|Impression counts continue to increase for catalogs.|
For the first six months of 2004, the ink industry has been receiving better news in some segments, while other markets remain troubling. Overall, the National Association of Printing Ink Manufacturers (NAPIM) reports that volume has increased 1.2 percent year to date, while sales have risen 2.4 percent.
The good news comes from the news ink market. According to NAPIM, the volume of news ink sold has increased 2.9 percent year to date, with sales rising 6.6 percent.
Unfortunately, heatset hasn’t shared in that good fortune. While volume rose 2.7 percent during the first six months of 2004, sales dropped 1.6 percent. Publication gravure continues to decline.
All things considered, the fact that volume is up overall for the first time since 1999 is good news for the ink industry, but the continuing price erosion remains a major concern.
U.S. and International Markets
The U.S. publication market has shown some signs of strengthening so far in 2004. Magazine ad lineage has improved slightly year-over-year, but is not back to levels seen in 2000. Book printing also has shown some improvement, while directories are being challenged by Internet offerings. Newspaper inserts show some continued strength.
“All publication segments are facing stiff competition from new and developing media,” said Mark Levin, corporate vice president, Sun Chemical North American publication inks. “In addition, despite some consolidation, the printing industry still has overcapacity, and the competition among printers for business is fierce. This has led to a profitability squeeze for printers and their suppliers, especially as prices for many raw materials are increasing.”
“Although growth has not been as great as anticipated, the publication market has been growing steadily,” said Susan Kuchta, vice president, Flint Ink’s North America publication division. “We are seeing the greatest growth from publication heatset web applications.”
Advertising gains are key to this growth.
“Advertising spending continues to post increases this year, which has positively affected print media in general,” Ms. Kuchta said. “The summer Olympics and 2004 elections have contributed to greater advertising and higher page counts in the magazine sector. Additionally, we are seeing new-entry celebrity magazines, such as Warner Media’s Us Weekly and Bauer Publications’ In Touch.”
Outside of the U.S.. the publishing industry hasn’t made huge gains.
“These markets have been flat in publication gravure and in web offset,” Dr. Nonn said. “In Asia there is no publication gravure except in Japan, but this is a very small market.”
There are indications that some U.S. publication printing may be moving overseas. Sun Chemical officials said that printers in Asia and South America increasingly are finding market niches in the U.S., especially in such printed products as books and calendars.
“We are seeing a trend of print production moving outside the U.S. for non-time-sensitive materials and production that requires significant handling,” Ms. Kuchta said. “This has been especially apparent in the book market.”
Publication gravure remains a challenging market. At best, publication gravure is maintaining the status quo, Mr. Levin said. “While only three North American printers continue to use gravure, it remains a large and substantial portion of their business,” he said. “They are beginning to retire some older presses while gaining productivity of their newer, larger presses.” However, other factors seem to be weighing against gravure, including the perception that other printing processes can match its quality at lower cost.
“Growth for the publication gravure market has been flat,” Ms. Kuchta said. “The trend towards lower basis weight papers continues. Publishers and/or advertisers are leading the push towards this, in an effort to reduce overall postage and shipping costs.”
Siegwerk Group, a worldwide leader in publication gravure inks, hasn’t seen much growth in the market.
“Based on Siegwerk's participation in and exposure to this market, we have witnessed zero growth in 2004,” said Dr. Ansgar Nonn, president of the business unit print media of the Siegwerk Group and member of the company’s international management board.
Marketers also are looking to target their audiences, Mr. Levin said, which means shorter press runs where heatset offset has some advantages, and personalization afforded by other processes such as digital printing. Suppliers continue to work on sleeves and other methods to engrave cylinders that can reduce the cost of printing gravure, so it can remain competitive, he said.
Newspapers, Catalogs and Magazines
As noted before, the news ink side has rebounded somewhat in 2004. According to the Newspaper Association of America (NAA), advertising expenditures increased 3.46 percent and 4.1 percent during the first and second quarters of 2004, respectively.
“The news ink segment is rebounding slowly due to a slow recovery that is beginning in advertising spending,” said Mike Green, vice president, North America news ink division at Flint Ink. “Newspapers are striving to achieve higher quality standards in order to remain competitive for future advertising revenue, which is the life-blood of this industry. Additionally, newspapers are refining operations to improve pressroom efficiencies, and adding more commercial work where possible.
