The Year In Review

By David Savastano, Ink World Editor | 09.12.05

After another challenging year, ink executives are cautiously optimistic as they look ahead to 2004

As has been the case since the end of 2000, the ink industry suffered through tough times in 2003. According to the National Association of Printing Ink Manufacturers (NAPIM), the first three quarters of 2003 has brought more bad news. Overall ink sales are down 4.1 percent year to date, while volume has declined 3.3 percent. That signals more price erosion.

On the publication and commercial side, volume is down 3.4 percent and sales are off 5.0 percent year to date, while packaging is down 2.8 percent and 3 percent in terms of volume and sales, respectively.

Still, as 2004 nears, many industry leaders are expressing optimism as the first signs of economic improvement are appearing. While the printing and ink industries are likely to lag behind the economy, a prolonged improvement will bring hope to manufacturers.

A Look Back At 2003
For ink manufacturers, 2003 is a year they would like to forget. NAPIM statistics found that while sales volumes in most categories decreased, prices came down even faster.

“This has been a challenging year for the U.S. ink industry. Recent government reports seem to indicate the national economy is rebounding, but in the ink industry, signs of recovery are still weak,” said Mike Murphy, president, Sun Chemical North American Inks. “There have been only small gains for most types of printing. This weak demand for print, coupled with overcapacity, has created intense competition among printers. Many are turning to their suppliers for relief. Consequently, volume is up slightly, but it appears the entire ink market has seen some price erosion.”

‘For 2003, it hasn't been the case of most growth, but more realistically, least loss. A huge turnaround next year does not seem likely. However, hopefully the declines have subsided, and there is cautious optimism that the market will grow as the economy continues to strengthen. ‘ – Kathy Marx, Flint Ink’s vice president, marketing and strategic planning

“2003 began favorably, but quickly curtailed as any signs of the long-hoped-for economic recovery disappeared,” said Kathy Marx, Flint Ink’s vice president, marketing and strategic planning. “Sales have continued to be disappointing, as increased pricing and competitive pressures place additional compression on margins. Overall market declines have been seen in nearly every segment, including the more traditionally economically-insulated food packaging industry. Even those segments that have seen high growth in the past are struggling to maintain growth, in spite of some cannibalization of other segments.”

“I saw further deterioration in the ink industry in 2003, with companies having to lower prices to try to meet the competition,” said Harvey Brice, managing director of Superior Printing Ink. “Hopefully 2004 will be better, because 2003 has not been where the government says the economy should be. We as an industry are lagging behind, although I’m encouraged by the improvement in the economy.

“UV and UV hybrids were highlights for us, and we made more inroads in in-plant operations,” Mr. Brice added. “We introduced new value-added services for our customers with new software and improvements in service. The packaging area appears to be brighter, and some of our customers are very busy.”

“Overall, SICPA has done fairly well, while other ink companies I’ve talked to range from having done well to just holding their own,” said Ed Dedman, market development manager for SICPA North America. “I would speculate that most ink suppliers are experiencing either relatively flat sales or some growth, but across the board, profit levels are down.”

Mr. Dedman noted that

North America had its strongest growth in narrow web, particularly in UV flexo and screen inks, and there was increased interest in metallics.

“On a positive note, the advancing use of high luster metallics using vacuum metallized pigments has had some effect on us, with increased sales of those products,” Mr. Dedman said.

The inconsistent nature of the economy is taking its toll on ink companies.

“It has definitely been a challenging year,” said Jim Leitch, Braden Sutphin Ink’s CEO. “ We have good months followed by difficult stretches. Momentum just does not sustain itself, which makes it hard to plan accordingly because you don’t know which is the true measure of the marketplace.”

“The industry is still struggling,” Rick Clendenning, CEO and president of INX International Ink Company, said. “We have not seen any consistency in economic recovery. One month looks strong, the next month is not. With the downturn of the printing in the U.S. in pretty much every segment, competition is strong and capacities are under-utilized. Those of us that are controlling costs and becoming more efficient are doing fine in these difficult times and will come out of this better for it.”

