5/13/02 - ALEXANDRIA,VA - The Envelope Manufacturers Association (EMA) recently released an update to their semi-annual Outlook for Envelopes. The Outlook was delivered to the EMA membership during their Spring Meeting on April 9. Mike Shaw, chairman of the Plant Management Committee, gave the presentation. The committee is predicting the following for the remainder of 2002:
1. The recession is ending but it is going to be a long and slow recovery that is different than previous recoveries. Most of the growth manufacturers will experience will be in the second half of the year.
2. Paper price increases are on the horizon, but not until the second half of the year. It will be difficult to sustain price increases for paper in the short run because the market is so soft.
3. The future of the USPS will determine the future of the envelope industry. The USPS must go through a major financial restructuring if it will remain relevant as a delivery channel.
4. The next six months should show improvement in shipments, but that improvement will be in smaller increments than ever before. By year-end, shipments should be slightly below 2001 numbers.
5. The transactional mail market continues to remain solid, although an eight percent increase in First-Class Mail rates continues to drive transactional mailers into additional cost-cutting strategies.
6. The value per thousand will continue to fluctuate and should end the year around $16.75.
7. Recycling material prices should stabilize and increase by year-end to approximately $250 per ton for Hard White.
8. There might be some consolidation and possible attrition by year-end.
9. In 2003, the industry will return to more normal volumes. However, margin pressure will continue to remain intense as companies continue to try to grow market share in a more moderate growth market. We estimate only two percent market growth on average in 2003, so growth in excess of this point will come from niche operations and being a very cost effective competitor.
To receive a full copy of this report, please contact Barbara Monson at the EMA office at 703-739-2200 or [email protected]