A couple of weeks ago a famous price index reporter announced they are starting a price index for recycled linerboard. This is a "solution" in search of a problem! They might as well call it the "Jute Liner" or the "Test Liner" index. When I first heard about this, I started ranting and raving and calling it a throwback to the 1990's. I have had a chance to calm down and think about it and will now revise my statement: it is throwback to the 1980's. Today, liner is sold on performance and appearance specifications, what its primary ingredient is is unimportant.
This new scheme will certainly be a great way for independent box makers to beat up recycled linerboard producers and achieve a pricing leverage. I can understand this on an individual company basis, but as a society is this what we want? A lever to de-incentivize recycling? If I were in the independent liner manufacturing business, I would instruct my minions to never report prices to this scheme under threat of termination.
What I hear when I am out and about in the industry is that senior leaders would like to do away with the whole pricing reporting scheme as it now stands. Paperitalo Publications has even been asked to start our own pricing reporting system.
To date, while flattered, we have graciously declined. The problem with all the schemes we have ever seen is that they are opaque. They are not reports of prices transparent to the public. They are phone calls, faxes and emails from people who said they sold for certain price or they bought for a certain price. Guess who reports the higher and who reports the lower numbers? Who do you believe?
Yes, the system is flawed, through no fault of the reporting entities. But creating a recycled liner price index is not a path towards improvement.
Jim Thompson is CEO of Paperitalo Publications.