The Paper Supply Chain Update. The Straight Truth.

No single issue is impacting the printing industry more than the shortage of paper and the significant rise in costs when stock is available. So, on behalf of our print members, we wanted to ask the experts, where we are, how we got there and what does 2022 and beyond look like for our industry. On February 3, 2022. Upwards of 60 participants from over 35 different companies took part in a webinar hosted by Tony Golden of Lindenmeyr-Munroe Paper Co with presentations by Gilbert Goodworth of Domtar Paper and Mike Robinson of Verso.

While we are facing unprecedented challenges, the seeds for our current situation were planted years ago as demand for all grades of printing paper started to fall.  The response on the part of the mills was to close some, reduce capacity at others, take machines offline, and in some cases, repurpose machines to produce products in growing segments like packaging. So, when demand increased in the latter part of 2020 and throughout 2021, at a time of lower overall capacity, unprecedented stress was put on the supply chain and that pressure included pulp, chemicals related to papermaking, and even things like lumber and nails for pallets used in the shipping of paper.  It seemed that everything that could be a problem, became one.

While the current challenges cross all types of paper, the speakers presented two very different perspectives.  Coated paper is heavily dependent on imports for well over 50% of production and the issues facing them include covid’s impact on the workforce, increase in demand, difficulties in the countries of origin and transporting paper through US ports.  Uncoated is primarily made in North America and their problems differ only in that the paper doesn’t have to travel from foreign ports. The 2022 election season will further stress the paper supply, coated cover, in particular, the substrate used for many of the products associated with election mailings and handouts.

While concerns raised by the presenters included machines that are running beyond sustainable capacity, increasing trucking and maritime costs and shortages all along the chain including a significant shortage of truck drivers, there was some good news. Demand continues to be robust with Q4 2021 production 79,000 tons (5%) higher than Q4 202. The presenters shared some statistics about how print products have performed in the last year. There was a 6-9% increase in book sales over 2020, a forecasted increase in commercial print of 5.2-6.2% over 2021 and global direct mail is expected to grow from 71+ billion to 72+ billion in 2022.

Summary

Currently, almost every mill is on allocation/ reservation. There had been a ten-year, or more, lessening of demand for printing papers that the pandemic only exacerbated.  While we are facing the perfect storm of chemical, pulp, pallet supply, shipping challenges, and Covid 19’s effect on workforce, demand increased and affected all grades of sheets and web grades.

At the time of this webinar, no mill can allocate 100% of past usage to their customers, and thus the guessing game each month is how much can the mill supply.  It can be as low as 60% and there is little light at the end of the tunnel for the foreseeable future. All the experts on the webinar stressed that paper machine efficiency is critical and that all machines, coated and uncoated, are running beyond the safe range for sustainability. To add to the difficulties, some machines may have to go offline in 2022 for maintenance. Everything related to the manufacturing and bringing to market of paper has risen significantly since the start of the pandemic. 

What can you do?  Plan ahead with your clients, order well in advance, be flexible about grades and finishes and prepare for a challenging 2022.  At present, there is little light at the end of the tunnel but be assured that the merchants and the mills are doing everything they can to help their customers thrive in, what continues to be unprecedented times!!

Headline: Inflation

The most recent Consumer Price Index (CPI) data was released and is once again making headlines as the index rose 7.5% for the 12 months ending in January, the largest one-year increase in nearly 40 years. If that last line sounds like a broken record, it’s because the last four announcements starting with last October’s data have all carried that distinction with year-over-year changes consistently higher than 6%. The last time CPI inflation was that high was October 1982.

The Fed received a great deal of criticism for describing inflationary pressures as “transitory” and dropped that label from their official commentary late last year. While that decision has been validated by six consecutive months of accelerating inflation on a year-over-year basis (5.2% à 5.4% à 6.2% à 6.9% à7.1% à 7.5%), we will likely see this trend reverse later this year as the factors contributing to these large increases begin to fade.

The two main reasons for this deceleration in prices (or disinflation) are 1) the “basing effect” of comparing today’s price index to a time 12 months prior when economic activity was still limited by the pandemic, particularly in the services sector, and 2) relative smaller components of the index having an outsized contribution due to significant price increases that are not expected to be sustained going forward. Take vehicle prices and energy costs as two examples. These categories each comprise ~7-8% of the overall CPI, yet they account for nearly half of the increase in the index over the past 12 months. New and used car prices increased less than 0.5% on average pre-pandemic, but in January vehicle prices had increased more than 20% from the year prior, and energy prices are nearly 30% higher. 

