NAPIM Convention Examines State of Ink, Printing Industries

By David Savastano, Ink World Editor | 05.18.06

Ink customers are coping with fundamental challenges, raw material and operational costs are rising and margins are becoming even tighter

The printing ink industry is facing dramatic changes. Its customers are coping with fundamental challenges, raw material and operational costs are rising and margins are becoming even tighter.

With that in mind, the National Association of Printing Ink Manufacturers (NAPIM) examined some of the forces impacting the ink industry at its 2006 Annual Convention.

The convention, titled “Strengthening Your Link in the Value Chain,” was held March 19-23 at LaCosta Resort & Spa, Carlsbad, CA. It focused on a wide variety of topics, from petrochemicals to commercial and packaging printing.

The opening session clearly illustrated the financial problems facing the printing ink industry. The State of the Industry Report, presented by Jim Leitch of Braden Sutphin Ink and Rick Tolin of Noveon, showed that the margins continue to suffer for ink manufacturers. While ink prices rose 2.5 percent during 2005, higher raw material costs and operational costs outpaced those increases.

As a result, the earnings before income taxes and depreciation (EBITDA) for the ink industry was 1.4 percent, down from 3.3 percent in 2004. However, when broken down by company size, the numbers were more stark: ink companies with sales of below $50 million had a EBITDA of 6.0 percent; ink manufacturers with sales of higher than $50 million had EBITDA of a paltry 0.7 percent. Meanwhile, return on net assets (RONA) fell from 7.6 percent in 2004 to 2.9 percent last year.

Operating expenses as a percentage of sales is also indicative of the tough times the ink industry is facing. On average, from 2000 to 2004, the ink industry spent 52.1 percent of its sales on raw materials. In 2005, industry leaders reported that figure went up to 58.8 percent.

NAPIM presented its Printing Ink Pioneer Awards to, from left, Andrew Matthews and Mike Impastato of Flint Group; Kramer Ink’s John Treece; and Gary Reniker of INX International Ink. Roy Newstead of Sun Chemical Canada is not pictured.

Joining NAPIM executive director Jim Coleman, third from left,  are fellow Ault Award recipients Cal Sutphin of Braden Sutphin Ink; Jimmy Sutphin, former NAPIM executive director; Harvey Brice of Superior Printing Ink; Mike Murphy, formerly of Sun Chemical; and Urban Hirsch III of Ink Systems.

“I realize this information is of huge use for our making our case to our customers,” said Dave Frescoln, CEO of Flint Group and NAPIM president. “We think it is pretty indicative of what we are seeing. There is ample room for industry improvement.”

Challenges for The Ink Industry

The March 21 session featured four talks that served as warnings for the ink industry.

Paul Graves, vice president, investment banking for Goldman Sachs, opened with a discussion on Wall Street’s Perspectives on Raw Material Price Environment for Specialty Chemicals Producers.

Noting that commodity pricing is at an all-time high, Mr. Graves discussed the impact of oil prices on many aspects of the chemical market.

“Oil prices impact decisions on cracking chemicals, and the declining emphasis on petrochemicals by the Western oil companies such as Shell, BP and Total has led to a different dynamic,” he said. “Unlike past cycles, we believe that Asian and Middle East producers will likely lead the new wave of investment. There is pressure to reinvest and incentive to add capacity, but additional capacity is likely to impact Asian-based customers. The U.S. will likely see increased price volatility.”

On hand for Flint Group are, from left, Craig Foster, Mike Impastato, Dave Frescoln, Diane Parisi, Ron Gallas, Andrew Matthews and Michael Gannon.

Sun Chemical’s David and Rosanne Hill and Gerda and Michael Griem.

“Specialty chemical companies should focus on earnings rather than revenue growth, which is a key differentiation on valuations,” Mr. Graves said. “We are beginning to sees some discipline in specialty chemicals, where people are walking away from business and market share, and public valuations have not suffered as a result of losing share.”

Next up was Dr. Joe Webb, partner of Printforecast.com and president, Strategies for Management, Inc., who talked about “Commercial Printing and Its Changing Environment.”

