The Publication Ink Market
The publication printing market has suffered through the recession, and ink manufacturers anticipate that further challenges are in store in 2010.
By David Savastano
Generally speaking, the publication market has fared the worst among the major printing sectors during this global recession. Newspapers have suffered from both readership declines and an advertising slump, and some newspapers (Christian Science Monitor, Seattle Post-Intelligencer, among others) have suspended their printed issues in favor of becoming exclusively online.
Printers are also being impacted by the economy. In the largest example, World Color Press, previously known as Quebecor World, just came out of bankruptcy.
Dennis Sweet, vice president, product management, publication inks for Sun Chemical, said that the publication printing market worldwide has struggled considerably in 2009.
“During the recent economic downturn, print advertising revenues have declined,” Mr. Sweet said. “This decline has come on top of the decline print advertisers were seeing as more advertisers move to take advantage of online advertising and social media. We have seen a variety of publications, some with long histories in the marketplace, be discontinued; and those publications that have survived, we have seen a decrease in the number of printed pages.
“In response, we have revisited our operating plans for this year and recast them in view of more recent volume projections,” Mr. Sweet added. “We will have to intensify our cost reduction efforts by tightening our belts even further. Simultaneously, we are raising our focus on the customer by helping them grow their businesses and succeed. That means working for our customers everyday to further improve our performance on the essentials of our business such as reliable, on time delivery, consistent product quality, and investment in research and development.”
“The global publication market in line with other ink segments faced a challenging year, with markets down in comparison to the previous 12 months,” said Peter Baird, marketing manager, Flint Group, Print Media Europe. “Increases in raw materials, currency volatility and decreased demand all created difficulties for the industry.”
“This decline in market demand was particularly evident within the newspaper market,” said Norm Harbin, vice president business and technical development, Flint Group, Print Media North America. “The economy greatly affected newspapers, as well as other media – such as TV and radio – that depend on advertising for their primary source of revenue. This situation has also been compounded by digital media competing for a slice of this same revenue, resulting in increased competition.”
“The economic downturn led to a dramatic decrease in sales and volume in Europe, where Siegwerk is represented in the publication business,” said Dr. Peter Heimerzheim, director corporate communications, Siegwerk Druckfarben AG. “In publication gravure, for example, the European market is down by approximately 25 percent compared to last year.
“Normally, the last quarter is the strongest time in the European publication business with the highest demand in ink,” Dr. Heimezheim added. “It is too early to get a clear picture if these mechanics will work also in these times.”
“The publication market in Southeast Asia and West Asia, including for heatset and gravure, is smaller in market scale than that of Europe, the U.S. and Japan,” said Yu Adachi, corporate communications for Toyo Ink Mfg. Co., Ltd. “The market in 2008, as a whole, remained sluggish due to the impact of the worldwide economic slump. The market for high-end print material for export, such as catalogs, has slowly rebounded. We’ve seen a speedier recovery in high-end printing of catalogs and the like than in the publication sector.”
The heatset and gravure markets have been hard hit by the recession.
“The past year has proved to be most challenging for the publication heatset printing and ink market,”
Mr. Sweet noted. “The soft demand for publication print and fluctuating raw material costs have been the primary concerns in the industry.”
“Heatset did a little bit better compared to publication gravure and coldset, but the times of permanent growth are gone for the moment,” Dr. Heimerzheim noted.
“The heatset market, as with other segments, was significantly down as a result of the financial difficulties,” Mr. Baird noted. “We do expect to see a modest recovery moving forward. However, it could be some time before we reach the same levels witnessed prior to the market downturn in 2008.
“The gravure market was also not immune to the financial difficulties and witnessed a decline in market volume when compared to 2008,” Mr. Baird said. “This was mainly driven by significant cuts in advertisement spend and a major drop in the catalogue business. Looking forward, we would hope to see this business recover slowly from this low point, and expect this to happen primarily in the magazine and inserts/brochures market. However, overcapacity, increasing costs and lower print runs do continue to put pressure on margins and remain a constant threat for the gravure industry.”
Liz Scherer, director, publication gravure technology, Sun Chemical, said that 2009 presented a challenging business year for the publication gravure printing industry.
“Advertising is the engine which drives most publication printing, and newspaper insert advertising makes up a significant part of the publication gravure print work,” Ms. Scherer said. “The economic downturn, combined with the struggling newspapers and other publications, and the poor health of many retailers, have all contributed to the challenges of 2008 and 2009. We expect these challenges to continue in 2010.”
Mr. Sweet said that Sun Chgemical does not expect a rapid turnaround in any of the publication sectors. “The challenges of newspapers and other publications and the poor health of many retailers because of the economic downturn will likely continue in 2010,” Mr. Sweet said. “Sun Chemical, however, will continue to work for our customers everyday to further improve our performance on the essentials of our business to ensure we are part of their future delivering quality, service and innovation.”