 

It’s highly unlikely that vehicle prices continue to rise at the current pace as supply chain issues ease. In fact, we could experience outright deflation in the vehicle index given its unprecedented increase over the last 12-24 months. And while energy prices could remain at current elevated levels, we don’t believe further increases are likely as high prices incentivize additional capacity and production, thus removing that accelerant from the CPI data. As the chart below shows, the fading of the red (vehicles) and green (energy) components of the index moving forward, combined with the overall basing effect, would result in a significant decline in the inflation readings we see in the second half of this year.

The key risks to this outlook are labor market dynamics and the housing market. Shelter is the single largest component at ~33% of the CPI, and housing price increases tend to have a lagged effect on the index, so we could see continued increases in this component. This will be counterbalanced by increased interest/mortgage rates slowing future activity. As for the labor markets, last Friday’s Employment Report indicated some easing to current tight labor market conditions as new jobs were higher than expected and previous jobs numbers were also increased materially higher, but it’s very early stages here so this is something we’re monitoring extremely closely.

Fed rate hike expectations have been accelerated and increased by investors so far this year. For as much pressure as the Fed is facing now to raise rates, if economic growth and inflation do indeed start to decelerate in the second half of this year, we could very well see a pause in the current expected trajectory and/or magnitude of Fed rate hikes (not to mention what impact politics may have later this year as we approach the midterm elections). This may provide some temporary relief to equity markets later this year, but – for now, at least – “the highest inflation in nearly 40 years!” will be the continued refrain a little while longer.

Posting OSHA Form 300A for FY 2021

Posting OSHA Form 300A for FY 2021
The Occupational Safety and Health Administration (OSHA) requires employers to post Form 300A for injuries that occurred during the previous year from February 1-April 30. Read more

Employers are only required to post OSHA Form 300A (summary), not the OSHA 300 log. March 2, 2022 is the deadline to electronically report your OSHA Form 300A data for calendar year 2020. Employers with ten (10) or fewer employees and employers in certain industry groups are normally exempt from federal OSHA injury and illness recordkeeping and posting requirements.

The ITA website (Injury Tracking Application) should be used to electronically submit required injury and illness data. The website also has instructions for completing the Form 300A.

Recording workplace exposures to COVID-19
OSHA recordkeeping requirements mandate covered employers record certain work-related injuries and illnesses on their OSHA 300 log (29 CFR Part 1904).

COVID-19 can be a recordable illness if a worker is infected because of performing their work-related duties. However, employers are only responsible for recording cases of COVID-19 if all the following are true:

1. The case is a confirmed case of COVID-19 (see CDC information on persons under investigation and presumptive positive and laboratory-confirmed cases of COVID-19);
2. The case is work-related (as defined by 29 CFR 1904.5); and
3. The case involves one or more of the general recording criteria set forth in 29 CFR 1904.7 (e.g., medical treatment beyond first aid, days away from work).

Employers should follow the OSHA enforcement guidance found in the Updated Interim Enforcement Response Plan for Coronavirus Disease 2019 (COVID-19).

Visit OSHA's Injury and Illness Recordkeeping and Reporting Requirements page for more information.

