Marcal Paper Goes Chapter 11

beeing i live at home still, the mother buys whatever is on sale. But i do prefer marcal.

Garden State Paper in Garfield also went into Chapter 11, and is still closed almost five years later. They also had rail service.

Carter, that's true but GSP got caught up in the Enron melt-down. The Marcal situation is perhaps more frightening because of its consumer visibility in this area... and I believe this is the only Marcal production facility.

I'll go somewhat idealistic and say Marcal was doing some good using recycle rather than virgin paper stocks as well.

I'm hoping it's not accounting games that's caused the problem... in addition to everything else, Marcal is a major customer of ours.

Marcal also has a facility in Chicago which produces waxed paper, but it is very small by the standards of the Elmwood Park facility.

" I hope it's not accounting games........"

As I said in a previous post, Marcal has been on shaky financial ground for several years. Their Dun and Bradstreet rating was not good, and they're known throughout the trucking industry as a company that doesn't (didn't) pay their bills on time.....and in the trucking business, most companies consider "within 90 days" as on time. When we stopped doing business with them it took close to a year before we received all the monies due for freight bills.
They are a small player in the paper business, with competitors like Scott Paper and Charmin (owned by Proctor and Gamble), and, like many other smaller paper companies that have folded up, just aren't able to compete.
Before the NYS&W was sold to CSX/NS, the chairman of Marcal sat on Delaware Ostego's board of directors, a move that I would guess W. Rich made to help insure that the railroads bills were paid in a timely manner.

Marcal declaring Chapter 11 was no surprise to people in the business, it was just a matter of when...

Marcal's market share in the New York has been declining steadily in the past 10 years. New York Market is their bread and butter.

The paper category (paper towels, toilet paper) used to be a major category for the Supermarket class of trade in this region.

Ever since the club stores (Costco, BJ's, Sam's) have come into fruition, the paper category has been declining in Supermarkets......The Walmart's and Target's of the world have only accelerated the decline, so who gets hurt by all this???...the local guy, Marcal

As more and more people buy this category at non traditional outlets, they are not purchasing Marcal, because all of these other retailers carry only a few or no Marcal items.

Also with various price increases that have occurred (paper, transportation), other major manufacturer's have been able to absorb.

P&G makes their paper in Mehoopany PA, much lower cost of living
Kimberly Clark restructured their supply chain...
Georgia Pacific combined and closed production facilities, and opened new ones in very low cost of living areas in the SOutheast

Marcal's cost of doing business is fixed, only one plant, in one of the nation's most expensive areas to do business in....

They may survive this bout with Chapter 11, but the end is near unfortunately

I can't imagine being unable to "Marcalculate and save" any more. While never a "big" customer, every car counted, on the freight side, of the Suzy. Waste paper and chlorine, were all we ever spotted. Even during the "good years" of the late 80's, Marcal was only doing around 10-12 cars a week. Not a huge volume, by any account. Sometimes, Oakanite out produced them, with copper ingots coming in, and finished spools, going out. Regards

While I agree Marcal is in pretty big trouble, most of the blame for this chapter 11 seems to lay in increased energy costs rather than market share. We all feel the pressure at the pump in our cars. Multiply that by about a million times and you have Marcal's problem.

The co-gen plant on site became uneconomical to operate when the cost of NG nearly doubled.

Marcal has not one but two of the finest paper machines currently producing paper, the 10PM and 11PM machines.

Cost of labor is, of course, a big problem in the area, and there is little which can be done about this. Marcal isn't the kind of company that seems open to the idea of relocation, so I'd doubt a move to another state, though a thousand small towns in PA would have people lining up for the work.

Marcal has been in chapter 11 at least 3 times before, and each time has pulled through. That doesn't really mean anything this go around, but it shows the family and the workers to be good fighters.