“Newsprint consumption, which is a good indicator of how the newspaper industry is doing, has declined somewhat during 2004,” said Todd Wheeler, marketing services manager, US Ink. He added that the continuing increase in process color usage among newspapers benefits the news ink suppliers.
The catalog and magazine industries continue to be affected by the economy. “In Europe and NAFTA countries, the markets are down by 2 percent,” Dr. Nonn said.
“Growth in the catalog and magazine industries has been steady,” Ms. Kuchta said. “Impression counts are slowly increasing, but magazines are still challenged by other communication media.”
Advertising measurement services report slight growth in ad pages, and somewhat larger growth in revenues as publishers raise advertising rates. Through the first half of the year, the Publishers Information Bureau recently reported that YTD ad pages in magazines were up 0.5 percent over 2003, while publishers’ ad revenues were up 7.3 percent in the same time period.
“It appears that printers and their suppliers thus far have not been able to pass on their rising costs to the publishers due to the intensely competitive nature of the market,” Mr. Levin said.
Many catalog companies have dropped or reduced large catalogs in favor of targeted catalogs that can be personalized to meet the interests of individual customers.
“Some retailers who tried to move from print to on-line catalogs have found they need to cross marketing in both areas to keep consumer interest and sales high,” Mr. Levin said.
Meanwhile, flexo has yet to make a dent in the publication market. Some newspapers continue to purchase flexographic presses, Mr. Levin said, but the process is not seeing the same type of growth in publications that it has in the packaging converting market. “The print quality just doesn’t match heatset or gravure for publication printing, while platemaking time, cost and quality continue to be concerns,” he said.
“No significant inroads are being made in flexo,” Ms. Kuchta said. “Production efficiencies just are not there for the longer runs common to most publication work.”
Ms. Kuchta noted other trends in the industry, such as the use of lower basis weight papers and new fulfillment services.
“The trend towards lower basis weight papers continues across the board in the publication market,” Ms. Kuchta said. “In addition, many larger printers are providing specific fulfillment services designed to aid their customers in realizing the best shipping and postage rates possible. Some examples are Quad/Graphics’ Parcel Direct and RR Donnelley’s distribution Optimizer service.”
To meet the more stringent demands of printers, ink companies have developed a wide variety of new products.
“Siegwerk Inc. is in the process of developing a new color set for the U.S. market, which would eliminate complexity caused by the duality of coated and uncoated inks,” Dr. Nonn said.
On the publication gravure side, Siegwerk has developed new varnishes to improve performance for customers.
“Siegwerk offers individually developed special extender varnishes to customers,” Dr. Nonn said. “This is an all-around high-quality product which reliably supports all print jobs. Tailor made to the specific requirements and the order structure of the respective printing house, they combine the need for high quality with optimal cost-effectiveness.”
Handschy Industries manufactures several product lines that serve the publication printing industry. The Heatset Low Tack Series is ideal for printing on lightweight substrates such as flyers and inserts. This series offers excellent transfer properties and has very low misting.
Heatset Cleargloss Series is ideal for higher basis weight papers. Cleargloss Series are used for printing brochures, annual reports, direct mail and speciality labels. It is also FDA compliant. The Heatset Top Dri Series delivers properties in the finishing of specifically printed products beyond typical specifications. Excellent rub resistance and high gloss levels make this series a must for demanding end use requirements.
Heatset Sterling Series provides excellent print quality, brilliant color and high gloss. It is ideal for high speed presses and can be used on a wide variety of substrates.
Arrowlith UV, a new ink system developed by Flint Ink, helps coldset web printers expand their business opportunities into work on coated or semi-coated stocks.
“This new capability allows coldset printers to produce materials traditionally handled by other segments of the printing industry, increasing both revenue and profitability of coldset printers,” Mr. Green said.
The publication market remains a highly competitive field, with overcapacity hindering printers’ chances of rainsing prices to their customers. That, in turn, impacts ink manufacturers.
Still, with the economy seemingly having turned a corner and ad revenues increasing, ink companies are hopeful that the market will finally see signifiucant improvement the near future.
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