The flexo ink market continued to post strong growth in 2006. Despite challenges posed by rising raw
Gleukos Performance Beverage, produced by Ampac Flexibles, a division of Ampac Packaging, received the Flexible Packaging Association’s 2006 Highest Achievement Award Winner in Packaging Excellence as well as a Gold Award Winner in Printing Achievement. The Gleukos custom stand-up pouch is the first performance drink package designed to mold to the body when placed in an athletic apparel pocket.
“The flexo market had a very strong year in 2006 as the market continues to grow in capability and capacity,” said Daniel McDowell, president–NAFTA region, Siegwerk. “Siegwerk continued to experience strong growth in the flexo market. We expect continued consolidation of converters.”
“2006 was a good year for flexo. We saw a number of new press installations throughout the year,” said Michael Impastato, vice president, business development for Flint Group – Packaging Division. “It appears the growth of flexo is comparable to the growth of packaging, and printers are finding that they can upgrade their operations and increase productivity. Although we see productivity improvements in other printing methods, the productivity improvements in flexo are more significant.”
“Speaking for Wikoff Color, the flexo market fared very well in 2006,” said Jim Freid, product manager, fluid inks and aqueous coatings for Wikoff Color. “We saw good overall growth in our sales, primarily but not solely due to the introduction of new performance-based products in the flexible packaging markets.”
“We think 2006 was a good year,” agreed Perry Auton, president of Fluid Sciences, Inc. “In the markets we serve it was a good year. Most printers were busy.”
“From our viewpoint, the flexo market was strong in 2006,” said Scott Reese, vice president of sales at Premier Ink Systems. “Most of our flexo customers are near capacity and growing.”
Outside the U.S., there are a number of emerging markets that offer exciting opportunities for flexo.
“We are absolutely sure there is growth potential in other regions throughout the world,” said Mr. Auton. “We have discussed possibilities with parties in areas ranging from China to Africa.”
“Despite global GDP progress in 2006, Siegwerk has experienced above average growth coming from developing markets such as India and Russia,” said Gilles Faure, director of marketing – paper, plastics and labels, Siegwerk. “Siegwerk has been able to broaden its scope within 37 countries worldwide.”
“Our sales growth outside of the U.S. and Canada has been steady, but not up to our expectations,” said Mr. Freid. “We are exploring all opportunities as they arise, either via direct sales or through qualified distributors. However, a significant percentage of export contacts are simply looking for lower pricing without regard to our capabilities to supply consistent, value-added performance-based products.”
Besides emerging global markets, there are numerous other opportunities for growth. Flexible packaging and labels are key areas driving flexo’s growth, although growth opportunities exist in smaller niche markets as well.
“Flexible packaging will continue to be the growth driver,” Mr. Impastato said. “Flexible packaging provides good solutions to today’s needs, very good quality print on packaging which has a low package-to-product ratio, along with good barrier properties for a wide variety of applications.”
“Wikoff is anticipating continued opportunities in flexible packaging, folding carton and narrow web labels, with flexible packaging and labels expected to lead our flexo growth in 2007,” said Martin Hambrock, vice president Canadian operations and flexible packaging products manager for Wikoff Color.
“Flexible packaging and labels offer the most opportunities for Siegwerk within the U.S.” Mr. McDowell added.
Innovations in food packaging are also driving growth. “We see the food packaging/container segment having good growth opportunities in 2007,” said Mr. Reese.
“Initiatives related to packaging reductions, along with changes in consumer demands, are expected to have a significant impact on the flexible packaging and narrow web markets,” said Jeff Ashburn, vice president sales and marketing, Graphic Sciences.
In addition, companies reported that specialty niche products offer a number of growth opportunities.
“Security products are being requested more and more,” said Mr. Auton. “Overall, specialty products will offer opportunities for growth.”
Solvent, Water and Digital
The consensus among ink manufacturers seems to be that although there is a place for solvent-based flexo inks, it does not present a threat to water-based flexo inks.
“Although solvent-based flexo ink sales are strong, we have not seen any detrimental effect on the water-based flexo market,” said Mr. McDowell. “Some customers are discussing the cost advantages of printing solvent instead of water, but we have not seen any movement by them yet.”
“We don’t see solvent-based ink growing,” said Mr. Auton. “While there is a market, regulations, shipping and storage hamper growth. We occasionally see substrate and end use requirements that need solvent-based. However, there is continuing progress occurring in the water-based and UV inks that can replace solvent-based ink.”
“We still believe there is a healthy demand for water-based inks even though solvent-based inks appear to be growing in demand as well,” Mr. Reese noted.
“The market segments we serve have not been notably impacted by migration to solvent-based products,” said Mr. Ashburn. “We still find that the safety and environmental benefits of water-based flexo inks, coupled with the continued development of new water-based technologies, continue to make water-based inks the preferred choice for our core markets.”
Still, solvent-based inks have advantages. “For certain wide web applications, such as high speed, high quality flexible packaging printing on plastics, the water-based technology simply has not been able to meet the demands of the end user for both speed and graphics,” said Mr. Hambrock.