“The first half was tempered by economic troubles resulting most likely from the war,” added Bryce Kristo, INX International Ink Company’s CFO and vice president of business development. “The third quarter demand rebounded in October, but the second half will be below our expectations. Overall growth was modest. Packaging remains stable with commercial experiencing volatility, and there was growth in UV.”

Sun Chemical also saw growth in the UV market.

“The energy curable products continue to find favor because the capital costs of installing UV or EB equipment have begun to moderate,” Mr. Murphy said, adding that printers recognize the value energy-curable products can bring in terms of improved performance properties while improving manufacturing productivity by allowing processes such as coating and die-cutting to be completed in-line.

Overseas competition has impacted U.S. ink companies, whether it is ink being imported into the U.S. or manufacturing jobs leaving the U.S. and being followed by packaging printers. It has been estimated that nearly two million manufacturing jobs have been lost in the U.S. in the past three years, and the impact on printing, in particular corrugated, has been heavy. This loss, in part, explains the decline in water-based flexo inks.

“The ink industry is no different than the rest of the U.S. manufacturing sector in that it is being affected by the movement of manufactured goods to the Far East,” Mr. Murphy said. “As manufacturing moves to the Far East, the printing of the packages does also, cutting ink usage in the U.S.”

Imported ink has also affected domestic ink manufacturers.

“After three years of slack demand, we see signs of firming in the market,” Mr. Murphy said. “The past three years have been tough for domestic ink manufacturers as low-price, inconsistent-quality ink has been streaming in from the Far East. We are optimistic that the recovery will renew interest in domestic, high-quality inks.”

“We intend to keep our ears to the ground for increased competitive threats from offshore sources, particularly in the commodity segments,” Mr. McDowell added.

In terms of mergers and acquisitions, 2003 had been a quiet year until late November, when Siegwerk Group of Siegburg, Germany, signed an agreement to acquire CCI Color Converting Inc., based in Des Moines, IA. The acquisition, which will extend the presence of Siegwerk Group in North America and strengthen its overall global position as a packaging ink market leader, was expected to be finalized in early December.

‘We have not seen any consistency in economic recovery. One month looks strong, the next month is not. With the downturn of the printing in the U.S. in pretty much every segment, competition is strong and capacities are under-utilized. Those of us that are controlling costs and becoming more efficient are doing fine in these difficult times and will come out of this better for it.’ – Rick Clendenning, CEO and president of INX International Ink Company
Publication and Commercial Market
On the publication and commercial ink side, NAPIM’s figures show a 3.4 percent decrease year-to-date in volume through the first three quarters of 2003, and a corresponding sales drop of 5.0 percent.

The $650 million heatset ink segment saw volume decline 0.4 percent during that period. The problem is that its value still dropped 4.2 percent. Publication gravure has been hardest hit, suffering double-digit drops in both volume and value.

Mr. Murphy noted that recent reports from the publishing industry show signs of improvement. The Printing Industries of America (PIA) reported that shipments by printers were up 2.2 percent in the first half of the year. While other publishing segments have stated that their advertising rates and revenues are up, the printed volume remains flat. Some major retailers have reduced page counts on their advertising inserts, changed formats or reduced the amount of color used.

Advertisers still seem to be holding back, even though government reports say consumer spending is driving the 7.2 percent growth in GDP during the third quarter of 2003, Mr. Murphy said. “Historically, these advertisers don’t jump back into the printing market until a recovery is well underway,” he added.

“I believe that the advertising market has been hit the hardest,” Mr. Clendenning said. “When companies look at cuts to survive, one of the first areas they always look at is their advertising dollars. The longer companies do without, the longer the recovery time.”

Two other factors facing publishing and commercial printers are overcapacity and competition from developing media. Both will also have a major impact on the ability of publications to rebound.