“We have lost $30 billion in commercial sheetfed shipments,” Dr. Webb said. “There are 1,000 commercial printers closing shop every year. We forecast there will be $4 billion lost in shipments this year. The industry could lose half by 2010, and needs contingency plans.”

George Gialenios, CEO, J.W. Fergusson, focused on “Packaging Printing and Its Changing Environment,” as consumer product companies (CPC) face increasing pressure from large retailers.

“Cost, quality and service are considered a given, or you don’t even get invited to bid,” Mr. Gialenios noted. “Printers must have multiple printing technologies. Oversupply has led to a lack of pricing control and reduced margins at a time where investing in new technologies is required.”

Because of this, printers are looking for more from their suppliers. “Vendor reduction is necessary,” he said. “Vendors must have ability to support packaging providers as they grow, with multiple manufacturing locations, products and processes.”

INX International Ink’s Yassan Hashimoto, Hiroshi and Yoshiko Ota, Gary and Pat Reniker, Rick and Peggy Westrom, Rick and Kitty Clendenning and George Polasik.

Siegwerk Ink’s Kent and Hasu Shah, Herbert Forker, Jyoti Gidvani, and Lori and Dan McDowell.

Anne Johnson of the Green Blue Sustainable Coalition closed the session with “Sustainability: Opportunity in the Marketplace.”

“We need to be cradle-to-cradle, designing materials and engineering recovery systems,” she said.

That evening, the annual black-tie Ault Award Dinner honoring ink leaders for their years of service was held.

NAPIM executive director Jim Coleman received the Ault Award, the industry’s most prestigious award, while Printing Ink Pioneer Awards were presented to Michael Impastato, vice president of market development for Flint Group North American Packaging; Andrew Matthews, technical director for Flint Group’s publication division; Roy Newstead, general manager of Sun Chemical’s liquid ink operations in Canada; Gary Reniker, safety director for INX International Ink Company; and John Treece, general manager of Kramer Ink’s news ink division.

The third day featured “Unlocking the Power of Business Creativity,” a session held by Dr. Tom McDonald, an internationally known speaker. The convention closed with the Suppliers Party, “Game Nite,” and a Habitat for Humanity project on March 23.

Overall, NAPIM leaders were happy with the convention.

“I thought the convention went very well, although the turnout was down a bit,” said Mr. Coleman. “The program feedback was very good.”

Next year’s NAPIM Convention will be held at the Fairmont Hotel in Bermuda from March 24-28. For information, contact NAPIM at (732) 855-1525.

Scenes from the NAPIM Convention

Tak and Yukari O’Haru and Kathy and John Copeland of Toyo Ink America.

Michelle and George Sickinger of Color Resolutions International.

Fujifilm Sericol’s Jerry and Irene Avis and Joan and Ed Carhart.

Jeff and Liz Koppelman of Gans Ink & Supply.

Kramer Ink’s Chan and Dyane DeKramer, Dorothy and John Treece and Debby and Jim Baker.

Apollo Colors’ Larry Bykerk, Nancy and Patrick Carlisle of Joules Angstrom U.V. Printing Inks, and Kris Bykerk.

Kathy and Mike Gettis of Colorcon, No-Tox Products.

From left, Teresa and Mitch Baker of American Inks & Coatings, and Ron Gallas of Flint Group.

From left, Winfried Gleue of Hostmann-Steinberg Printing Inks, Inge Baecker and Kent Wishart of Graphic Sciences, and Aileen and Ralph Marshall of Colmar.

Standing, from left, Evan Weissglass and Steve Smith of Magruder Color, Cal Sutphin of Braden Sutphin Ink, and Jeff and Liz Koppelman of Gans Ink & Supply; and seated, from left, Christina Greenlaw and Urban Hirsch III of Ink Systems, Sandy Sutphin, and Harvey and Lorie Brice of Superior Printing Ink.

Alan Kalmikoff of Keim Additec and Rick Tolin of Noveon Ink Additives.

Web Extra - More Photos from the NAPIM Convention