“The shift between solvent and water technologies has stabilized,” Mr. Impastato said. “We no longer see many printers making that change. Solvent inks have grown over the last couple of years because the markets supported by solvent inks have grown. I don’t think we will see much business cannibalization between the technologies. Where water is used, it fills a technical and business requirement. Solvent inks will not seriously encroach on these markets. There are some marginal areas where solvents can take some water volume, but that will be limited.”
With its increased popularity, digital technology has made some inroads into markets that are traditionally dominated by flexo.
“Digital technology has and will continue to earn its place in markets traditionally dominated by flexo printers,” said Mr. Ashburn. “The benefits of digital printing in high-end, short-run applications have been well proven. However, the challenge still exists in meeting the demands of the high-output printer.”
“Digital is making some progress, but only in very short run jobs,” said Mr. Auton. “It has a long way to go to affect most flexo markets because of speed. We have seen digital being more complementary to the offering of the flexo printers than a cannibal of existing products.”
“At this point, digital technologies have had minimal impact on the flexo market,” said Mr. Reese. “We do not believe, in the near future, the digital technologies will have a greater effect on the flexo process.”
“They appear to be impacting on the very short-run, special niche markets,” said Mr. Hambrock. “To date we have not seen any significant impact on wide web or narrow web flexo markets.”
According to Mr. Hambrock, besides digital printing technology, a more disruptive technology has emerged over the past few years to compete with the wide web flexo printers.
“VSOP, variable speed offset presses, offer variable repeat combined with the flexibility to print a wider range of papers, board, aluminum foils and plastic films on the same press by quickly changing either/or the print and blanket cylinders,” Mr. Hambrock noted. “As the economic advantages of flexo have eroded with respect to gravure and offset due to the increasing costs of the flexo presses, pre-print, plate and anilox developments, to support the higher graphics demands, it remains an open question how this offset technology will impact the flexo marketplace.”
Besides the challenges rival technologies pose to flexo’s growth, rising raw material and energy costs continue to plague the industry. It has become essential to pass on some of these added costs.
Customers that were once resolutely resistant to price increases are beginning to realize they are necessary in order for a company to remain viable.
“Price increases are always difficult, but most of the increases in the past two years have been directly related to higher oil and energy costs, which confront all businesses,” said Mr. Freid. “Most people as consumers can relate to it on a personal basis, which has changed the market’s price expectations based on global commodity pressures. So, for these reasons, the increase have been easier to pass along than in the past.”
“For the most part, customers have been accepting of the changes that ink manufacturers have been facing due to continual rising of raw material costs,” said Mr. McDowell. “Price increases are difficult on all customers, which is why Siegwerk continues to strive to provide value through process cost savings not only at the customer level but also within its own processes and formulations.”
“Raising prices is always the last issue we want to discuss with customers, but at times it must be done because of our increased costs,” said Mr. Reese. “Many of our customers realize that Premier offers more than just price with our products. We provide customers total value which not only includes good economics but also a quality product with great support to their printing process.”
“Increasing prices is always taboo, and no one wants to hear ‘price increase,’” said Mr. Auton. “Making adjustments; that’s business. We’ve made adjustments with little resistance and improved efficiencies that helped minimize other increases.”
Meeting Customers’ Needs
Keeping customers satisfied and delivering a product that meets its needs is a prime concern. Flexo ink manufacturers are continually challenged to provide the most innovative products to meet increasing demands.
Maintaining open lines of communication to find out the most important issues affecting printers is an important part of delivering the best possible product.
“There is definitely an increasing demand from customers. We see this as an opportunity, not an obstacle,” said Mr. Auton. “A key component to any company’s success is communication with its customers. Understanding a customer’s needs and being a part of the information chain instead of being the last to know helps to alleviate the instant response burden. We meet our customer’s demand with an approach of total involvement in existing and new processes.”
“Excellent communication is very important to our customers,” said Mr. Reese. “Our sales and technical people meet face-to-face with our customers on a regular basis. By listening to our customers and being proactive, we respond to our customer’s increasing demands with a quality product at an economic price along with the proper support from our organization.”
“Foremost to Wikoff's growth, we must better understand the customer’s print, conversion and end-use requirements, and communicate these requirements from the field sales personnel to the technical departments,” said Mr. Hambrock. “This will ensure that we are providing the most suitable, versatile and economical products to meet or exceed the customer’s expectations. A competently trained sales force with very knowledgeable technical service personnel is a very high priority within Wikoff Color, and we regularly update both groups with the latest technology developments.”
Flexo ink makers are meeting the demands of its customers by developing and improving on technologies.
“Of particular note is the continuing evolution of pH-neutral technology and the benefits these products provide to high output printers,” said Mr. Ashburn.
According to Mr. Freid, digital plate technology continues to drive the high end graphics applications for flexo. “As flexo expands into traditional gravure and offset print markets, more and more printers are moving to this technology along with fine line aniloxes and plate screens to address the customer’s needs,” he added.
“The entire process is continuing to improve,” said Mr. Auton. “Ink, anilox and plate manufacturers are working to continue the evolution of the flexo process. There have been surges in each of the mentioned processes within the last several years that have improved the flexo printing process. Digital plates, improved anilox cell structure and inks that are more user-friendly have contributed to improvements in the process.”