While the printing industry is likely to be slow to rebound, the elections and Olympics, along with tax cuts, may help spur some growth.

“The commercial market has been hit the hardest with advertising curtailment,” Mr. Kristo said. “More recently, tax cuts and low interest rates resulting in home refinancing have given the consumer extra cash. Hopefully retailers will try and capture that extra spending ability through greater advertising. Also, 2004 is a presidential election year.”

“For 2003, it hasn’t been the case of most growth, but more realistically, least loss,” Ms. Marx said. “Aside from digital, most of the segments have remained stable, although many declined significantly. A huge turnaround next year does not seem likely. However, hopefully the declines have subsided, and there is cautious optimism that the market will grow as the economy continues to strengthen. As 2004 is both an election and an Olympic year, we are hopeful that we will growth similar to that of past election and Olympic years.”

The commercial sheetfed market has been among the hardest hit by the economic downturn.

“We are seeing a shrinking market in the commercial sheetfed business segment with fewer printers doing less work, on average,” said Jeff Koppelman, Gans Ink & Supply’s president and president of NAPIM. “It’s been a continuously weak economic environment, and with it came a decline in our company’s volumes, overall revenues and profits. All in all, 2003 has been another year that I’m glad is almost over.”

For ink manufacturers, a major concern is the shrinking printing industry. The PIA has reported that since 1993, the number of printing plants has declined from 54,462 to 45,964 at the end of 2001, a decline of 15.6 percent, which translates into thousands of presses no longer printing.

“I think the strength of the economy appears to be regionally based, and that certain printers who are tied to niches are doing well while others aren’t,” said Mr. Leitch, who is a member of NAPIM’s Manufacturing Information Committee. “In September and October, many of our customers said they were busier, but we’ve also seen more printers close their doors this year.”

‘We are seeing a shrinking market in the commercial sheetfed business segment with fewer printers doing less work, on average.’ – Jeff Koppelman, Gans Ink & Supply’s president and president of NAPIM
Packaging Ink Market
On the packaging ink side, NAPIM’s figures show a 2.8 percent decrease in volume year-to-date through the first three quarters of 2003, and a corresponding sales drop of 3.0 percent. Color Converting Industries (CCI) president Dan McDowell said those figures accurately reflect the marketplace.

“Based on feedback from our supplier base and other industry data, it appears that packaging ink sales were down between 5 percent and 10 percent in 2003,” said Mr. McDowell. “CCI also experienced contraction within existing accounts that paralleled these overall market trends. On the other hand, market share increases have buoyed our overall growth rates such that CCI’s growth rate has been 6 percent to 7 percent in 2003, down from 11 percent to 12 percent in 2002.”

In packaging, Mr. Murphy said, the rate of growth appears to have slowed at least temporarily, but it’s still growing. “Besides their functional properties, packages still play a major role in promoting sales.” he said. “Consumer demands drive the search for new technologies that increase the shelf appeal of packaged products. For instance, convenience and resealability are very important to busy consumers. That is why Sun Chemical closely monitors these trends and tries to anticipate the need for new inks and coatings. Even the popularity of colors changes, so we must incorporate this factor into our pigments research and development.”

With the growth of stand-up pouches, retort packages and shrink sleeves leading the way, the flexible packaging market has had the strongest growth in this segment. The dollar value of flexible packaging sales has nearly doubled in the past 13 years, from a little more than $12 billion in 1990 to nearly $21 billion today, according to the Flexible Packaging Association (FPA).

That is confirmed by the growth in solvent-based flexo inks, which have increased 1.3 percent by volume and 2.0 percent year to date through the third quarter of 2003.

As a result, lamination has been a strong area for ink companies. Mr. Murphy said it is likely that these products will continue their growth pattern through 2004.

“Flexible packaging is pushing into areas where lamination is a necessity,” Mr. Murphy said, explaining that many products are being converted from folding cartons to flexible packaging such as stand-up or retort pouches, two of the fastest growing segments in flexible packaging. These packages need the structure and barrier properties that lamination can provide.”

