While companies are somewhat optimistic that the U.S. economy has turned the corner, there are still major concerns about prices, particularly as energy costs remain high. For vehicle and varnish manufacturers, collaborating with their customers to develop new products remains the best way to move forward.
Role of Varnishes And Vehicles
The importance of vehicles and varnishes to ink formulating can not be overstated. “The vehicle is the major component of the ink and provides the performance needed for a particular substrate or finished result,” said Alex Williamson, Noveon’s business director. “It carries the pigment and other components to the substrate as well as providing the physical characteristics required (gloss, adhesion, print quality, etc.)
“Varnishes are overprints that improve the look, feel and durability of many different types of print jobs,” Mr. Williamson said. “Printers have come to prefer the advantages of aqueous coatings over conventional oil-based overprint varnishes. Like overprint varnishes, aqueous coatings can be run in-line. Unlike overprint varnishes, aqueous coatings dry very quickly, enabling the printer to expedite the printing process through the pressroom. Noveon offers the graphic arts industry fully formulated blend vehicles for specific applications including surface ink systems, laminating ink letdown vehicles and ready-to-use vehicles for paper applications. Noveon’s Algan Coatings line offers printers and ink makers water-based formulated products for a variety of applications.”
It is essential for vehicle and varnish manufacturers to work closely with their customers to create innovative products.
“Printers and ink companies are looking for reliable, trouble-free systems that will have forgiving water-window capabilities,” said John Jilek, president-again of Ink Solutions LLC. “The varnish must provide the key printing characteristics of the ink. The vehicle supplier must listen to the needs of the ink maker and work closely with them to obtain the goals of the printer.”
Considering the importance of vehicles and varnishes to ink manufacturing, it comes as no surprise that ink companies are seeking improved properties that will help their formulations.
“Ink companies are looking for the lowest cost varnishes that perform every bit as well or better than their current systems,” said Joe Mele, national sales manager for Var-Chem Products. “The impetus is on us, the raw material supplier, to ‘think outside the box’ to fulfill this requirement. Var-Chem has spent a great deal of time and resources globally searching for raw materials and partnering with current suppliers to achieve this goal.”
Another area of interest is reducing inventory.
“The most recent trends for the ink vehicles and varnishes are low cost, low odor and products that can run on a variety of substrates keeping inventories down,” said Mr. Williamson. “From the varnish end, we see more ink jet and laser jet printable coatings possibly due to people using more ink jet printers to put a date stamp or product ID stamp on the package.”
“Ink companies are looking for economy and raw material consolidation, e.g. a low cost, universal varnish that will permit one varnish to take the place of several,” said Guy Trerotola, Eastman Resins’ business director for commercial sheetfed offset for varnishes.
There is always pressure to keep prices down as ink companies wait for a much-needed recovery for the printing industry to begin. However, for vehicle and varnish manufacturers, keeping prices down in the face of high crude oil prices is difficult at best. With crude oil prices reaching into the mid-$30s, thus leading to higher energy and feedstock costs, vehicle and varnish suppliers are looking at their own costs and prices.
“Price competition is still intense,” Mr. Williamson said. “At the same time, our industry is facing significant cost pressure related to the escalating energy and petrochemical feedstock costs.”
“Raw materials are increasing across the board, including oils and resins,” Mr. Jilek said.
Vehicle and varnish suppliers find that passing along energy and feedstock price increases to their customers is challenging, and they have had to live with lower profit margins as a result.
“At Var-Chem, our raw material costs have and continue to increase, “ Mr. Mele said. “However, our selling prices have had to remain constant and in some cases decrease. This, of course, means we have had to accept lower profit margins to maintain and generate business.”
“Raw material costs continue to rise and outpace the ability to recover costs through price increases,” said Mr. Trerotola.
In some cases, manufacturers are discontinuing certain raw materials, which is further impacting vehicle and varnish manufacturers.
“Along with every thing else, vehicle raw materials tend to be increasing,” said Rick Tolin, vice president of sales and marketing at Carroll Scientific. “More concerning is the fact that some raw materials are being discontinued or phased out due to a variety of reasons.”
Thoughts on 2004
Even with the threat of further energy price increases, vehicle and varnish manufacturers are somewhat optimistic that better times lay ahead for their business.
“2001 and 2002 had a debilitating effect on the printing industry as a whole, with significant losses in sales and profits,” Mr. Williamson said. “The last quarter of 2003, though, saw the economy in the early stages of a substantial and sustainable upturn, with profit levels returning to normal levels. Noveon realizes that product innovations that result in superior performance or cost advantages are the best means of providing significant value to the end-users. This is especially true today when many industrial markets are flat or where slow growth and excess capacity are commonplace. We are expecting to introduce several new vehicles to the ink market this year.”
“Like everyone else in our industry, we are cautiously optimistic that 2004 will be a more prosperous year for our industry,” Mr. Mele said.
“We are very optimistic for 2004,” Mr. Jilek said. “The economy seems to be turning around. There are excellent predictions for more print advertising, as 2004 will be an election and an Olympic year, which should add to the positive momentum.”