NAPIM Convention Analyzes Digital, Conventional Technologies

The growth of digital technologies was the focus of this year’s convention.

By David Savastano
Editor

The printing ink industry has seen many changes in recent years. Perhaps the most dramatic has been

Rick Clendenning, second from left, the 2007 Ault Award honoree, is joined by fellow Ault Award recipients, from left, Michael Murphy of Joules Angstrom U.V. Printing Inks; Cal Sutphin of Braden Sutphin Ink; Urban Hirsch III of Ink Systems; and James Coleman of NAPIM.

the rapid growth of inkjet, which has taken a sizable share from the screen printing market and appears poised to make further inroads in other markets.

For ink manufacturers, the continued emergence of inkjet is both an opportunity and a challenge. With that in mind, the National Association of Printing Ink Manufacturers’ (NAPIM) 2007 Annual Convention, held at The Fairmont Southampton in Bermuda from March 25-28, analyzed the changes that are ahead in “Digital vs. Conventional: The Opportunities for the Ink Maker.”

The conference, chaired by William Miller, president of Flint Group’s North American ink operations, offered comprehensive looks at the changes occurring due to inkjet technologies.

There were two sessions devoted to the issue of inkjet. The March 27 session featured Charles Brewer of Hardcopy Supplies Journal and Lyra Research, who discussed “The Transition of Printing Markets to Digital.” He was followed by Phil Kane of Fujifilm Graphic Systems USA, who talked about “The Future of Print – The Case for Digital,” and MAN Roland’s Roland Ortbach, who presented “The Future of Conventional Offset Printing.”

“Traditional printing is not going away,” Mr. Brewer said. “There is a huge installed base, it is cheaper on long runs, and can run on a wider range of media. Still, there’s no stopping digital, as the output keeps getting better, offers high margin jobs and the capabilities of variable data.”

The 2007 Printing Ink Pioneer Award recipients are, top row from left, Christopher Bonk of INX International Ink, Sal Moscuzza of Superior Printing Ink and Dan Neese of Braden Sutphin Ink; and bottom row, from left, Diane Parisi of Flint Group; Anthony Renzi of Sun Chemical; Bill Curtin of Press Color; and George Sickinger of Color Resolutions International.

Mr. Kane noted that the number of printing establishments was at 37,673 in 1998, and had fallen to 31,790 by 2004. It is anticipated that the decline will continue, reaching 26,640 by 2010. He said that printers who focus on offset will have to redefine themselves.

“We see a technology shift in the printing industry similar to the way that offset replaced letterpress,” Mr. Kane concluded, estimating that 30 percent of printing will be digital by 2015.

Mr. Ortbach suggested that conventional printing will remain competitive, as improvements in technology have led to shorter lead times and run lengths.

The second session, held on March 28, featured a cross-section of experts, starting with Ian Baitz of Ryerson University in Canada, who discussed “Digital vs. Conventional: Opportunities for the Ink Maker in the Book and Publication Markets,” and Andrew Rosenau of book publishers Edwards Brothers, who talked about “The Life of a Title.”

Mr. Baitz suggested that digital technologies would be ideal for test marketing books at low risk, the using offset for the printing. The question is whet the crossover point is for digital and conventional technologies, with analysts falling between 1,000 and 3,000 copies.

Edwards Brothers is a major book publisher with $77 million in annual sales, and places an emphasis

On hand for Sun Chemical were, from left, Russ Henke, Maurice Carruthers, Ed Polaski, John Law, Dr. David Hill and Greg Lawson.

on “Life of Title.” Mr. Rosenau noted that studies show that 20 percent of book inventory is four years old, with only 10 percent of those books likely to sell A traditional book costs $2.25 to manufacture. Digital allows publishers to save money on inventory; the company’s two digital book centers specialize in run lengths of 25 to 300, with average quantity of 80. Digital printing reflects 30 percent of the company’s order volume and 9 percent of its sales.

“‘Just-in-Time’ inventory, not ‘Just-in-Case,’ will enhance margins,” Mr. Rosenau noted.

