Taking Stock
"The buyer who purchases the right product for the job at the best price is one who is knowledgeable about the product lines. This knowledge comes from experience and from resources such as paper merchants, office supply houses, paper mills and trade organizations," writes author Lawrence A. Wilson in Paper Buying Primer. "However, most buyers don't take full advantage of the available resources."
Weyerhaeuser (www.weyerhaeuser.com) CEO Steve Rogel believes that the new year within a relative new century will also play a role in how paper buyers and sellers choose to operate. "As we enter the 21st century, we find ourselves in the midst of what sailors call sea change—change of a very large magnitude," he describes. "This includes learning how to operate according to a new business system…dovetailing our support staff services…fully integrating our acquisitions…and coping with extremely rapid technological change—or, as we call it internally, adjusting to 'e-time.' Another change we're adjusting to is industry consolidation that dictates that we grow and grow profitably—or be absorbed."
Rogel isn't alone in reevaluating how best to operate in 2002. "International Paper is continuing to streamline and improve its operations," agrees Dillon. "We ran our mills more efficiently in the third quarter. And (last year), we announced the permanent closure of our Erie, PA, mill."
Compared to third quarter 2000, earnings declined in most paper segments as the impact of the slow economy reduced demand for products used for advertising and print. Forest Products earnings did, however, improve compared to one year ago, notes Dillon. And his company realized higher lumber prices and volumes as a result.
He anticipates trends in early 2002 that mimic those from the last quarters of 2001. "Third-quarter earnings for printing papers were $146 million, up from $119 million in second quarter 2001, as a result of higher coated paper volumes reflecting holiday catalog demand," says Dillon. "European paper results were slightly weaker than the prior quarter, due to the increased slowdown in European economies, which lagged the downturn in the U.S. economy."