“Most of CCI’s growth in 2003 has been related to high-end lamination applications, alongside continued development in energy cure applications for lamination replacement and food applications,” Mr. McDowell said.

“We expect these trends to continue in 2004.”

In particular, Mr. McDowell said that the flexible packaging market showed the best growth.

"We have seen market interest and growth in lamination inks, especially pouch and retort applications; specialty and security inks, including anti-counterfeiting inks; ink for shrink sleeves; and energy cure applications for food packaging and lamination replacement," he said.

Certain segments of the packaging market faced difficulties in 2003, particularly the corrugated and the bag markets. Corrugated packaging typically uses water-based flexo, which has declined 5.8 percent by volume and 7.6 percent by value year to date.

“CCI observed increased price pressures in commodity segments such as T-shirt bag, corrugated and industrial bag markets,” Mr. McDowell said. “We believe that this dynamic is largely attributed to offshore competition and industry recession. While these segments may rebound in late 2004 following overall economic conditions, CCI is not counting on it.”

‘CCI observed increased price pressures in commodity segments such as T-shirt bag, corrugated and industrial bag markets. We believe that this dynamic is largely attributed to offshore competition and industry recession. While these segments may rebound in late 2004 following overall economic conditions, CCI is not counting on it." – Dan McDowell, Color Converting Industries’ president
Digital Technologies
The ink jet ink market is expected to experience moderate growth within its various segments as new opportunities emerge.

In particular, wide format ink imaging, one of the fastest growing ink jet segments, is estimated to grow between 10 to 20 percent.

Conductive inks are also a hot topic, as analysts believe these inks will become more widely used in a variety of applications, including radio frequency identification (RFID) antennas and “smart labels.”

As a result, Flint Ink created two subsidiaries in 2003. Jetrion is focused on ink jet, while Precisia is developing conductive inks.

“Flint Ink is capitalizing on the growth of digital technologies with its commitment to Jetrion, a recently-inaugurated company created to aid customers in applying ink jet technology to complement traditional printing solutions,” said Linda Welty, COO of Flint Ink Corporation. “There’s a lot of interest, but at the same time a lot of uncertainty, as to how to utilize commercial ink jet technology profitably. Jetrion was created to help customers determine how to profitably integrate ink jet capabilities into their printing operations.

“Similarly, the use of traditional printing techniques to manufacture such things as RFID chips is an emerging opportunity for the printing industry,” Ms. Welty said. “Flint Ink’s investment in Precisia is designed to provide expertise in the use of traditional techniques to print untraditional products. These are but two examples of ways in which Flint Ink is creating value for its customers based upon its knowledge of print.”

“Digital printing continues to grow as the industry finds new ways to improve its quality and speed,” Mr. Murphy said. “Large-format printing is gaining popularity in display graphics. There has been experimentation in package printing with UV ink jet inks. Commercial printers are looking for ways to combine variable data and digital printing to produce highly targeted direct marketing pieces.”

‘The U.S. chemical industry has enjoyed a distinct advantage in the industrialized world with the availability of favorable natural gas prices. However, the current squeeze is threatening the ability of many domestic chemical producers to be competitive on a global basis.’ – Corey Soeldner, purchasing director, Sun Chemical North American Inks
Offering Value
Ultimately, proving value is essential to doing business in the ink industry.

“INX International has done an exhaustive market study on customer loyalty and adding value,” Mr. Kristo said. “Based on the findings from this effort, we are transitioning our company to better align with what the customers value most. We equate customer satisfaction to adding economic value. Our goal is to provide the right mix of company resources focused on the individual customer’s value priorities and demonstrate that we deliver economic performance with service and products that is as tangible as the physical properties of ink on paper.”

Ms. Marx believes that further cost containment and new technology development will be essential for ink manufacturers to move forward.