New Technologies for the Publication Market
New technologies remain critical to the success of ink manufacturers.
“Flint Group has strived wherever possible to maximize on our capabilities and improve upon efficiencies to provide real tangible benefits to customers, not least through continuous innovation, consistent quality and exceptional value,” Mr. Baird said. “We believe that innovation is more than important – a key ingredient to our future success, particularly in these difficult market situations. We continue to work hard to explore new technologies to support printers in their innovative approaches to attracting advertisement through the use of novel substrates (high brightness, varying shades) to differing ink demand (larger color gamut, metallic shades, fluorescents, fragrance scented inks, etc) as well as the development of new technologies such as energy cured newspapers (heatset and UV) and waterless printing to enable semi-commercial quality output.
“One of the key highlights from 2009 within Europe has been the launch of PremoKing, a new heatset ink series providing more print efficiency to our customers,” Mr. Baird noted. “Further heatset concepts are being developed and will be communicated when the market launch is ready. The biggest challenge facing newspaper printer today is to drive quality and process improvement to meet an increasing demand on cost efficiency and also on consistent high quality. To meet this we as a supplier not only have to offer high quality products but we also offer our services in printing process improvement. Flint Group is in a unique position to offer the cross-fertilization of printing technologies as a result of the Print Media organization where all print industry competences are under one umbrella organization.”
Mr. Adachi stressed Toyo Ink’s emphasis on environmentally friendly products.
“The Toyo Ink Group is developing a wide variety of LED-curable inks and environmentally friendly products using vegetable-based ingredients,” Mr. Adachi said. “In particular, for vegetable-oil ink systems such as palm oil ink in Malaysia and rice ink in Japan, we are developing products made with materials readily available in the local environment from the viewpoint of local production for local consumption. Moreover, Toyo Ink continues to produce inks in the Asian region that meet the safety and quality criteria of Europe, the U.S. and Japan.”
The Challenges Facing the Global Newspaper Market
The news ink market has probably suffered the worst of all the publication segments, as circulation and ad pages decline while some major newspapers cling to life.
Todd Wheeler, marketing manager, US Ink, said that the challenges facing the newspaper industry are well documented.
“News ink volume has been significantly impacted by the decline in newsprint consumption over the last decade,” Mr. Wheeler said. “This volume decline has been accelerated by the current recession along with intense competition for advertising dollars. Newsprint consumption in the U.S. has decreased by approximately 57 percent from 2000 to 2009.”
“The economy has been devastated as a result of the global recession,” said Norm Harbin, vice president business and technical development, Flint Group, Print Media North America. “Traditional industries that utilize newspapers for their advertising needs were hit especially hard. This includes sectors such as automotive, housing, financial, employment and retail business. We do, however, see signs that this decline has now leveled off in the past few months.
“An historic ‘sacred rule’ that newspapers printed their own product has changed, as newspapers realized they are really in the news gathering and dissemination business,” Mr. Harbin added. “As a result, significant consolidation has taken place in printing newspapers, and considerable cost savings have been achieved by maintaining fewer facilities that are more productive with longer press runs. This is helpful to the ink industry, as larger quantities of ink can be delivered to fewer locations, helping reduce freight and delivery costs. When the national economy eventually recovers, and confidence is regained in each of these sectors, improvement in advertising and the health of the newspaper business will inevitably improve.”
European newspaper publishers also suffered from the economy. “Unfortunately there are no clear positive signs in the moment,” said Dr. Peter Heimerzheim, director corporate communications, Siegwerk Druckfarben AG. “The coldset market was weak in the second quarter; we hope that the last quarter will show up with some first light at the end of the tunnel.”
However, Yu Adachi, corporate communications for Toyo Ink Mfg. Co., Ltd. said there was some good news in the Asia-Pacific region. “As newspapers in countries such as Malaysia and the Philippines sport full-color pages, the news ink market saw smaller declines in demand relative to the publication sector,” said Mr. Adachi. “Moreover, news ink demand in India has been on the rise.”
Mr. Wheeler did add that there are several positive signs for the news ink market.
“The Newspaper Association of America (NAA) has reported that more than 104 million adults read a printed newspaper everyday, and more than 115 million on Sundays,” Mr. Wheeler noted. “That’s more people than those that watch the Super Bowl (94 million), American Idol (23 million) or that typically watch the late local news (65 million).
“Additionally, 61 percent of 18 to 24-year-olds and 25 to 34 year-olds read a newspaper in an average week, and 65 percent of them read a newspaper or visited a newspaper website in the past week,” Mr. Wheeler added. “The NAA report says that newspapers, as individual businesses, by and large remain profitable enterprises with operating margins that Wall Street analysts estimate will generally average in the low- to mid-teens during 2009. While that may be down from historical highs, such margins would be the envy of many other industries today.”