The industry that buys ink by the barrel is contesting U.S. tariffs on Canadian newsprint, with Arkansas newspapers and others across the nation calling the tariffs a threat to business.
Through two decisions, on Jan. 9 and March 13, the U.S. Commerce Department has levied tariffs of up to 30 percent on newsprint manufactured in Canada.
Canadian mills supply about three-fourths of the $1.2 billion in newsprint used each year for newspapers, newspaper supplements, certain books and directories and writing paper in the United States. The Commerce Department said the Canadian newsprint-makers were being unfairly subsidized by the Canadian government and were "dumping" their product in the U.S. at prices below fair market value -- a claim denied by the Canadian mills.
Critics of the tariffs note they weren't requested by the primary trade group for U.S. paper manufacturers, the American Forest and Paper Association, or by four of the five paper mills still producing newsprint in the United States.
A metric ton of newsprint, or 2,205 pounds, costs about $600 now. A 30 percent tariff would push the price up to $780.
Newspapers have experienced other dramatic increases in the price of newsprint. In 1995, newsprint jumped from $552 per metric ton in January to $675 in May. But those price increases came when the industry was healthier than today and were the result of normal supply and demand. Newspaper leaders are calling the tariff decision by the U.S. government shortsighted and unnecessary.
"These tariffs started with a single American newsprint manufacturer who complained that Canadian companies were 'dumping' their product in the U.S. at below-market prices," the Tampa Bay Times wrote in an editorial March 23. "In the current political climate, that complaint found a friendly ear in Washington."
A 30 percent tariff on the 17,000 tons of newsprint it uses each year would add more than $3 million to its annual newsprint bill, the newspaper said. "These tariffs will also hurt our employees, because payroll is the only expense that is bigger than newsprint," the editorial said. "To help offset the extra expense of paper, publishers will eliminate jobs. Make no mistake: These tariffs will cause layoffs across American newspapers, including this one."
Arkansas newspapers have taken up the call.
"The additional cost for newsprint will add up to millions of dollars for the company's operations," the Southwest Times Record in Fort Smith said in an editorial published in January when the first round of tariffs was announced. "If fully implemented, the resulting hardship could lead to the loss of thousands of jobs in the newspaper industry."
Based in Fairport, N.Y., GateHouse Media owns the Fort Smith paper and five other dailies in Pine Bluff, Conway, Arkadelphia, Stuttgart and Hope and 17 weekly newspapers in the state, plus hundreds of other publications across the nation.
The Arkansas Press Association is rallying editors and publishers to the fight, hoping to have the tariffs reversed by either the Commerce Department, when it's to make a final decision in August, or by the International Trade Commission, an independent, bipartisan federal agency that reviews such tariffs. If the duties are overturned, publishers would get rebates.
"This affects more than just newspapers themselves," Ashley Wimberley, the association's executive director, said. "Very few newspapers anywhere will be able to absorb these costs. Smaller newspapers especially will be hurt, and so will the communities and advertisers they serve."
The association last week sent out a "guest editorial" from another trade group, the News Media Alliance, to its member newspapers, to rally subscribers and advertisers to the cause.
Canadian mills aren't to blame, David Chavern, News Media Alliance's president and chief executive officer, wrote. "Rather, newsprint mills shut down or converted to producing other, more profitable paper products when the demand for newsprint fell, something that has been happening steadily for decades," he wrote. "Since 2000, the demand for newsprint in North America has dropped by 75 percent."
The full effect of the tariffs hasn't yet been felt in Arkansas, several newspaper executives said last week.
John Bland, publisher of The Times Dispatch weekly in Walnut Ridge, had just stepped back into the office after delivering newspapers Wednesday morning to take a telephone call from the Arkansas Democrat-Gazette.
His paper, with a circulation of 2,900, is printed at the Jonesboro Sun, owned by Paxton Media Group of Paducah, Ky.
"I've gotten a warning that price increases will be on the way, though we don't yet know how much," said Bland, who's the third generation of his family to run the newspaper, founded in 1910.
Any additional costs incurred by the printers in Jonesboro will be passed on to customers like Bland.
"It will make it that much tougher in an already challenging environment," he said. "We've been lean and mean, as they call it, for some time now. As people retired, we haven't replaced them, we've all absorbed more duties and done whatever it took to streamline."
Lynn Hamilton, president of the Arkansas Democrat-Gazette, said the newspaper, like other large publications, buys newsprint 30 to 60 days ahead, using a formula based on industry averages, minus discounts for volume.
All Canadian newsprint-makers are increasing prices, regardless of the specific tariffs they've been saddled with, and American newsprint manufacturers are doing the same, he said.
Prices have been increasing steadily, even without the tariffs, he said, declining to give specific numbers for the newspaper. After payroll, printing is the newspaper's biggest expense, he said.
"It adds more pressure to us, but we have no definite plans how to react," Hamilton said. "But it's certainly a challenge we don't need right now."
Tom White, publisher of the Advance-Monticellonian in Monticello, prints his newspaper and seven other small publications.
The cost of newsprint is up 23 percent since July, said White, who is the incoming president of the Arkansas Press Association.
"That's not directly due to tariffs, but rather because of all the talk leading up to the tariffs," he said. "What concerns me more right now is availability. I've talked to people who've spent decades in the business, and they've never seen a market this tight.
"We've seen a lot of consolidation in the paper [manufacturing] industry. We've seen a lot of mills shut down, too, which reduces supplies. The tariffs are just another part of the puzzle, but they're happening at a time when the effect will be even more dramatic."
White offered numbers that put the dispute -- and the challenge facing newspapers -- into perspective, comparing print costs from last July with projected costs this May.
A weekly newspaper with a press run of 1,500 copies of 12 pages uses 225 pounds of newsprint, or about 10 percent of a metric-ton roll. Based on his current contacts for newsprint, such a newspaper will see its printing costs rise from $311.92 per weekly run to $335.80, with newsprint costs rising from 29 percent of the total bill to 33 percent.
A daily newspaper with a press run of 25,000 copies of 24 pages -- using 5,896 pounds of newsprint -- will see a $617 increase in daily printing costs, from about $3,748 to $4,366 per edition. The cost of newsprint, as a percentage of total printing costs, would increase from 55 percent to 68 percent for that newspaper, he said.
"The increasing costs will have a larger impact on a larger newspaper but, in most circumstances, the smaller papers in the state are operating on a much tighter budget," White said. "Even a small increase could make the difference in a community paper's success."
Larger daily papers, though, likely will be hit hardest, he said.
"Even though the larger papers may have capital and be able to weather the price increases, they have also been hit much harder by the downturn in national advertising, so they may have a difficult time with any increase in printing cost," White said.
At 20, Hayden Taylor is one of the nation's youngest newspaper publishers.
He bought the Central Delta Argus-Sun in Brinkley in December 2016, garnering worldwide attention, and restarted it as the Monroe County Herald, with a circulation of about 1,500.
With just three people on the payroll, including Taylor, the Herald's biggest expense is printing, he said.
"We can't just try to take more money out of our advertisers' pockets," Taylor said. "As of now, we don't charge for obituaries. We might have to look at that. We'll need to beat the bushes more to get our subscriptions up. We'll need to talk to our larger advertisers, like Kroger or Food Giant, and maybe get more inserts."
He has no regrets about getting into the newspaper business.
"It's worthwhile, so I'll stick with it," he said. "But I won't be buying a Porsche anytime soon."
SundayMonday Business on 04/01/2018