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North of the Border



A weak Canadian dollar hasn’t prevented Canadian ink companies from reaping the benefits of a growing industry. Companies are reporting strong gains across the industry, whether it be flexo, sheetfed, litho, gravure or specialty inks.



By Jenn Hess, Ink World Associate Editor



Published September 2, 2005
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The ink market in Canada is alive and well, and in the midst of a period of steady growth. Companies large and small are vying for key marketshares, particularly in Toronto, Quebec, Montreal and British Columbia. In order to remain a major player in the industry, companies of all sizes continue to jockey for position in an industry that promises to become more and more competitive.

“Most regions in the country are growing, and we see the ink industry continuing to grow at a rate which exceeds the gross domestic product nationally,” said Wayne R. Burroughs, president, Sun Chemical Limited.

Jack Nace, executive director, Canadian Printing Ink Manufacturers Association, also said the Canadian ink industry is strong. According to the CPIMA, there was a 6.8 percent increase in sales in 1997, and a 6.3 percent increase in 1998, Mr. Nace said. To date, 1999 sales are increasing about 7 percent over 1998.

Winfried Gleue, president, Hostmann and Steinberg, Toronto, attributes some of the industry’s growth to new sales in the U.S. “More and more printers are doing business across the border,” Mr. Gleue said. “We expect to see continued growth. There is more and more activity in the industry.”

Despite the country’s vast size, the ink market is very concentrated, which is illustrated by the location of a number of the country’s major ink companies being located in and around Toronto. “Ontario is the largest ink market,” Mr. Burroughs said, “followed by Quebec and then British Columbia.”

Adrian Diamond, Flint Ink Corporation’s vice president of the central region, said about half of the company’s Canadian sales are done within the greater Ontario area.

“Colmar’s business is mainly in southern Ontario/greater Toronto area with some in Montreal,” said Ralph Marshall, president, Colmar Inks, Rexdale, Ontario. “The ink market is much more concentrated here than in the rest of Canada. The market appears to be growing, and the competition is getting tougher.”

 

Business is Booming
Sun Chemical Limited, a producer of inks for all printing processes, holds onto the top spot in the Canadian industry with a substantial market share, according to Mr. Burroughs. In order to stay atop the industry, Sun has branches across the country. “We have positioned ourselves closely to every major ink market in Canada,” Mr. Burroughs said.

Despite Sun’s size, other ink companies are also reaping the benefits of a growing market.

Flint’s sales have also been growing, Mr. Diamond said. “Our sheetfed and web lines are doing very well,” he said.

Hostmann & Steinberg, the market leader in sheetfed inks, has reported steady growth over the past two to three years. “There have been some solid growth rates in the litho and offset markets for us,” Mr. Gleue said. A new sheetfed printing process line, Alpha Reflecta HiT, has just been introduced by Hostmann-Steinberg. “This is another step forward for us, offering our customers another quality improvement,” said Mr. Gleue. “We try to come up with the technical solutions and innovations that improve our quality levels and assist our customers to grow so that we will grow.”

Mr. Marshall said Colmar has also enjoyed yearly sales increases. The company has recently begun to invest in high graphic water-based inks. “This has been the area where we have seen the most growth,” Mr. Marshall said. “We moved into this area last summer, and have been quite successful with a few accounts.”

Even though Colmar’s specialty is corrugated inks, it has added a water-based coating for flexo and litho inks, a new series of sheetfed litho inks which print on difficult stocks and a water flexo water-based simulated gold. “Water-based metallics are notorious for a short shelf life,” Mr. Marshall said. “Our product has an extra long life, good luster, and looks like a gold.”

Kromacorp, Prescott, Ontario, the largest independent Canadian ink manufacturer, has also been active on the metallic inks scene. “Kromacorp has continued to expend significant R & D resources to expand its metallics range,” said Hamish Somerville, president and CEO. New from Kromacorp is Kromasheen-Ultra, a very bright metallic ink that can eliminate the need for hot foil stamping from the packaging process. According to the company, Kromasheen-Ultra simulates foil stamping through its superior brightness and density properties. “Like Kromasheen, Kromasheen-Ultra retains the integrity of conventional inks, can be used in-line, and can be adapted to custom requirements for gravure and flexo,” Mr. Somerville said. This new product can be used on a broad range of substrates, is available in a variety of shades and is recyclable.

In addition to metallic inks, Mr. Somerville said Kromacorp is developing a broader coating and adhesives technology. Kromacorp also has a full range of flexo, gravure and specialty inks.

One company that has not been afraid to look elsewhere for its business is Rieger Printing Ink Company Limited, Burlington, Ontario. According to Bob Rieger, president, the company’s sales breakdown is: Canada, 60 percent; U.S., 20 to 25 percent; and southeast Asia and Australia,15 percent.

Mr. Rieger said the company is the largest Canadian-owned ink company. Rieger offers both liquid and paste inks, though he said there is a greater focus on paste inks – sheetfed, offset and cold web.

Only in operation for 16 years, The Image Group, Oakville, Ontario, has seen its business go from focusing solely on the plastic container industry to developing into a full-service ink company. According to Paul Kurz, sales and technical specialist, the company offers UV curable inks, printing blankets, pre-treatment equipment, UV curing systems and lamps, printing presses, training, and cleaning products. “Since 1982, we have continually added many new products and services that other ink companies have not been able to provide,” Mr. Kurz said. “They just can’t duplicate the level of customer service we offer.”

