Paper Forecast — Consolidation Cuts Through

"Currently, merger activity is a result, at least in part, of a strong economy that has not benefitted the paper sector very much," Frohlich states. "These company performance pressures have made it difficult for paper companies to prosper."

Will it continue? "The simple answer is yes, from my perspective," he adds. "The paper industry is realigning itself and I don't think it is finished. Mills, merchants and their customers will see continued consolidation and the new wrinkle: alliances. Independent companies are coming together to complement each other, as in paper merchant marketing groups. Also, e-commerce alliances are taking hold that bring paper companies together with paper-related Internet sites. These activities must also be factored into the paper industry realignment equation."