Excellence in Print 2022

MD Relief Act Summary

Maryland RELIEF Act Summary

*sources: Comptroller’s Office, Governor’s Office, DLS

• Sales and Use Tax Credit – Authorizes eligible vendors to retain an increased vendor tax credit for the three consecutive months following the enactment of the law. The amount of the vendor credit allowed is equal to the lesser of the amount of sales and use tax collected during the month the vendor qualifies for the increased credit or $3,000, not to exceed $9,000 in three months.
  • Eligibility: a vendor must file a timely sales and use tax return or consolidated return, and; the gross amount of sales and use tax remitted with the return may not exceed $6,000, and; a vendor must choose to forgo the standard vendor credit in order to claim the enhanced vendor credit.
  • When? Credits will be granted during the months of March, April, and May 2021. If you file returns quarterly, claim the March credit on the return you file in April, and claim the April and May credits on the return you file in July.
  • Amount: Eligible vendors may claim a credit against their sales and use tax for either the amount of the sales and use tax collected during the month for which the vendor claims the credit or $3,000, whichever is less.
• Business Tax Relief
  • Unemployment Tax Relief for Small Businesses
    • An employer’s 2021 unemployment tax rate will be calculated based on their non-pandemic experience by excluding the 2020 fiscal year, and instead by using the last three fiscal years of 2017, 2018, and 2019. This was already in effect via executive order but a change in law was necessary for it to remain in play beyond the state of emergency.
    • Small businesses and nonprofits with fewer than 50 employees will be allowed to defer unemployment insurance tax payments in calendar year 2021 to January 2022
  • The RELIEF Act’s loan and forgiveness plan safeguard Maryland business owners against any tax increase triggered by the use of state loan or grant funds.
• Unemployment Assistance - $1,000 one-time grant payments to certain individuals whose unemployment claims have been in adjudication for 30 days
  • Eligibility: The Department of Labor determines the recipients of the grants and will submit to the Comptroller a list of individuals who will receive payment
  • When? Payments will be sent to qualified individuals from March-July, dependent upon when the eligibility is determined by the Department of Labor
• Unemployment Insurance Income Tax Subtraction - The RELIEF Act provides a State Income Tax Exemption for Unemployment Insurance (UI) Benefits for qualifying filers. UI payments are currently subject to federal and state income taxation. Beginning with Tax Year 2020 and including Tax Year 2021, the Act exempts from the state income tax the UI benefits received by an individual earning less than $75,000, and couples filing jointly or individual heads of households earning less than $100,000.
• Grant and Loan Programs – New grant and loan programs for businesses and nonprofits to be administered by several state agencies, and local governments (see attached for local programs)

• Maryland Economic Development Assistance Authority and Fun
  • Grant program for businesses in distressed communities to assist the businesses in setting up an online sales framework and offering employees telework opportunities

Other provisions:

• Authorizes the Department of Commerce to forgive up to $50,000 of a loan, if the loan was made to a small business under the Equity Participation Investment Program with the Maryland Small Business Development Financing Authority. This provision applies only to fiscal 2021 and 2022 loans provided to relieve the adverse effects of the coronavirus pandemic.
• Creates a $420 million fund within the Department of Budget & Management to be used for:
  • Financial assistance to individuals, businesses, and nonprofit organizations
  • Funding for the Department of Health and UI program
  • The restoration of Department of Transportation transit services and highway maintenance funding.

Joint Letter to the Postmaster General

February 19, 2021

The Honorable Louis DeJoy

Postmaster General

United States Postal Service

475 L’Enfant Plaza SW

Washington DC 20260

Dear Postmaster General:

As representatives of your customers, the undersigned are writing to you in an effort to clearly convey the fragility of customer confidence in the Postal Service, given the recent collapse in service, and the danger of increasing prices under such circumstances.

We understand the impact of the pandemic – our member companies and nonprofit organizations, and their customers, are experiencing it as well – and of other factors that have impaired USPS operations and delivery. As the Postal Service has acknowledged, that impairment was worsened by internal failures to maintain control over inventory and follow established procedures and operating plans.

As a result, customers have experienced delays of not just a few days but weeks – even months – in getting their personal correspondence, greeting cards, statements, advertising mail, newspapers, magazines, and packages to their recipients. In turn, many customers, from the clients of commercial mailers to everyday users of retail services, now question whether they can depend on the Postal Service in the future. The collapse of service experienced in recent months has the potential to significantly accelerate the abandonment of mail; it has already resulted in messages to consumers encouraging them to “go paperless.”

In this context, increasing prices for substandard service should not even be considered. Any action that would drive away already skeptical customers would worsen the Postal Service’s challenges. Any short-term increase in revenue from an over-CPI price change would be outweighed by its long-term business impact. We believe there are better measures that could be undertaken to restore financial equilibrium.

As you have noted, the burdens imposed by Congress could be alleviated through successful discussions with legislators; reform legislation could remove unnecessary retirement prefunding obligations; USPS employee costs could be reduced through more disciplined negotiations; and operational efficiencies can be implemented that do not require diminishing service standards. Yes, those would be more difficult than simply raising prices, but also would yield greater and more long-lasting benefits – without imperiling mail volume.

