Used to produce magazines, catalogs, labels, paper supplements, cartons and gift wrap, the gravure printing process is comprised of three segments–publication, packaging and product. In 2000, all three rode the wings of a strong global economy to positive performance and stable growth.
As we move towards the summer of 2001, the unstable economic climate has begun to rattle the chains of fortune. This means that gravure printers have begun to focus on shorter press runs, increased automation and other technological advances to maintain business levels. Along with this, ink manufacturers are developing new products and working closely with customers to find individual formulation solutions.
Automation, Shorter Runs and Ink Makers
According to Dick Dunnington, executive vice president of the Gravure Association of America (GAA), automation helps to control costs and deal with labor shortages. “All areas of business are being automated, from order entry to ink mixing to materials movement to press setup to press changeover,” he said.
Working to improve the compatibility of gravure printing with shorter press runs to satisfy customers’ needs has also been a process-wide trend, specifically in the packaging and product segments of the market. And the success of this effort is of particular importance since shorter runs look to increase in prevalence as the 21st century continues.
“Both packaging and product gravure printers are finding ways to profitably compete in a short run market,” Mr. Dunnington said. “Press print runs of 3,000 to 5,000 yards are a reality and new equipment is offering the possibility of 500 yards.
“Press manufacturers have come a long way in designing and building short run presses,” he continued. “The electronic line shafts, computer controls and other state of the art technologies are driving down the costs of manufacture and installation.”
While Mr. Dunnington’s statements deal specifically with the production side of the gravure process, with press advancements must also come adaptable ink systems. Additionally, as printers look for ways to save money, optimizing ink systems is one solution they inevitably examine.
“Long runs are still the order of the day in gravure. However, we are seeing some short run jobs to fill press schedules,” said Bill Witzel, Flint Ink’s gravure product development director. “Flint Ink has developed new formulas as requested by our customers. Several new products have been developed to help our customers obtain the standardization and quality of printing demanded by the publishers. Although the majority of the work is confidential at this point, the areas of focus are products that will provide greater use efficiencies based on improved colloidal stability in the final ink on press.”
“Much of the activity in the gravure industry has been towards reducing costs throughout the entire printing process, from cylinder making to paper selection,” added Tony Fontanetta, gravure account manager at Flint Ink. “While these areas are not specific to ink, we have been working closely with our customers to insure that there is no loss in print quality with these changes.”
According to a recent study released by marketing consultants Frost & Sullivan, gravure ink sales represent 15 percent of total ink sales annually. Because this meant $675 million in revenues last year, in spite of the relative maturity of the gravure market ink makers are still trying to meet the demands of their customers by introducing new products to the mix as well as by refining preexisting systems.
In publication gravure, Siegwerk has spent the last six years developing what it calls a HotTech ink, or a solid gravure printing ink without solvents that is melted immediately before it is applied to the printing cylinder. “We are confident development will be successfully completed in a few years,” company officials stated. “HotTech ink will offer the whole printing industry a new ink system with tremendous advantages, particularly in respect to cost savings.”
On the packaging side, Siegwerk recently introduced three new ink systems. These include chlorine inks for retortable pouches, nitrocellulose-based lamination inks for PET and OPA films and alcohol-based two component systems.
Color Converting Industries (CCI) has also been actively developing new products for the packaging gravure market, specifically a new laminating ink using nitrocellulose bases. According to Kent Shah, vice president and chief technical officer at CCI, nitrocellulose has been recognized for years for its ability to print well on gravure presses while offering excellent color and transparency. “There is a definite need in the market for a laminating ink that is nitrocellulose-based and has a robust lamination bond performance,” he said. “We have also introduced water-based surface printing inks for bottle labels.”
Gerry McLain, formerly marketing manager for packaging inks at Sun Chemical and now a consultant for the company, also sees film laminations as a focus of technological development. “A number of new systems have been developed, primarily in the area of film laminations,” he said. “A lot of emphasis has been placed on more versatile systems, and new resin technology has brought about the development of systems that are not only more versatile but offer other advantages as well.”
In recent years, both Sun and Flint have worked hard to develop and promote new laminating inks.
“We have been focused on high performance inks for laminations such as retort packaging and solventless adhesive use,” said Larry Shanks, director of product development, flexible packaging, Flint Ink North America. “We expect to introduce a new product mid-year for high performance use in this area.”
According to Sun, its Rotomax system is a high performance gravure lamination ink featuring extraordinary bond strength, exceptionally good solvent release and superior printability at higher press speeds.
While all of these technologies have the potential to shake up the market, toluene usage in publication gravure as it relates to the environment was an issue that nearly had a dramatic effect upon the gravure industry in Europe.
