Why is newsprint (the paper newspapers are printed on) in short supply?
More than a dozen mills in the United States have stopped making newsprint in the last decade because demand for paper has declined 75 percent as large newspapers have lost readership.
If newsprint production capacity has declined over the course of 10 years, why are newsprint prices just now increasing?
Newsprint is a commodity, and its pricing fluctuated regularly in past years. Recently, one small paper mill in Washington state tried to use federal trade and tariff laws to improve its profits. North Pacific Paper Co., or NORPAC, complained to the U.S. Department of Commerce and International Trade Commission that Canadian newsprint mills, which produce much of the newsprint consumed in America, are engaging in unfair trade practices, including government loan subsidies and harvesting of trees on government land. Temporary tariffs of more than 20 percent have been applied while authorities investigate. If the tariffs are made permanent, the price of newspaper printing will skyrocket.
Shouldn’t the tariffs on Canadian imports boost domestic production of newsprint?
Even if Canadian paper disappeared because of high tariffs, U.S. paper mills, which industry observers estimate are running at 97 percent capacity, could not supply newspapers with the paper they need. Mills cost hundreds of millions of dollars to build or reopen and can take many years to comply with environmental rules. With demand falling, it is unlikely paper manufacturers will invest in a massive expansion of U.S. newsprint production. The industry organization for U.S. paper producers, the American Forest and Paper Association, does not support NORPAC’s case.
What has been the impact on newspapers to date?
Preliminary duties against Canadian producers began in January in the range of 6.5 percent to nearly 10 percent for the alleged trade violations. Another set of duties began in March with an assessment of 22 percent for alleged underpricing or “dumping.” The preliminary findings are not unusual and do not mean that the final determinations will end with such major assessments. U.S. trade laws are engineered to give the benefit of the doubt to domestic producers, even at the cost of higher prices to consumers. Preliminary findings can be intended to provide some interim relief even before final facts are in. These tariffs are being collected now at the U.S.-Canadian border, however, and are in escrow until final findings are complete. Newsprint producers already are escalating their prices to U.S. newspapers. The harm already has begun.
What do the Canadian producers say about the allegations?
Canadian companies say that U.S. publishers’ demands have fallen as large daily newspapers have cut back, merged, closed or dropped publication days as digital commerce and competition have driven reductions in advertising and print readership. Market forces, not trade practice, are responsible for the harm to U.S. paper producers, they say.
Why do you still publish a printed newspaper instead of going all digital?
Digital publication has become common for most newspapers, including this one. However, there continues to be strong demand for and use of the printed newspaper. Further, community newspaper publishers cannot support online versions of their newspapers without a printed newspaper. Hard-copy advertising and readership provides 90 percent or more of a community media company’s revenue and enables the digital newspaper to exist. In other words, without print, there would be no online news from your hometown newspaper. These revenue streams support the newspaper’s mission of providing our communities with journalism and marketing professionals who work every day on behalf of readers and advertisers.
What will happen if the tariffs become permanent?
Publishers will not be able to absorb the significantly higher cost of newsprint, which is a newspaper’s second-largest expense behind payroll. Newspapers likely will have to raise prices for readers and advertisers, reduce distribution by eliminating publication days, cut content and reduce our workforce. Not only will newspapers suffer, but so will our workers, readers and advertisers.
This Q&A reprinted with permission of the State Journal (Frankfort, Ky.) and Steve Stewart.