Resources & Support

May 12, 2010

Recently Western Graphics has witnessed across the board raw material price increases for paper and printing supplies, ranging any where from 1% to 6%. Paper producers for the last several months have started raising prices based primarily on decreases in worldwide pulp production. While we continue our efforts to make productivity gains and reduce costs, we have been unable to compensate for significant raw materials, energy and transportation cost increases. Many other factors are playing into these price increases both nationally and internationally and below we’ve outlined the major reasons contributing to these current price increases:

1. Demand currently is exceeding supply and inventories are presently at a 28-day supply making it a challenge for producers to re-supply the global pipeline.

2. Chile earthquake in February of 2010 is creating a massive shortfall in pulp production worldwide due to physical destruction of transportation links, forestry and mills.

3. China continues to surge in their demand for paper products and is aggressively acquiring any tonnage available.

4. Black Liquor Energy Tax Credit from 2009 amounted to about $8.5 billion for approximately 37 pulp and/or paper producers. This one time Federal “alternative fuel” energy tax program was intended for transportation fuel and companies could qualify for a tax credit by adding a mix of diesel fuel to the pulping paper process. The benefit of this one time tax credit is coming to an end and the majority of the industry previously passed on the benefits by curbing paper cost increases.

While recognizing the paper market is continually being challenged with the aforementioned issues, in addition to the downturn of the economy - Western Graphics is focused and intent on ensuring our customers are provided with the best value, consistent quality and speed of delivery. In addition, we wanted to be proactive and provide you with adequate lead time to review and adjust your print production budgets accordingly.

We at Western Graphics sincerely appreciate your business and we will continue to analyze and source alternatives while at the same time maintaining our desire for high quality print production. If you have any additional questions concerning this matter, please don’t hesitate to contact us.