Recognizing that its size might not allow it to compete with the likes of Sun and Flint, Rycoline, Inc., Toronto, thrives on offering the medium-sized printer the best service available. “We believe we are unique because of the personal service we offer,” said Karen Welfare, administrator. “We pay attention to the printers’ needs, make smaller batches, have a quick turnaround time – which is something we pride ourselves on.”

Rycoline is a manufacturer of sheetfed lithographic inks, but has also begun to distribute water-based coatings. Though it has yet to match the sales figures of last year, which Ms. Welfare said was the company’s fastest growing year, sales are still rising. Rycoline also prides itself on being family-owned. Ms. Welfare’s father, Bill, owns the business, while her brother, Peter, is the lab manager. “Being family-owned gives us extra pride in our work, makes us better prepared to deal with our customers,” she said. “We care where the company has been and where it is going. We find many printers who like the fact that we are Canadian-owned and want to use Canadian suppliers.”

 

Economic Effects
Many companies have found the value of the U.S. dollar, which is very strong against the Canadian dollar, to have both positive and negative effects. When looked at together, Mr. Gleue said it is a wash. “It has given us an advantage in terms of our sales ,” Mr. Gleue said. “But the strong U.S. dollar has made our raw materials, which we get from the U.S., more expensive.”

Ms. Welfare said the weak Canadian dollar has made it difficult to keep prices down, since Rycoline imports 75 percent of its raw materials from the U.S. “The bright side is that the weak Canadian dollar has brought business into Canada,” she said.

Other companies might argue differently, particularly those that do not import raw materials from the U.S. “The strength of the U.S. dollar vs. the Canadian dollar has been a real advantage for us,” Mr. Rieger said. “We can put out a low-cost superior product and perform well because of a low Canadian dollar. We also have an advantage because we obtain most of our raw materials from Canada.”

“Many of our customers export to the U.S., taking advantage of the weak Canadian dollar,” Mr. Diamond said. Due to the weakened Canadian dollar, Mr. Burroughs said any benefits from NAFTA have been balanced out. “While NAFTA reduced tariffs over a five-year period, the positive effect of this has been more than offset by a weakening of the Canadian dollar,” he said. “As many of our raw materials are imported from the U.S., this has a significantly adverse effect on our costs.”

According to Mr. Burroughs, the Canadian dollar has improved compared to where it was at in 1998 at this time. “But it is currently facing downward pressure by the growing differences between Canadian and American interest rates,” he said.

 

Going Global
Even though many ink companies agree there is still plenty of room for growth within Canada, some companies have begun to look elsewhere for new customers.

Kromacorp recently opened a wholly-owned subsidiary in mainland China, complete with full manufacturing capability, earlier this summer. According to the company, the China operation is a component of a broader emerging Asian operation being managed out of the newly established Kromacorp office in Sydney, Australia. “Progress has also been made on establishing a presence in South America, which continues to be a strategic marketplace for Kromacorp,” said Mr. Somerville.

Rieger Inks has opted to go down under, where it sees vast opportunities for success. “Australia is a great market for us,” said Mr. Rieger. The company has been supplying paste inks and cold web inks to printing companies in Australia for six years. “There is a lot of money in Australia spent on presses, particularly newspaper presses,” Mr. Rieger said.

Key Groups
The Canadian ink industry continues to benefit from having strong trade organizations, including OCCO, the Canadian Division of the Oil and Colour Chemists’ Association and CPIMA, looking out for their members’ best interests. Both organizations are actively pursuing ways they can further educate and train their members’ employees.

“There is a need for more locally produced and run short courses,” said Colmar’s Mike Miller, chair of the CPIMA technical committee, and chair of the Canadian Division of OCCA. “OCCO has been working on a project with CPIMA for new sales staff, customer service, technical personnel, employees, etc. We are trying to develop lectures and programs to meet this specific need and to adopt to the needs of the future.”

Mr. Diamond, president of the CPIMA, said CPIMA’s technical group will begin to offer technical lectures to its members later this fall. “We are making a bigger push towards education for our members,” Mr. Diamond said. There is also the issue of employee turnover, which Mr. Miller sees happening within the next decade. “My principal concern is that if you look at Canadian ink companies, there is a group of skilled and knowledgeable people who will be set to retire within 10 years,” Mr. Miller said. “There is a wealth of experience within the Canadian ink industry. When these people retire, we will need to bridge the gap.”

 

Future of the Industry
What will happen next seems to be set: the Canadian ink industry will continue to grow as the demand is there, and the economy continues along and even improves.

“What happens next really depends on how the U.S. and Canadian economies move,” said Mr. Diamond. “They tend to move in sync.”

Mr. Miller said more Canadian ink companies might try to enter into the U.S. because of “potentially large volumes to be had in the U.S. printing industry.” Ms. Welfare feels there is still a lot of room for growth within Canada itself.

Who remains in the action might not be so certain. With all the different players vying for marketshares in Canada, consolidation might not be too far ahead. “The ink industry will consolidate in much the same fashion as our customer base,” said Mr. Burroughs. “Large companies will continue to grow larger and small companies will serve niche and regional geographic markets. Medium-sized business will continue to shrink in numbers.”



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