At present, toluene-based inks remain the standard for high quality publication gravure printing, with almost all high-circulation magazines, catalogs and brochures being printed with this process. While this solvent is listed as a hazardous air pollutant by the U.S. Environmental Protection Agency (EPA), solvent recovery systems employed by U.S. printers have addressed the possible problems associated with its use. “In the U.S., the status of toluene has not changed,” said Liz Scherer, director of publication gravure technology at Sun Chemical. “All publication gravure printers in the U.S. and Canada utilize solvent recovery systems and the issue is not under close scrutiny at this time.”
Where it is under scrutiny is in the European Union. At the end of last year the Danish EPA proposed that highly restrictive classifications be applied to toluene. Had this been successful, it would have dramatically affected the gravure segment of the printing industry in Europe, even though it accounts for a fraction of the total amount of toluene usage in the region.
“The Danish labeling proposal for toluene has not been followed by the European Union, as this proposal was not based on scientific grounds,” remarked James Siever, secretary general of the European Rotogravure Association (ERA). “However, there are still efforts on the EU level to further restrict the use of toluene. This policy is not considering properly that toluene is used by the gravure industry in very low concentration under controlled conditions.”
While the toluene issue was confined to Europe, the consolidation of printers was certainly felt by gravure ink makers on both sides of the pond.
In the North America market, three major printing firms – Quad Graphics, R.R. Donnelley & Sons and Quebecor World – now control more than 25 plants consuming more than 400 million pounds per year of publication gravure ink alone. As a result, their buying power is significant and the business of these and other gravure printers is highly sought after.
“We are currently seeing the effects of consolidation with some announced plant closures on the printer side,” said Ken Todd, national technical service manager, publication gravure, Sun Chemical. “I think you are going to see some of the older equipment taken out of service. There is some talk that there may be some investment in new equipment made next year by all three printers.”
In Europe, the industry is not as consolidated as in the U.S., but the process towards such a state of affairs is continuing.
“The gravure industry is still in the process of consolidation,” said Mr. Siever of ERA. “This development is due to the evolution towards a European single market and the ongoing globalization with take-overs and mergers still occurring.”
The factors driving market performance last year, however, were not as closely aligned to the internal working of the ink/printer businesses. Rather, what drove the gravure market more than anything else was the booming economy of the first half of 2000. The positive economic outlook of that time meant more advertising pages in magazines, more newspaper supplements, more catalogs being mailed out, more labels being produced and more gifts being bought that needed to be wrapped. All this proved extremely helpful to the fortunes of all three gravure segments.
In spite of the solid returns recorded in the first half of 2000, the financial hiccups that began to roll across the U.S. and reverberate in the rest of the world at the end of the year meant that was a mixed bag overall in terms of performance. Additionally, the financial outcome of 2001 is anything but certain.
“Publication gravure saw a strong 2000,” said Mr. Dunnington of GAA. “There was a hint of a downturn late in the year, and 2001 will likely be slower than 2000 because of the general economic slide.”
“Growth has been moderate in the publication gravure market over the past few years,” said Mr. Fontanetta of Flint. “A trend towards niche magazines with shorter runs has made web offset a more practical option in some cases. Towards the end of last year, a number of major advertisers reduced their advertising commitments in the insert market, reflecting a softening in the economy as a whole. At the same time, there are a few indications that the second half of this year may see some firming in business.”
According to Mr. Todd of Sun Chemical, retailer closings and corporate caution hurt publication gravure ink sales in the first half of this year, but that the second half of 2001 should see some improvement.
“The closings of Ward’s and Bradley’s have hurt the market as well as Sears’ announcing that it is cutting back on advertising,” he said. “On the retail side, it has been slow this year. Traditionally, however, the second half of the year is the busy season for us. From August to December is when things really get hopping on the retail side. This year, we are hearing that the presses are fairly booked up again, even with the slow economy.”
On the packaging side, Mr. Shah of CCI predicts 2001 sales will be very strong. “We believe the packaging gravure printing and ink markets will achieve 1999 levels,” said Mr. Shah. “We forecast our ink sales to be about 10 percent higher than in 2000. This will be helped by packaging gravure’s strong hold in confectionary and cheese packaging. In these cases, the need for high graphic resolution is extremely important.”
“Packaging has seen a very competitive market,” Mr. Dunnington said. “At this time, we are seeing reports of a strengthening gravure market coming from both equipment suppliers and trade shops.”
In fact, it seems the upward climb of the packaging segment will extend into Europe, as Mr. Siever refers to the installation of more and more modern presses with wider web widths which enable the industry to grow with the market. “Sales of gravure products grew by 3 percent in 2000, with capacities being partly booked out,” he said. “The prospects for 2001 are quite optimistic although the economic prospects in Europe are less bright than in 2000.”
Keeping a Watchful Eye
As a well established area of the printing industry, the gravure market is closely connected to many segments of the general economy that are the first to react to economic undulations. Because of this, the economic performance of the gravure process as a whole may serve as a good indicator for the status of the industry as a whole. Hopefully, the recent decision by Quad Graphics to open a new plant in Oklahoma City will only support positive growth in all segments of the industry as we move into the second half of 2001.