“As printers continue to look beyond print for growth opportunities, ink manufacturers must continually assess their markets and value propositions to ensure viability and profitability for the future,” Ms. Marx said. “It is unlikely that the industry will rebound to past levels from both a sales and profitability perspective, and consequently, continued focus on cost containment and additional growth opportunities will be necessary in order to continue to provide adequate returns.”

Mr. Dedman believes that value is expected by the customers, but being able to help them contain costs that is far more critical.

“The whole concept of value-added selling has almost become a given in the sales process,” Mr. Dedman said. “Most ink companies offer things like an ink room, press room, and/or quality audits, ink management tools like scales, proofers and dispensers, assistance with managing color, and as many other creative ideas as you can list. The average customer has come to expect those things as a normal part of our product offering, at no extra charge.

“From my perspective, the new focus is on cost reduction – whether through lower prices, cost sharing, or cost-out programs of one type or another that help the customer control and decrease cost of production,” Mr. Dedman said. “This is the new world we are learning to live in.”

“CCI expects to see continued consolidation among converters in the U.S. with consolidation accelerating amongst converters across continents,” Mr. McDowell said. “This trend would continue to drive price pressures. We also believe that there will be continued pressure on point-of-use service with quantifiable and guaranteed process cost savings results. CCI continues to focus its efforts on helping our customers to increasing throughput, decreasing operating expenses and decreasing investments in our customers’ pressrooms across the country.”

“There is pressure from customers to reduce prices, and Flint Ink is reducing costs by becoming even more efficient in our manufacturing processes, the way we interact with our customers and by working with suppliers to reduce costs in the supply chain,” said Dr. Joe Raksis, senior vice president, research and new market development for Flint Ink. “The industry is seeking improved short-run economics for offset printing, and Flint Ink is developing new ink sets with faster make-ready times and trouble-free printing. The use of energy curable inks is continuing to grow, and Flint Ink’s new generation of UV curable inks is easier to use by printers, and more easily accommodated on existing equipment.”

Printers are looking to strengthen the links in their supply chain, Mr. Murphy said, adding that was the impetus behind creating Vivitek, its new supply and service company. “Sun Chemical believes that if an ink manufacturer can reliably provide other materials related to the printers’ processes, then its value as a supplier increases. Printers can turn to a single source for many of their product and service needs. We are also able to design product combinations such as ink and fountain solutions that work together and which Sun Chemical can support technically.”

New Technologies
Ink companies launched a large range of new products to meet the needs of customers. Joe Cichon, senior vice president, product and manufacturing technology for INX International Ink Company, spoke of some of those new packaging technologies.

‘From my perspective, the new focus is on cost reduction – whether through lower prices, cost sharing, or cost-out programs of one type or another that help the customer control and decrease cost of production. This is the new world we are learning to live in.’ – Ed Dedman, market development manager, SICPA North America
“We have seen many new developments that have affected the ink industry, and some of them represent shifts in printing from one method to another,” said Mr. Cichon. “For example, some metal decorating is being replaced by film wrap labels for aerosol cans and other three-piece cans like coffee and other products. Fortunately for INX, we have a diversified product line and can capture the business in whatever form it comes.”

The packaging industry has seen some major transitions, said Dr. John Rooney, Sun Chemical’s vice president of technology. There is an emphasis on improving demanding ink performance characteristics. As an example, he pointed to retort inks that must be able to produce outstanding images in a laminated structure while withstanding extended exposure to high temperatures.

Dr. Rooney also pointed out an increasing move toward EB adhesives in laminated structures. This presents a challenge to formulate conventional lamination inks and EB adhesives that form excellent bonds.

Among the new products INX International is offering are its VersaCure hybrid UV offset inks, which can achieve initial “set cure” with UV lamps and can be coated in line without the severe gloss back of conventional oil-based inks, saving process time; the INX ColorTrac
CS system, which allows catalog and magazine printers to use the same ink for cover application as well as insert applications and meet all performance specifications including cost; and the INX UVXcel blending system, which allows the UV printer who runs both web and sheetfed presses to use one single inventory of inks for both presses; and the latest release of INX Lamiall laminating inks system for flexible packaging, which covers a very diverse line of films applications and has allowed many printers to eliminate as many as three separate ink inventories with one.

