Westport, Connecticut, USA 26 June 2013 -- FutureMark Paper Group said that it is now securing approximately 50% of the recovered paper needed to run its business through long-term purchase agreements.
“These types of agreements are highly unusual maybe — even unheard of — in recovered paper markets, but we believe they're going to be instrumental in ensuring the long-term health of U.S. recycled paper companies,” said Steve Silver, President and CEO of FutureMark Paper Group.
The agreements, collectively worth more than $20 million per year, help FutureMark manage its costs for buying waste paper, which is the company's single largest operational expense, the company said.
FutureMark said that it has signed 10 long-term agreements for buying the recovered paper needed to make the company's 90% to 100% recycled paper. Each agreement lasts for two or three years and establishes a stable cost, regardless of how dramatically recovered paper markets rise or fall over the life of the agreement.
“Until FutureMark pioneered these long-term waste paper sourcing agreements for our two manufacturing facilities, no recycled paper company could gain this level of supply assurance or cost predictability. These agreements are an insurance policy against the extreme volatility of globalized waste paper markets — for both us and our suppliers," Silver added.
“We're very pleased with the agreements we have reached with FutureMark, as it provides a stable outlet for our clients' recovered fiber, as well as a predictable revenue stream for our company,” said Don Majka, Vice President of Sales and Marketing for Waste Management – one of the firms with whom FutureMark has signed long-term purchase agreements. “Beyond protecting our business against market fluctuations, it also frees our team from the typical monthly negotiations and administration. It's a win-win all around.”
According to FutureMark, volatile waste paper costs — and the financial uncertainty that comes with it — have contributed to the bankruptcies of several recycled paper mills over the past few years. High waste paper prices also played a role in the bankruptcy of Manistique Papers in 2011. Manistique Papers was purchased from bankruptcy and integrated into FutureMark Paper Group in 2012.