As a result, a completely new printing sector is being created which could require a different production and distribution structure among its suppliers, particularly ink makers.
After the disappearance of most of the state-owned printing companies, as well as many ink producers during the 1990s, much of the Eastern European printing market stretching from the German border through to the western areas of Russia has been served by ink companies based in Western Europe.
A lot of their customers have been small- and medium-sized printers who have used the opportunity of free markets to set up their own businesses.
Over the last few years, however, large printing operations in publishing and packaging have begun to be established. They are aiming not only to satisfy rapidly growing domestic demand but also to cater to export markets, especially in Western Europe, where they can take advantage of Eastern Europe’s relatively low labor costs.
“Eastern Europe is still a big opportunity for ink companies in Western Europe because it will remain an emerging market for at least a few more years,” said a marketing executive of a Western European ink company. “Not only are the economies in the east of Europe growing much faster than those in the west, but some printing markets are relatively underdeveloped.
“Countries in Eastern Europe are also becoming export bases supplying global markets,” he added. “We are not seeing comparatively small-scale investments in printing equipment any more but money going into some very large projects. The construction of big printing plants in the region will make a major difference to the market.”
Most bulk ink companies active in Eastern Europe supply the region from their mother plants in Western Europe. Most of these producers also have local plants, many of them secondary mixing units, to meet the requirements of specific customers,.
But the large printing enterprises now becoming a force within the region may not find these distribution channels adequate to satisfy their needs. They may soon want to be supplied from primary production plants in relatively close proximity to their premises.
Among the countries with the fastest expanding printing sectors are Russia and Poland. While much of the impetus in Russia comes from an enormous domestic market, both in terms of population and geography, the Polish sector is driven more by both the demands of a substantial domestic market and its ventures into export markets.
In Russia, big increases in advertising expenditure have triggered consolidation among Russian publishers and also attracted investments by Western publishing companies. Advertising revenue of newspapers and magazines at least doubled in two to three years in the early 2000s.
In order to obtain higher value through color advertising, publishers then started to invest in the modernization of their printing equipment. Pushkinskaya Ploshchad, a Moscow-based printer, last year installed two 48-page Goss Sunday presses to make it one of the largest magazine print houses in Russia with approximately 20 percent of the premium market for glossy weekly and monthly publications.
Prestige Vision Group (PVG), a Russian printer specializing in large format and outdoor advertising, has just enlarged its St. Peterburg’s site, where it already has computer-to-print (CTP) and large-format platesetter technology, with the introduction of a KBA 151cm x 205cm Rapida 205 press.
Multinational packaging companies like Mayr-Melnhof and Mondi have been establishing packaging and printing facilities in Russia to take advantage of a fast growing domestic packaging sector.
In Poland, Western packaging, publishing and printing companies, such as Bauer Verlags Gruppe and Amcor Flexibles, have also been setting up major operations in the country. RR Donnelley recently acquired full ownership of Poligrafia, the country’s third largest printer of magazines, catalogs, retail inserts and books.
Polish entrepreneurs have also been putting money into ambitious printing projects to exploit the strategic geographical position of Poland between not only the west and east of Europe but also between the Nordic countries and the Baltic states and the central and southeast parts of the region.
Tadeusz Winkowski, president and co-owner of Winkowski, one of Poland’s rapidly expanding printing companies, said that the country has the opportunity to be “the European printing center.” His company is investing €40 million ($48 million) in a new printing and logistics centre at Wyszkow, which will have six sheetfed presses, 12 heatset presses and three CTP systems.
Other similar printing complexes are being set up across Eastern Europe, some of them on the initiative of Western investors but many by local businesses. But the investment in modern printing capacity will be a long-term process.
There are, for example, a relatively small number of publication gravure presses—two in Poland, one in Slovakia and one under construction in Moscow. But there are many more packaging gravure plants, which is helping the development of an infrastructure of suppliers for gravure printing.
“The gravure presses arrive first, probably to be served by imported cylinders, and then the ink producers and cylinder engravers,” said George Battrick, technical coordinator at the European Rotogravure Association (ERA).
Ink Manufacturers In Eastern Europe
Sun Chemical has made the biggest inroads into Eastern Europe’s main bulk inks markets of offset, flexo and gravure. Like many other leading Western ink producers, it has been able to use as a platform for expansion well-established reputations of German affiliates in the area. Hartmann Druckfarben, its German subsidiary acquired in the late 1980s, was active in Poland as early as the 1930s.
“A major reason for our market leadership in Eastern Europe is that we moved in early after the market opened up, while we also gained from Hartmann being well known in the area,” said Gerhard Jaschek, Sun’s director for Central and Eastern Europe. “But we decided not to adopt Hartmann’s policy of using local agents and traders. Instead we do our own distribution, except for very small accounts.”
Sun Chemical’s expansion in Eastern Europe started with the establishment in 1992 of a small production unit in Hungary. It then took over the Russian ink maker Moscow Printing Inks, whose production plant has just closed down after taking over last year the printing ink business of Windstar in the Russian capital. The acquisition replaced Sun Chemical’s plans to build it own new plant in Moscow.
In Poland, Sun Chemical opened in mid-2003 a production facility with laboratories on a greenfield site at Marki, near Warsaw, to serve the local and neighboring markets.
Huber Group of Germany has, like Sun Chemical, a big presence in Poland with a logistics and production centre in Wroclaw and branch offices in Warsaw, Gdansk, Cracow and Szczecin.
It supplies the Polish market through a network of secondary mixing plants, supported by laboratory facilities at Wroclaw. “Well-equipped labs are the essence of mixing plants and monitor all production phases and develop different recipe variations,” says Janusz Cymanek, president of Michael Huber Polska. “Our archive of recipes and wet ink samples facilitates our work in the case of repeatable orders.”
Huber also said it accounts for more than half of Poland’s newspaper market, for which it transports ink from Germany by road tanker.
“We expect to be able to strengthen our position in the Polish and other Eastern European markets as a result of our recent alliance with Micro Inks of India,” said a Huber official. “Micro produces pigments and resins which will enable us to sell our inks at even more competitive prices.”
Huber supplies from its Wroclaw hubs neighboring Eastern European markets like that of Ukraine. The company also had marketing offices and secondary production facilities in countries such as Russia, the Czech Republic and Hungary.
Flint Group is reorganizing its Eastern European operations to integrate the secondary plants and sales offices of BASF Drucksysteme, ANI Printing Inks and Flint Schmidt from which the new company’s European activities were formed last year.
“Eastern Europe is one of our priority areas,” said a Flint executive. “Traditionally the region has been a market served by distributors. We have to set up a structure which enables us to sell inks to customers there under our own name so that we can pursue our own strategy in the area.”
With the exception of relatively new fledgling operations selling to the lower end of local markets, established indigenous Eastern European ink producers are comparatively uncommon. Torzhok Printing Inks, founded more than 40 years ago, is one of the few independent printing ink companies left in Russia, where it supplies flexo, screen, gravure and offset inks
Another of the few survivors is Budacolor of Hungary, which is celebrating its centenary this year and specializes in sheetfed offset inks. It was acquired by Toyo Ink of Japan a few years ago and then sold to Samor International of Italy.
“Besides ourselves there are only two other ink producers of any significance with Hungarian roots,” said Bolazs Megyeri, R&D and production manager at Budacolor. “ In our domestic market we gain from being one of the few local producers.”
Budacolor believes the Hungarian sheetfed market has been growing by over 20 percent in recent years, although it expects a slowdown this year. Such growth rates are typical of local Eastern European markets. The region still has some way to go before it catches up with the per-capita consumption levels in printing products of its western counterpart.