The Postal Regulatory Commission has provided greater pricing authority to the Postal Service. When the commissioners concluded the USPS was not financially stable, the tool they used to remedy that condition was alteration of the rate-setting mechanism to enable greater price increases. The challenges facing our industry require a more thoughtful and comprehensive approach than for the Postal Service to mechanically maximize its rate authority, separately or as part of a broader plan, simply because it was provided with the opportunity to do so. Moreover, the availability of $10 billion in funding under recent legislation, and the ongoing positive income derived from increased parcel volume, lessen the urgency to seek additional revenue from ratepayers.

The Postal Service’s financial condition did not develop overnight and is not simply due to inadequate revenue – nor can it be remedied simply by raising prices, particularly through an unanticipated increase at a time when customer allegiance has been so severely compromised by poor service. Customers already prepared to walk out the door should not be asked to pay more – now or in the future – for something whose value they concurrently have reason to doubt.

We look forward to working with you to strengthen the Postal Service and ensure its future. We are also prepared to collaborate on an integrated and comprehensive approach to the challenges we face together. We stand ready to discuss these and other issues at your convenience.

MD Dept of Labor Detected Over 156,000 Potentially Fraudulent Unemployment Claims Since January

**FOR IMMEDIATE RELEASE** Maryland Department of Labor Detected Over 156,000 Potentially Fraudulent Unemployment Claims Filed Since January States Across the Nation Experiencing Significant Spike in Fraud Over 87% of Claims Investigated in Maryland Confirmed as Fraudulent BALTIMORE, MD (February 11, 2021) - The Maryland Department of Labor (Labor) today provided an update about the department’s ongoing unemployment insurance fraud detection, prevention, and investigation efforts. Over 156,000 Potentially Fraudulent Claims Detected Since Beginning of January With the record number of unemployment insurance claims filed and the additional federal benefits available during the COVID-19 pandemic, states across the nation have continued to see bad actors and fraudsters using illegally obtained data to file fraudulent unemployment insurance claims.  However, since the passage of the Continued Assistance for Unemployed Workers Act (CAA), which expanded the federal CARES Act programs and most notably offered an additional $300 a week to eligible claimants through the Federal Pandemic Unemployment Compensation (FPUC) program, states have seen a significant spike in fraudulent activity.  Of the 243,186 new claims filed in Maryland since January 1, 2021, 156,403 claims (64.31%) have been flagged as being potentially fraudulent due to new and existing aggressive security measures in place to protect taxpayers and the integrity of the state’s program. As fraudsters are becoming more brazen and adapting their tactics, Maryland continues to add new technology and safeguards to prevent and detect fraud.  Over 87% of Claims Flagged and Investigated Confirmed as Fraudulent With aggressive security measures in place, Labor continues to investigate potentially fraudulent in-state and out-of-state claims. With over 87% of claims flagged and investigated being confirmed as fraudulent, it is critical that the department reviews and verifies documentation manually.* Of the 161,897 out-of-state claims that have been identified as potentially fraudulent, 147,305 (90.99%) have either not uploaded the verification documentation requested or their documentation has been reviewed and denied. Of the 226,933 in-state claims that have been identified as potentially fraudulent, 191,358 (84.32%) have either not uploaded the verification documentation requested or their documentation has been reviewed and denied. Of the 388,830 claims flagged, there are currently 14,348 (3.69%) in-state and out-of-state potentially fraudulent claims pending manual review and verification by a team of specialists. *Note that these numbers are subject to change as the department continues to flag potentially fraudulent claims. Labor continues to coordinate its investigation with the U.S. Department of Labor’s Office of the Inspector General (OIG) and the U.S. Attorney’s Office. Report Unemployment Insurance Fraud on Quarterly Employer Statements The department recently emailed all employers about potentially fraudulent charges appearing on their fourth quarter benefit charge statement because of an increase in the number of claims fraudulently filed in the names of people who are actively working.  This means that claims may be fraudulently filed for an employer’s employee, even though the employee is still working and is not unemployed. Please note that employers will not be charged for any fraudulent benefits associated with their account. All employers should carefully review their current and previous benefit charge statements to ensure that all claimant benefits charged to their account are accurate.  If an employer believes a fraudulent claim has been charged to their account, they should immediately file a benefit charge protest throughtheir BEACON employer portal located atemployer.beacon.labor.md.gov. The department will investigate their protest and will remove charges that are deemed fraudulent. For additional assistance, employers can contact the Employer Call Center by calling 410-949-0033. Report Other Unemployment Insurance Fraud If you believe that your information has been used to fraudulently file an unemployment insurance claim, please contact the Division of Unemployment Insurance’sBenefit Payment Control Unitby completing a “Request for Investigation of Unemployment Insurance Fraud” form and e-mailing it to This email address is being protected from spambots. You need JavaScript enabled to view it.. If you received a 1099-G tax form, but did not apply for unemployment insurance benefits in Maryland in 2020, then please complete anAffidavit Formand submit it along with picture ID to the Benefit Payment Control Unit by emailingThis email address is being protected from spambots. You need JavaScript enabled to view it.. If you are a claimant and believe funds have been fraudulently withdrawn from your Bank of America unemployment insurance debit card, please contact Bank of America directly by calling 1-855-847-2029. If you believe you have been a victim of identity theft, please read the Maryland State Police's Identity Theft Protection Quick Guideto find additional resources and learn more about the next steps you should take to protect your identity. For more information, visitMDunemployment.com.