The ink industry was then the focus, beginning with Sean Skelly of Jetrion Industrial Marking Systems, who focused on “Convergence of Digital and Traditional Print.” John Law of SunJet spoke about “The Evolution of Digital Print,” and Roger Oberg of Collins Ink closed the conference with “Inkjet Innovations for Industrial Applications.”

Enjoying the convention were, from left, Flint Group’s Michael and Teresa Gannon and Diane Parisi and Gail Ward.

Mr. Skelly used the example of the convergence in the photographic market, where the silver halideprocess has been severely impacted.

“Digital first was an accessory, and then it complemented the process before replacing it,” Mr. Skelly noted. “Advances in one sector then migrate to other areas.”

“Entire industries don’t disappear without a trace,” Mr. Skelly added. “Change is a process.” He noted that labels and packaging offer good opportunities for inkjet.

The State of the Industry

The 2007 State of the Industry Report was presented by Mr. Miller and Rick Tolin of Noveon, and while the numbers were better than the year before, it would be a stretch to say that the ink industry has turned a corner. For example, the earnings before interest and depreciation (EBITDA) was 1.9 percent,

On hand for INX International Ink were Jim and Katrina Clendenning, Ken and Kristin Kisner, Georgia and Chris Bonk, Brad and Jeanne Kisner, Rick and Peggy Westrom, and Kitty and Rick Clendenning.

a sizable increase from last year’s paltry 0.9 percent, but still far below industry standards. The return on net assets (RONA) was 4.3 percent in 2006, up from 1.8 percent in 2005. The best news came for companies with sales above $50 million, where RONA increased to 4 percent compared to 0.2 percent in 2005.

Operating expenses per dollar of sales showed the impact of raw material and freight price increases. For every dollar of ink sold, ink manufacturers paid 59.8 cents for raw materials and 6 cents for freight. That contrasts to the average figures between 200-2005, where raw materials accounted for 53.1 cents per dollar of sales and freight 4.6 cents.

Overall, ink sales rose 4 percent by value, while volume of ink sold declined 2.1 percent. Indications from the printing industry show little growth ahead, a serious concern for ink companies.

“The forecast of lack of growth, whether its volume or sales, is a trend that has been going on for several years,” Mr. Miller noted.

Rudi and Nita Lenz of Sun Chemical.

“As usual, the industry was overly optimistic in its forecast, but I am pleased with the gains the industry has made,” noted Dave Frescoln, Flint Group CEO and NAPIM president. “However, 2007 is a concern considering the numbers being reported by our customers.”

Ault and Pioneer Awards

A major highlight of the annual convention is the Awards Banquet, in which NAPIM honors industry with the Ault Award and Printing Ink Pioneer Awards. Rick Clendenning, president and CEO of INX International Ink Company, received the Ault Award, the most prestigious award in the industry.

NAPIM also presented seven industry leaders with the prestigious Printing Ink Pioneer Awards during the conference:

• Christopher Bonk, vice president and technical director, sheetfed inks for INX International Ink.

Teresa and Mitch Baker of American Inks & Coatings.

• William Curtin, president, Press Colors.

• Salvatore Moscuzza, technical director and senior vice president, Superior Printing Ink.

• Dan Neese, product development manager, Braden Sutphin Ink.

• Diane Parisi, vice president, supply chain, North America, Flint Group.

• Anthony Renzi, director of technical, North America, Sun Chemical.

• George Sickinger, chairman, president and CEO, Color Resolutions International.

Overall, NAPIM officials felt the conference was strong.

Jutta and Winfried Gleue of Hostmann-Steinberg Printing Inks.

“I thought the convention went very well,” Mr. Coleman said. “The feedback from the program was excellent, as our members appreciated the emphasis on inkjet.”

“The presentations were excellent,” Mr. Frescoln said. “The ink industry has its work cut out for us in how we deal with the digital marketplace.”

“We achieved what we set out to do, which is give our members more knowledge about digital printing,” Mr. Miller added.