Editor’s comment: What will be Paperlinx’s legacy?

Darryl Danielli
Monday, July 13, 2015

While the paper market seemed to chug down Paperlinx’s capacity with barely a burp, three months later concerns remain about the potential aftershocks of the demise of the UK’s largest paper merchant.

While normality quickly returned to supply, the loss of the group’s multiple credit lines is starting to be felt by some in the industry, especially those unfortunate enough to have worked with more than one of the group’s companies, as highlighted in this issue’s Briefing.

However, perhaps the bigger issue is how the remaining merchants might look to evolve to avoid suffering the same fate as Paperlinx in the future – as touched on recently by BPIF president Gerald White and also this issue’s interview subject, Anton chief executive Malcolm Lane-Ley.

Prior to the collapse of Paperlinx, margins in the merchanting sector would probably have made most printers blush. So, while the loss of a major player could in theory have resulted in price increases, the fact that the capacity was absorbed so quickly suggests that despite mills trying to increase prices, competition at the coal face is such that even modest price rises would be difficult for merchants to push through.

And this means that costs and efficiency will inevitably come under the spotlight again.

And the problem is that there’s no longer much fat to trim in the sector, so the industry might have to accept that if merchants can’t sell sharper, then printers might have to start buying smarter.

Which could mean that vast product ranges being available for just-in-time delivery might become a thing of the past, forcing printers of all sizes to tie up precious cashflow in paper stocks.

And of that becomes the new normal, then that could be the true lasting legacy of the loss of Paperlinx.

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