Pa­per sup­ply prob­lems, tar­iffs im­peril news­pa­pers

Las Vegas Review-Journal - - FRONT PAGE - By Richard N. Velotta Las Ve­gas Re­view-jour­nal

News­pa­pers across the coun­try could be thin­ner or even dis­ap­pear in the near fu­ture as news ex­ec­u­tives na­tion­wide wres­tle with dis­rup­tions in pa­per sup­plies and new tar­iffs on newsprint.

Tar­iffs as high as 32 per­cent have been placed on im­ported newsprint from Cana­dian pa­per mills as the U.S. Com­merce De­part­ment and the In­ter­na­tional Trade Com­mis­sion in­ves­ti­gate com­plaints of un­fair trade prac­tices lev­eled against Cana­dian sup­pli­ers by a Wash­ing­ton state-based pa­per com­pany.

Tar­iffs have driven up the cost of newsprint, a com­mod­ity that al­ready has seen prices in­crease over the years be­cause of high de­mand and low sup­ply. Newsprint is gen­er­ally the sec­ond-high­est cost for news­pa­pers af­ter pay­roll.

The prob­lem is an ad­di­tional frus­tra­tion for the

Las Ve­gas Re­view-jour­nal be­cause its tra­di­tional newsprint sup­ply rail route has been dis­rupted by Project


Neon’s free­way im­prove­ments.

“En­sur­ing we have an ad­e­quate sup­ply of newsprint is a day-to-day propo­si­tion,” Re­view-jour­nal Vice Pres­i­dent for Pro­duc­tion Janet Owen said Wed­nes­day.

“We have been man­ag­ing with limited newsprint re­serves for about six months, and we don’t an­tic­i­pate any im­prove­ment this year. The Re­view-jour­nal is do­ing ev­ery­thing pos­si­ble to se­cure newsprint deliveries.”

Newsprint sur­charges

In North­ern Ne­vada, the 65 com­mer­cial print­ing ac­counts of Press­works Ink in Car­son City re­ceived an email from Gen­eral Man­ager Chris John­ston on Wed­nes­day an­nounc­ing they would be as­sessed a newsprint sur­charge on their or­ders be­cause of the tar­iffs.

The sur­charges vary de­pend­ing on the size of the jobs, but John­ston said his com­pany be­lieves the passthroug­h costs are the fairest way to ad­dress the in­crease.

“They didn’t bud­get for this price in­crease, and it’s af­fect­ing every­body,” John­ston said.

He said he has seen fluc­tu­a­tions in the newsprint sup­ply chain be­cause or­ders for pa­per that once took two to three weeks now take four to six weeks to ful­fill be­cause of in­creased de­mand.

Some of his col­leagues, he said, are buy­ing pa­per from Amer­i­can pro­duc­ers to dodge the tar­iff charges de­spite higher do­mes­tic prices re­sult­ing from high de­mand.

Ru­ral news­pa­per cri­sis

Paul Boyle, se­nior vice pres­i­dent of pub­lic pol­icy for the News Me­dia Al­liance, an Ar­ling­ton, Vir­ginia-based trade as­so­ci­a­tion rep­re­sent­ing about 2,000 news­pa­pers in the United States and Canada, said the dis­rup­tion is hav­ing a dev­as­tat­ing im­pact on news­pa­pers across the coun­try, in­clud­ing some in ru­ral ar­eas that are on the verge of ceas­ing pub­li­ca­tion.

Boyle said the Com­merce De­part­ment is sched­uled to con­clude its in­ves­ti­ga­tion and make a de­ter­mi­na­tion on tar­iffs by Aug. 2.

Mean­while, the In­ter­na­tional Trade Com­mis­sion is ex­pected to con­duct a hear­ing July 17 and is­sue its find­ings in Septem­ber, Boyle said.

“Coun­ter­vail­ing and anti-dump­ing du­ties have been used and en­forced by the govern­ment to pro­tect U.S. in­dus­tries and U.S. jobs, but with this pe­ti­tion for tar­iffs on newsprint, it’s ac­tu­ally go­ing to have the op­po­site im­pact,” Boyle said. “News­pa­pers are fac­ing con­sid­er­able head­winds. We’re al­ready see­ing the im­pacts of these tar­iffs with newsprint prices go­ing up 30 per­cent, and in some cases small news­pa­pers are hav­ing a hard time ac­tu­ally find­ing sup­ply be­cause the mar­ket is com­pletely dis­rupted.”

Newsprint sup­ply prob­lems be­gan years ago as news­pa­per cir­cu­la­tion de­clined and many pub­li­ca­tions shifted to dig­i­tal for­mats, re­duced the size of their pub­li­ca­tions or stopped print­ing on some days of the week.

To sur­vive, many U.S. pa­per pro­duc­ers closed mills, re­duced op­er­a­tions and be­gan sell­ing more newsprint to thriv­ing mar­kets in China, Rus­sia and Europe.

Small mill’s com­plaint

Re­cently, a small mill in Longview, Wash­ing­ton, North Pa­cific Pa­per Corp., owned by hedge fund One Rock Cap­i­tal Part­ners, com­plained that Cana­dian mills were com­pet­ing un­fairly with U.S. pro­duc­ers by op­er­at­ing with fed­eral loan sub­si­dies and har­vest­ing trees on govern­ment land.

One Rock’s web­site said the New York-based hedge fund fo­cuses on “un­der­op­ti­mized” com­pa­nies, those that don’t make as much money as they po­ten­tially could. Work­ing with a strate­gic part­ner, Japan’s gi­ant Mit­subishi Corp., the fund is in­vested in fast food out­lets, con­sumer ap­pli­ances and chem­i­cal com­pa­nies. It ac­quired North Pa­cific Pa­per in 2016.

While the Com­merce De­part­ment in­ves­ti­gates North Pa­cific’s com­plaints, tem­po­rary tar­iffs from 6.5 per­cent to 10 per­cent have been levied with col­lec­tions go­ing to an es­crow ac­count un­til the in­ves­ti­ga­tion is com­plete. This month, an ad­di­tional 22 per­cent tar­iff was as­sessed be­cause of a new al­le­ga­tion that Cana­dian mills were un­der­pric­ing their prod­uct.

Though the tar­iffs are only tem­po­rary, Amer­i­can mills, which on av­er­age are run­ning at about 97 per­cent of ca­pac­ity, have raised their prices

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