CCI also unveiled a variety of new technologies.

“In the lamination arena, the high-end market continues to shift toward polyester substrates and, increasingly, to corona-treated vs. chemically treated polyesters,” Mr. McDowell said. “Pouch applications (stand-up pouch applications in particular) continue to grow rapidly and there continues to be strong interest in retort applications.

“Though not new, we also continue to see demand for increasingly high quality graphics that impact ‘shelf set.’ This includes pressure for more specialty offerings, for better process print characteristics and for expanded gamut process printing such as Hexachrome, Opaltone and proprietary processes. Also of note is the continued market interest in energy cure solutions for lamination replacement applications and food applications in general,” Mr. McDowell added.

Dr. Rooney said that new printing technology continues to push improvements in quality and productivity. Ink often must be tailored to its application to meet certain performance requirements such as higher gloss, lower slip and faster drying that is necessary to run on newer presses that are wider and faster. The types of substrates used in packaging, publication and commercial applications also continue to explode.

This challenges ink manufacturers to adapt our technology to work on a wide array of existing and emerging print technologies, Dr. Rooney added, explaining that Sun Chemical is working to find breakthrough technologies like its WetFlex.

“The WetFlex process and UniQure inks are drawing global interest,” he said. Sun Chemical recently opened a demonstration site at its Daniel J. Carlick Research Center in Carlstadt, NJ, to showcase this process. “WetFlex utilizes wet-trapping inks that can be applied without interstation drying. The energy-cured inks offer several benefits advantageous to packaging converters.”

New computer technologies such as computer-to-plate and stochastics are also driving changes in the landscape.

“One technology that has had a strong impact on printing ink is rapid growth in computer horsepower,” Mr. Cichon noted. “This has resulted in practical methods of stochastic screening techniques and in major improvements in offset printing technology in the prepress area, that impact the printers ability to reproduce items accurately.

“Although cost reduction and process efficiency has always been a key driver for development, this driver has grown in urgency and importance with the recent turn of our economy,” Mr. Cichon added. “Everyone wants to improve processes and shorten cycle times, and cost reduction is an essential part of survival in these lean times. Key to these goals is to simplify processes and systems. INX has focused on new product technology that can help printers reduce waste, shorten cycle times, and reduce inventories, all of which will reduce costs. Everyone claims to do this, but as we all know, the devil is in the detail. And the key question is: how can a change in ink formulation or technical service help the printer achieve such advantages? Examples of this have materialized in several new products released by INX this year and future planned releases.”

“Prepress developments that have affected the market include stochastic screening and computer-to-plate technology,” Dr. Rooney said. “These processes produce a much finer dot, but the new plate chemistries produce more potential for toning and scumming. Sun Chemical has formulated inks, such as its High Fashion FM series, that will work with these plates to hold finer dots, control dot gain and reduce blanket piling.”

“We also see continued movement toward computer-to-plate or digital platemaking technology,” Mr. McDowell said. “Over the past two years, this technology has proven to increase fidelity in process printing. Transferability of the inks from this plate material is critical to achieving the desired improvement in print quality. This has led to increased demand on point-of-use service and CCI technicians skilled at achieving positive results. CCI has either commercial solutions or projects in development to address all of the above trends. Many of the development projects are on-going as the bar continues to rise.”

‘The competition is pretty keen,” Mr. Brice said. “I think the industry is shooting itself in the foot in the search for market share. As an industry, we don’t give ourselves enough credit for what we offer our customers.’ – Harvey Brice, Superior Printing Ink’s managing director
2004 and Beyond
While there have been some signs that the U.S. is in the midst of the beginnings of an economic recovery, the printing industry has yet to rebound. As a result, ink manufacturers are taking a wait-and-see approach.

