Lords Of The Ream

Folio: The Magazine for Magazine Management, April 1, 2003

Byline: MARK J. MILLER

Heavy consolidation among paper suppliers has shifted the power to fewer players. And as the top tier gobbles up more marketshare, bargains are harder and harder to find, mainly because pricing is easier to standardize when there's less competition. Here's a comparison of the companies that are suddenly making all the rules.

International Paper

Headquarters: Stamford, Connecticut Number of employees: 90,000 worldwide Contact Info: 800/258-8852

IP, the world's largest paper company, dominates the field. The company has operations in more than 40 countries and is listed on the New York Stock Exchange (symbol IP).

It is also one of the largest private forest landowners in the world. IP manages its forests under the principles of the Sustainable Forestry Initiative program (SFI), a system that ensures the continual planting, growing and harvesting of trees while protecting the overall environment.

MeadWestvaco

Headquarters: Stamford, Connecticut Number of employees: 30,700 worldwide Contact Info: 203/461-7400

MeadWestvaco Corporation is a global producer of packaging, coated and specialty papers, consumer and office products, and specialty chemicals. The company was formed in 2002, when the Mead Corporation and the Westvaco Corporation, both of which were more than 100 years old, came together in a merger. The company operates in 33 countries and serves customers in nearly 100 nations.

MeadWestvaco is the second largest producer of coated papers in North America and serves customers in the automotive, beverage, consumer products, healthcare, media and entertainment, and publishing markets. Like IP, it manages strategically located forestlands according to stringent environmental standards and in conformity with the SFI.

The company says that while consolidation in its industry may very well continue and that weak paper prices continue to threaten profitability, its magazines clients are saying they expect advertising to return to 2000 levels by next year.

UPM-Kymmene

Headquarters: Westmont, Illinois Number of employees: 2,000 in North America Contact Info: 630/850-3310

The Finnish paper manufacturer was founded late in 1996 when Kymmene and Repola Ltd. (and its subsidiary, United Paper Mills) merged. It has production in 17 countries and is listed on both the New York (symbol UPM) and Helsinki stock exchanges.

Fifty percent of its North American business is magazine-related, and it specializes in coated and uncoated paper for magazines and catalogs, ranging from three-sheets to supercalender.

More than one quarter of the company's 52 paper machines regularly use recycled fiber, with an average recycled-fiber content of 63 percent.

Stora Enso

Headquarters: Wisconsin Rapids, Wisconsin Number of employees: Approximately 6,135 in North America; 43,000 worldwide Contact Info: 203/356-2300

Finnish paper manufacturer Stora Enso Oyj acquired Wisconsin-based Consolidated Papers in 2000, creating Stora Enso North America. Consolidated had been around since 1894 and created the first electrically powered paper machines. The company is also responsible for being the first to manufacturer coated paper in a single, high-speed operation (1935). Stora Enso's shares are listed on the Helsinki, New York (SEO), and Stockholm stock exchanges.

In it entirety, the company claims an annual paper and board production capacity of about 15 million tons. Stora Enso North America says it has 20 percent marketshare of the magazine-publishing business and 76 percent of its business is magazine-related. SENA's capacity for supercalendered and coated mechanical papers was 1,690,000 tons as of last October; its total North American sales were 2,655,000 tons in 2002, up from 2,538,000 tons in 2001.

Sappi

Headquarters: Boston, Massachusetts Number of employees: Sappi Fine Paper, approx. 3,300; Sappi Limited, approx. 18,000 Contact Info: 617/423-7300

Sappi Fine Paper North America was formed in 1994 by Johannesburg-based Sappi Limited's acquisition of S.D. Warren Company. Now Sappi is listed on both the New York (SPP) and Johannesburg stock exchanges. The company's domestic roots go back to 1854 when Warren was established in Maine.

Last May, Sappi acquired Potlatch Corporation's printing papers business, brands, and pulp and paper mill in Cloquet, Minn. The $480 million acquisition enhanced the supplier's position in the North American coated-paper market.

Sappi claims to sell nearly a quarter of the coated fine paper in the western world for the specification, commercial printing, and publishing markets. As for actual annual paper capacity, Sappi says its Fine Paper North America can produce 1.3 million short tons while Sappi Limited can produce 5.1 million short tons.

Sappi's McCoy, Strobe, Lustro, Opus, and Northwest brands contain recycled content and the company works with the SFI to make sure that working forests used for fiber are regenerated.

Bowater, Inc.

Headquarters: Greenville, South Carolina Number of employees: 8,400 in North America Contact Info: 704/540-2667