|The Computer Age Doesn't Eliminate Paper, It Just Shrinks the Size of Paper Companies|
|Topic||Profit Maximization ; Production and Costs|
|News Story||The computer age is here, but rather than creating a paperless society, it has created a "less-paper" society. Demand for paper products such as newsprint has flattened since 1990, as has demand for paper bags, white copy paper and other paper products. The only paper product that seems immune to such decreases is tissue.
Such flattened demand has led companies to start reducing their size. International Paper sold off a forest the size of Massachusetts recently, and is eliminating the company's interest in home-building lumber, magazine paper, and others. Weyerhauser is in the process of selling off its "fine white paper" division to a Canadian rival. The only thing that is saving these companies during the decline in demand is that mill closures have helped keep price up.
Companies in paper industries are soon to be hit with cheap imports. Currently, Brazil makes the cheapest paper globally, although paper from Russia and China is less expensive than in the US. This will only increase the headaches of US paper companies.
Is there aspirin for US companies? Some developing countries are seeing an increase in demand for paper products, as demand for newspapers, etc, increase in those countries, especially those where computers and internet technologies have not yet taken off. But that is only a matter of time until those countries start moving the way of the US.
|Source||"Flat Prospects." The Economist. March 15, 2007.|
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