Offset Paper - Surviving The Digital Era

As digital printers and Web pages take work away from offset presses, how has the offset paper market fared? Rather well, say those in the paper business.

by W. Eric Martin

For years now, wave after wave of digital printing technology has battered the rock-solid shore of the offset market, making lots of noise with each splashy new entrance and drawing "oohs" and "ahs" from onlookers.

But just as it takes eons for water to hammer stone into countless grains of sand, the offset industry has easily withstood the competition from digital waters and remains the industry's most popular printing process.

Don't believe us? Then take it from those who know best—the folks who supply the rolls and reams of offset paper that keep the presses running.

"I think that [digital's] impact on offset has been widely overstated," contends Jack Miller, director of marketing for Domtar Papers. "We're seeing a little slower growth as a result of more cut size papers, more office printing, and more digital printing. But even when you add all that together, it's taken maybe half to one percent away from the growth of offset, which might be growing at two percent [annually] rather than three."

"The total volume for offset papers is down this year compared to last," adds Rob Melton, marketing manager for commercial printing papers at Weyerhaeuser, "but that's more a reflection of the slowdown in the economy. Print advertising is down, so printers aren't quite as busy, so paper usage in general is down."

Despite the predictions of many futurists, the e-commerce boom of the late 1990s did not usher in an era of paperless transactions.

"In fact, the dotcom craze generated a lot of advertising and printing to promote these companies," Melton points out. "That's part of the reason that the printing and paper businesses seem to be off this year—the dotcoms aren't out there spending the dollars to advertise anymore."

Slower Than Ever

Georgianne Plumberg, marketing manager for forms and printing grades at Boise Cascade, paints an even bleaker picture.

"We're hearing from printers and merchants who say that they've never seen it as slow as it is right now," she says. "A lot of times pricing can help you incite business, but right now even pricing isn't doing it. There's just not the business out there to be had."

The offset paper market may be hampered by the lagging economy at the moment, but as soon as the economic indicators start to turn around, paper manufacturers say they will be off and running again.

"Historically, it declines fairly quickly and comes back quickly," says Plumberg. "When the market turns around and consumer confidence goes up, and someone like [Fed Chairman Alan] Greenspan announces that spending is up, [the turnaround in sales] happens like a light switch. It's not a gradual thing; it's feast or famine."

Looking For Alternatives

While the digital waves have left the offset paper market largely unchanged, other forces are shaking the landscape. Mark Favus, product brand manager of printing and publishing papers at Georgia-Pacific, says over the past five years, sales in GP's premium offset line—which typically refers to its opaque grades—have doubled to roughly 800,000 tons annually.

"Our sense is that people are trading down from the [text] and cover grades and trading up from the core, commodity offset grades," he says. "People are more value conscious, so when they're thinking about producing a printed piece on text and cover grades, they look for alternatives."

In fact, Boise Cascade, Domtar and Weyerhaeuser have all seen movement towards opaque sheets, possibly as part of an overall trend towards whiter and brighter sheets that help color stand out better.

"Customers are asking for a typical offset sheet to perform like a higher-priced opaque sheet, but at the same price," says Weyerhaeuser's Melton. "Those text and cover papers that are bright and smooth and make the print look so good are very expensive, and what they want is a commodity type of product that will fill that gap and still look good."

In essence, says Melton, "they're looking for more features—brighter, opaquer, smoother—at the same price, and that's just a function of the competitiveness of the paper industry right now."

Dual-purpose Papers

That competitiveness has led both Weyerhaeuser and Georgia-Pacific to develop papers (Cougar Digital and First Choice, and Titanium Opaque, respectively) that will serve users on both traditional offset equipment and the newer digital presses.

"As a paper company, we want to make sure that we provide the simplest solutions in the marketplace," says GP's Favus. "You don't want a multiplication of brands and grades. Our entire development process is geared to producing papers that will be dual platform."

"You could develop papers that work well on one or the other of those technologies," adds Melton, "but you're forcing all people in the delivery chain to carry two types of paper. If you can develop one type of paper that works on either, you can reduce the amount of inventory you have to carry and increase the flexibility of the printer to be able to use it on either technology. We have those two grades, but at the commodity level, that's where the work still needs to be done."

Waiting It Out

Both Boise Cascade and Domtar are holding off on developing cross-over papers, according to company representatives.

"We have a standard opaque offset, which is a 93 bright and laser and digital compatible in some pieces of equipment. We're trying to expand the number of equipment installations out there that it will successfully go through," says Plumberg, of Boise Cascade. "A lot of folks still have the ink-jet for the variable data and are waiting to see what the market will do before they invest in [digital] equipment."

"When a new technology comes along, there's a drive towards using ordinary papers," says Domtar's Miller. "You can go back to fax machines and see this. The plain paper faxes and copies ultimately drove the specialty papers away because those papers were so specialized that they weren't available in abundant supply...and couldn't be made cost effectively."

Miller points out, for example, that Xeikon has introduced sheetfed digital presses that no longer require special paper, as used to be the case. "The trend seems to be moving in that direction," he says.

"[Digital] sizes like 12x18˝ fall in a gap," explains Miller, pointing out that Domtar's folio sheeters handle only larger sheets while its cut sheeters handle only smaller. "The size issue is not a trivial one because the converting and servicing of the market is a critical part of being successful in this business. The good news is that those billion dollar paper mills don't become obsolete"—no matter which sizes win out.

Recycled Demand Low

What is threatening to become obsolete is the supply of recycled paper, demand for which continues to be steady but small.

"For the past three years, recycled offset has been very consistent for us," says Plumberg, who estimates that recycled paper accounts for five percent of Boise Cascade's offset sales. "Most of what we see are government jobs—either state, local or federal—that require a recycled content." This is typically 30 percent post-consumer content, she says.

Domtar discontinued its recycled offset paper because the demand simply wasn't big enough.

"The market for recycled is [people who say], 'If it doesn't cost any more, looks just as good, and performs just as well, then I'll take it,'" says Miller. "Well, nobody's created that animal yet. You have to sacrifice something, and not enough people are willing to make that sacrifice."

The digital waves of the future will continue to hammer at offset's rocky shore. But, says Rob Melton, "offset will still be the most viable technology for the larger print runs and will continue to carry the largest percentage of printed pieces."

Paper War Rages On