Extra! Extra! costs: Michigan newspapers pinched by newsprint tariffs

A 32 percent tariff on Canadian newsprint is hitting some community newspapers hard, particularly in northern states like Michigan. (Photo by Daniel R. Blume courtesy of Wikimedia Commons)

Newspapers in Michigan and nationwide are facing a colossal financial threat from an unlikely source, publishers warn: a steep tariff on Canadian newsprint.

Amid decades of revenue losses at many newspapers as eyeballs shift to the internet, the import tax — sparked by a complaint from one Washington State paper manufacturer — could trigger fresh layoffs, page cuts or even worse as printing costs soar.

The tariffs could hit Michigan’s print-focused small town newspapers particularly hard, said Wes Smith, publisher of View Newspaper Group, which publishes 15 community newspapers in Lapeer and Saginaw counties and the Thumb.

“Right now, we’re at the edge of a wildfire, we’re beating the hell out of it with our coats,” said Smith.

Related:

The U.S. Department of Commerce earlier this year announced two sets of preliminary tariffs on Canadian paper products that collectively tax imported newsprint up to 32 percent. It was a response to a complaint from North Pacific Paper Co., one of five remaining U.S. newsprint mills. The hedge fund-owned company alleges Canadians are taking advantage of subsidies to flood the U.S. market with their paper products, stifling competition.

Publishers and their backers call the allegations unfounded. On Tuesday, U.S Sens. Susan Collins and Angus King, both of Maine, introduced legislation to suspend the tariffs while the Commerce Department studies effects on the newspaper industry.

What does all this mean for newspapers in Michigan? Smith, a Michigan Press Association board member, discussed the issue with Bridge Magazine last week at the association’s annual convention.

Editor’s note: Bridge Magazine is a member of the Michigan Press Association, and John Bebow, CEO of Bridge’s parent organization The Center for Michigan, is a board member.

The following is an edited and condensed transcript of the interview.

How have the tariffs affected newsprint prices?

They have basically increased the price of newsprint between 30 and 40 percent across North America. A large percentage of newsprint consumed in the United States comes from Canada. And certainly for the northern states, virtually all of it comes from Canada. So even though the temporary tariffs have not been applied evenly on Canadian manufacturers — some were dinged more than others — they have raised the overall price across the market.

Wes Smith, publisher of View Newspaper Group, says small newspapers are reeling from a tariff on Canadian newsprint.

And now some newspapers are having trouble finding newsprint supply, too?

It’s kind of the perfect storm. After many years of struggling to match supply with decreasing demand, newsprint manufacturers finally kind of figured that out. After fighting over dwindling market share, which depressed the price of newsprint, many newsprint machines were converted to produce linerboard — which become cardboard boxes. They found another market as Amazon’s rise fueled those demands.

(The reduction in supply) has hit as the tariff issue comes along. Both of these things happening at once is causing some desperation for a lot of publishers.

What are the immediate effects in newsrooms?

We were caught off-guard by the tariffs and unable to plan for them in our 2018 budget. Typically if we are going to increase either advertising rates or circulation rates, we’ll do that at the beginning of the year. We’re in the very difficult spot of not being able to recover any of this newsprint increase. It’s having a big impact. So you look for other places to cut. Maybe you cut pages out of the paper. Maybe you have to cut staff. Maybe you have to cut benefits. That’s what every newspaper of any size is faced with right now.

Have any of your newspapers cut staff because of this?

We have some open positions we haven’t filled. We haven’t whacked anybody, but we’re also not hiring as aggressively as we might otherwise. Aside from this tariff thing, community newspapers have really been doing quite well since the recession, which is a story that isn’t told much.

Why is that? Is that because subscribers to these hyper-local community newspapers just can’t get those stories anywhere else?

That’s exactly it. No one else in most of the markets where you find a community newspaper is reporting on the stuff we’re reporting on — whether it’s the city commission, local police and fire, local school districts.

Most of our papers are free-delivery model, so we mail the paper for free, they’re ad-supported. There’s not a lot of incentive for our readers go online when everything is in their mailbox.

When it comes to tariffs, your papers can’t just go digital to dodge this cost, right?

Correct. There’s been lots of discussion about how there’s not enough revenue from digital (advertisements) to support what you want to do. You can’t pay as many reporters from digital revenue as you can from print revenue. That still holds true.

So what’s next on the tariff issue?

We’re kind of waiting for the other shoe to drop. The tariffs have been implemented preliminarily. The final decisions (by the International Trade Commission) are to be made in August or September.

Your message for the commission?

Whatever the difference may be between community weeklies and metro market dailies, this is one thing we’re all together on: That this tariff was imposed improperly. One small company owned by a New York hedge fund is trying to manipulate trade laws for its own benefit. Essentially, the entire newspaper industry in the United States, as well as the printing industry, has come together and said this is wrong. This is hurting everybody.

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Comments

Fred
Wed, 05/16/2018 - 8:57am

Strikes me that:
1. Another special interest group is complaining
2. Whether we like it or not, newspapers are going the way of dinosaurs so we might as we get on with life...

Arjay
Wed, 05/16/2018 - 9:06am

Yes, newspapers are in a precarious position today, wedged between the traditional older generation of hard print readers, and the younger generation that gets it's news from twitter. To keep readership up, the papers are giving away for free their online news. I am not talking about the electronic copy of the print newspaper, but rather the websites that each paper maintains that has the developing story of everything they are tracking, which may include west coast news and sports stories that happened too late to make the hard print edition. If they want to stay in business, they should charge for the online convenience but that entails certain risks as people can just switch to another source and get the same content for free. Perhaps it is time to save a tree and let go of the printed medium. At least then we wouldn't worry about tariff wars on newsprint.

Agnosticrat
Thu, 05/17/2018 - 8:17am

Interesting point of view Arjay.
Should one put trust in the news that comes for free?
As you say Twitter will fill peoples need for information, but what good is information that has the added benefit of disappearing the next day when facts are in question?
Printed newspapers do make mistakes, but are generally responsible enough to retract that mistake when found. They can be held in hand and pointed to in a discussion, and waived in the face of a detractor during argument. You can do those things with a tablet but you are more likely to be charged with assault when you bonk your adversary over the head with hard plastic than if you were to do so with soft newsprint!
With Twitter you get ether. Non existence the next day. A deleted post...
Shall I say "Fake News"?
Print is real, and there for as long as you hold onto it.

***
Thu, 05/17/2018 - 8:22am

Only a few papers have been able to successfully charge people to read online to the point where they are actually making any serious money doing it, that business model has been a real struggle for most of them. I refuse to pay and then I get my "you have used up your limit of free articles for this month" and say I have to now pay but then I go back the next day and continue reading them with no problems. Its a joke.

Barry Visel
Thu, 05/17/2018 - 4:23pm

I would have to know what percentage of the average cost of doing business for these newspapers comes from newsprint in order to evaluate this situation more intelligently.

Martone
Fri, 05/18/2018 - 8:28pm

It's not just newspapers.
Newsletters, coupon books, store flyers, sewing patterns, instructions, owners manuals... much much more is printed on newsprint than most here consider.
The added cost will be put onto the manufacturers, businesses and organizations and eventually to their consumers and members.