically as discounting by
paper merchants has been curtailed.

2. Elimination of low-price prod-
uct lines by competitive paper
merchants.

3. Competitive paper merchants
have withdrawn from paper bid
business.

4. Competitive paper merchants
have shifted their activity away
from the “tax-supported body”
(government) paper market.

As a result of its situation, Xerox
is suspending all sales activity for
all lines of 1524 paper and OSM
offset paper as well as for 16 Ib.
and 20 lh. white OSM bond. In
addition. the corporation has estab-
lished a maximum allotment of
720 cartons (one carload) in any
30-dav period to protect its remain-
ing inventories. Xerox expects to
operate on this basis until it can
perhaps replenish inventories and
reexamine its overall position with
respect to what it calls a “rapidly
changing” paper market.

While I expected this sort of
condition to develop, I certainly did
not anticipate that it would happen
so soon. Xerox’s situation is an omi-
nous warning that the rest of us
should recognize. Most of us do
not operate on the same scale, but
if it's happening to Xerox, it will be
tougher on smaller users. Whether
your paper needs are large or
small, higher inventories will he
necessary to tide you over the
longer interval paper ordering will
require. Paper prices are already
up by $50 a ton, and price increases
appear to be an integral part of
the shortage, because it is the prof-
itability in vield which dictates the
quantity and variety of papers a

mill is willing to produce. So prices,
up 15% since June, will climb
even higher.

In a seemingly unrelated area,
the large microfilm users are also
experiencing the effects of the paper
‘shortage. Those of you who use
colored aperture cards for different
kinds of drawings or distribution
copies will begin to find that-only
the natural color is available. You
can compensate for this by using
stripes across the top of the card,
and since this situation is long
range, you may as well plan vour
substitutions well.

Striped cards offer a slight de-
crease in cost over colored cards,
which is an additional benefit.
Business machine cards in colors
will soon be subjected to the same
kind of situation, and probably the
same solution (striping) will work.

Once again, the oddity of the
shortage may prevail: If a sufficient
volume of cards is produced in red
for users all over the country, red
cards may be continued as a prod-
uct. Price increases are the order
of the day. You can expect prices
to bé reviewed every order, with
commitments no longer than 30
days in advance.

Duration of Shortage

And here is the bad news: the
shortage will probably last three
to seven vears! The paper industry
would be very unbusinesslike in-
deed if it ever permitted an over-
capacity, price-discounting condi-
tion to develop again. So, while the
variety will come back sometime.
paper will probably never be as
good a bargain as it was in the
last 15 years. v

BUSINESS GRAPHICS/SEPTEMBER 1973