Ugh…word from the Cartel.
Well friends, here we go again. To most… the word “Cartel” implies the core countries that control a vast percentage of the world’s oil supply. You know who they are.
To us in the direct marketing industry, the word “Cartel” is the backroom name referring to North American Paper Mills. When they speak it’s always about a price increase or something to do about limiting paper allocations to users. And it never comes at a good time.
This week we’ve been advised by this group that there will be a mill increase of between 5% and 7% on all uncoated paper. That means, offset stock, your beautiful laid finishes, your postcard stock, your business card stock, all that is not coated (shiny) will go up.
Now the teeny tiny bit of positive news is that we’ve not had a paper increase in a long time so intuitively “ya knew this was a’comin’.”
Add this to the fossil fuel increases and the postage increase and you have three economic bitch slaps in a row.
The postage increase is a dire attempt to gain relief from an eminent disaster and that disaster is basically the galloping cost of its postal pensions and retiree benefits. Like Social Security…it is not sustainable. If Postal pensions could be assumed by the Treasury (as are most government pensions) the USPS would have a fighting chance…but it ain’t going to happen. So postage goes up.
Paper Mills on the other hand have to not only pass on processing costs but the cost of a paper supply chain that is international. We get paper from Scandinavia, Brazil, and many other countries. We even get components for our inks from India.
How to offset this three pronged hit:
- Fuel is fuel, but ganging materials such as paper, inks, glues, in containers will help. Really looking at postal processing logistics…really really important…and figuring out the optimum balance of commingling, co-palletization and shipping to find the most cost effective way to save on postage and labor and shipping.
- Paper should be stockpiled for no more than three months before price increases which can be done because notices come out 60 days prior to any increase.
- SUPER GANGING…which is ganging the needs of several large mailers in one giant gorilla will help maintain your suppliers’ paper allocations and obtain savings because you’re buying in the multimillions, not hundreds of thousands.
In any event, advance notice and a proactive strategy will affect how much you save or lose with price increases!
George Lizama, a founder of Production Solutions and its CEO and chief marketing officer, has spent over 30 years in production management. A recognized leader in the fundraising industry, George served as president of the Direct Marketing Association of Washington (DMAW) in 2010 and received its Distinguished Achievement Award in 2006. In 2008, he received a Washington Business Journal Philanthropy Award for CEO Leadership, partly in recognition of his longtime support of Northern Virginia Family Service, of which he is a director.