“While the overall economy seems to be well on the road to recovery with the recent announcement of third-quarter 2003 GDP growth of more than 7 percent, this doesn’t appear to be the case in the sectors served by the ink industry,” said Dave Frescoln, president of Flint Ink. “Third-quarter earnings announcements and fourth-quarter projections for the major printing and packaging companies indicate weak demand, excess capacity and continuing downward price pressure.

“The outlook for 2004 is of insufficient growth to make up for the capacity glut, thus resulting in continued price pressure,” Mr. Frescoln said. “The consensus seems to be that the worst is over, but robust recovery in the printing and packaging sectors will trail the economy, probably by a full year. For the ink industry, this means 2004 will be a year of treading water to stay alive, with the potential for further consolidation and cost-cutting in preparation for better things in 2005.”

Confidence in the state of the economy will have to have to further grow before the printing ink and printing industries start to recover.

“The ink industry needs a solid, sustained recovery before it will see significant improvements,” Mr. Murphy said. “Consumer products companies are not spending on printing the way they did in the late 1990s and 2000. Business confidence needs a boost that will kick start spending on advertising and packaging.”

Mr. Murphy is certain that the recovery will come. “After nearly three years of recession, we are confident that the recent improvements will take hold and the recovery will steadily gain momentum,” he said.

Both Mr. McDowell and Mr. Kristo have seen the initial stages of a recovery, and they are optimistic.

“CCI has seen some relief in recent months (September, October) from earlier market contractions. This growth has been roughly in the 2 percent to 3 percent range. CCI expects that the packaging ink industry will generally follow overall U.S. economic trends in 2004, with its typical lag time, thereby seeing positive impacts in late 2004 assuming strong economic growth earlier in the year,” Mr. McDowell said. “CCI’s growth targets for 2004 are back up in the double-digit range, mostly based on specific customer opportunities and growth in market share vs. growth within existing customers.”

“The third quarter strengthened our performance,” Mr. Kristo added. “ The question is whether this strength reflects a long-term trend or another spike of sporadic growth. Our 2004 business plan remains conservative.”

While Mr. Cichon believes the economic recovery is coming quickly, he also noted that the lean years have changed the way printers do business.

“There is no doubt in my mind that we will see rapid economic recovery in 2004,” Mr. Cichon said. “We have already seen some of it happen this year. As we all know, the budgets for this year were made last year, and they were lean. But new signs of recovery are strong and many companies will project stronger budgets and more aggressive plans next year.

“But some strange things are overriding a happy story,” Mr. Cichon added. “Ink companies have helped the printing industry become more efficient in their use of ink product; less waste, means they need to buy less ink to print the same materials. Lower inventories are needed, because almost everything is now just-in-time. Less waste in processes, and use of computer horsepower, means less man-hours are needed to make the product – this means less employment opportunities for many laborers. The rapid growth in the economy will push us into some shortages that will result in higher ink prices, and perhaps higher material costs as well.”

While Mr. Dedman is not as optimistic, he, too, sees changes in the way printers operate.

“Quite honestly, I see things staying the same for at least a couple more years,” Mr. Dedman said. “They may even get a little worse, especially for the offset segment. There will be isolated areas of growth, but as an industry, our big challenge is going to be learning to do business profitably within this current climate. Too many of us old ‘inkies’ have done things the same way for too long – our customers are changing their paradigms, and we have to do the same.”

There are other concerns to consider. During the past three years, NAPIM’s reports show that dollar value is falling faster than volume, which means that prices are slipping fast. Even if a recovery occurs, Mr. Brice is concerned about the future of the ink industry.

“The competition is pretty keen,” Mr. Brice said. “I think the industry is shooting itself in the foot in the search for market share. As an industry, we don’t give ourselves enough credit for what we offer our customers.”

There are many challenges ahead for the ink industry. Printing ink manufacturers will soon find out whether the cautious optimism that many leaders are expressing will materialize as we head into 2004.