Excellence in Print 2020

December 9, 2020 12:00 PM EST

The wait has been long, but the work has been excellent.  See who brings home the prizes in the 2020 Excellence in Print Awards.

Click here for the Program

Click here for the Show

FMLA & The Hybrid School Calendar

The DOL has addressed the expanded FMLA and the hybrid school calendar, and related to choosing an all-online option if available. 

• If your child is on a hybrid plan, then expanded intermittent FMLA is available for the days they are learning at home.
• If your employee has opted to go entirely online despite school being open (hybrid or completely), the DOL says you can use expanded FMLA on the days your child would be doing online learning anyway because the school is “closed” to that family on those days of online learning.

The new guidance is below:

·  My child’s school is operating on an alternate day (or other hybrid-attendance) basis. The school is open each day, but students alternate between days attending school in person and days participating in remote learning. They are permitted to attend school only on their allotted in-person attendance days. May I take paid leave under the FFCRA in these circumstances? (added 08/27/2020)

Yes, you are eligible to take paid leave under the FFCRA on days when your child is not permitted to attend school in person and must instead engage in remote learning, as long as you need the leave to actually care for your child during that time and only if no other suitable person is available to do so. For purposes of the FFCRA and its implementing regulations, the school is effectively “closed” to your child on days that he or she cannot attend in person. You may take paid leave under the FFCRA on each of your child’s remote-learning days.

·  My child’s school is giving me a choice between having my child attend in person or participate in a remote learning program for the fall. I signed up for the remote learning alternative because, for example, I worry that my child might contract COVID-19 and bring it home to the family. Since my child will be at home, may I take paid leave under the FFCRA in these circumstances? (added 08/27/2020)

No, you are not eligible to take paid leave under the FFCRA because your child’s school is not “closed” due to COVID–19 related reasons; it is open for your child to attend. FFCRA leave is not available to take care of a child whose school is open for in-person attendance. If your child is home not because his or her school is closed, but because you have chosen for the child to remain home, you are not entitled to FFCRA paid leave. However, if, because of COVID-19, your child is under a quarantine order or has been advised by a health care provider to self-isolate or self-quarantine, you may be eligible to take paid leave to care for him or her. See FAQ 63.

Also, as explained more fully in FAQ 98, if your child’s school is operating on an alternate day (or other hybrid-attendance) basis, you may be eligible to take paid leave under the FFCRA on each of your child’s remote-learning days because the school is effectively “closed” to your child on those days.

·  My child’s school is beginning the school year under a remote learning program out of concern for COVID-19, but has announced it will continue to evaluate local circumstances and make a decision about reopening for in-person attendance later in the school year. May I take paid leave under the FFCRA in these circumstances? (added 08/27/2020)

Yes, you are eligible to take paid leave under the FFCRA while your child’s school remains closed. If your child's school reopens, the availability of paid leave under the FFCRA will depend on the particulars of the school’s operations. See FAQ 98 and 99.

Sanitation Guidelines

Protecting the health and safety of employees during the COVID-19 pandemic outbreak is essential to ensure the spread of the virus is stopped and it does not spread within the workplace. The emergence of the COVID-19 virus has created a situation where every printing operation needs to institute a cleaning and disinfection program that will minimize the possibility of an employee becoming infected. The information presented below is based on the guidelines issued by the Center for Disease Control for businesses.

Sanitation FAQs