Among offset inks, the sheetfed ink market is unique, as it can be used for packaging and commercial applications. For sheetfed ink manufacturers, 2004 was a solid year, with sheetfed ink sales accounting for $650 million, according to Ink World estimates.
In particular, sheetfed packaging showed growth. According to the National Association of Printing Ink Manufacturers (NAPIM), for the first nine months of 2004, commercial sheetfed ink volume rose 2 percent compared to the same period in 2003, while sales dropped 0.6 percent. On the packaging side, volume dropped 4 percent, while sales rose 4.5 percent.
For the most part, sheetfed ink manufacturers have seen some recovery in 2004, but there are major concerns ahead. Ink pricing has been competitive, and with raw material prices rising quickly, there is pressure for ink prices to increase. Smaller ink companies are successfully competing with the larger ink manufacturers, which makes for a competitive market.
2004 Results
Ink manufacturers large and small alike said that their results reflected those found in the NAPIM survey.
“Sheetfed ink consumption increased during 2004, according to numbers supplied by NAPIM,” said Brad Bergey, president, Kohl & Madden Inks, a member of the Sun Chemical Group. “However, ink makers’ profits have been squeezed by rapidly escalating raw materials, manufacturing and freight costs after several years without price increases.”
“2004 will be the strongest year for commercial sheetfed since Sept. 11, 2001,” said Charles Sagert, senior vice president, sales at INX International Ink Company.
Harvey Brice, managing director of Superior Printing Ink, said that sheetfed ink sales in 2004 were about even from the previous year.
“Sheetfed was flat, which was pretty much what we expected,” said Mr. Brice.
“The commercial sheetfed market has been more stable in 2004 than in previous years, when we experienced a tremendous amount of volatility from month to month,” said Jim Leitch, CEO of Braden Sutphin Ink. “We have still not seen much growth in this market, but we had not seen the major dropoffs like in previous years. Plant closings are still going on, especially with smaller shops where capital requirements are a bigger burden to handle during a tough economy.”
“On the commercial side, there hasn’t been much growth,” said Bryan Gobbell, president of Bowers Ink. “I’m seeing a few more spot colors and metallics from designers, which tells me that companies are starting to spend a little more money.”
The sheetfed printing market is undergoing fundamental changes, and ink manufacturers are watching these developments closely.
“Like many segments of the printing industry, the commercial sheetfed printing market is shrinking,” said Steve D’Angelo, global vice president marketing, sheetfed for Flint Ink. “Significant amounts of traditional sheetfed business has either moved to on-demand/digital output or moved offshore. The resulting over-capacity simply adds another element to a difficult economic situation.”
“Commercial sheetfed printing itself became less competitive against other printing such as color copy, ink jet printing and other media,” said Tak O’Haru, president of Toyo Ink America.
For small- and medium-sized ink manufacturers, 2004 was an improvement over recent years.
“It seems to be coming back from where it was, although not as strong as it was in the 1990s, but there’s more printing to be had out there,” said John Toigo, president of Grand Rapids Printing Ink.
According to John Nessmith, vice president of sales of Florida Ink Manufacturing Co. (FIMCO), the sheetfed ink market has been flat for a year or two, but there are some signs of rebounding.
“I’ll be anxious to see how the first half of the year goes, as there was a spike due to political advertising and the holidays,” Mr. Nessmith said.
Sheetfed Packaging
The best results are being seen in on the packaging ink side, in particular for short run and label applications.
“Contrary to earlier predictions, sheetfed has continued to hold its own in the packaging markets,” Mr. D’Angelo said. “Part of that is due to the trend towards shorter, versioned promotional runs which lend themselves to sheetfed production. Longer runs encounter greater competition from other printing processes as well as offshore competitors.”
“In the packaging market, sheetfed printing is used primarily on folding carton and some label applications,” Mr. Bergey said. “For many applications, the stand-up pouch has displaced folding carton during the past decade and this trend will continue, due to the stand-up pouch’s excellent graphics and reclosability. The label market continues to grow, although other types of labels such as pressure sensitive, in-mold and film cut-and-stack are growing faster than traditional paper cut-and-glue labels.”
“The packaging business has been pretty good, and we’ve seen growth there,” said Mr. Gobbell. “We’re getting opportunities that in the past we haven’t had. Some new jobs are being floated, and run lengths are also shorter.”
“The sheetfed packaging market is more lucrative,” Mr. Brice added.
|
(Photo courtesy of Sun Chemical) |
Changing Nature of Sheetfed Printing
The sheetfed printing industry is changing, and overcapacity is one of the key concerns for sheetfed printers.
“I believe that the commercial sheetfed market has stabilized somewhat, but there is still a high degree of pricing pressure among the printers themselves,” said Jeff Koppelman, president of Gans Ink & Supply. “There’s still too much capacity and not enough demand.”
Since 2000, the print market has weakened due to a poor global economy and increased competition from new media sources, Mr. Bergey said. In addition, industry overcapacity, has helped hold pricing down for several years. However, there has been some gains this year.
“The sheetfed printers have seen some year-over-year improvements in 2004, and with this better market are able to accept necessary price increases on materials such ink and paper, while remaining competitive,” Mr. Bergey said.
Digital printing is definitely having an impact on sheetfed printing.
“The sheetfed market is still a strong one,” said Barney Lenhart, president of JKM Ink. “Digital printing has taken a little away from it. Many small commercial shops have color copiers now, and the durability of these machines is improving. We’re also seeing more waterless in the market.”
The commercial sheetfed market is changing, and the smaller printers are looking for ways to be more competitive.
“Commercial sheetfed is reorganizing and consolidating, and it looks to me that many smaller- and medium-sized printers are being squeezed,” Mr. Brice said. “In order to strengthen their purchasing power, there are buying groups being formed, where smaller independent companies join together to purchase on a joint basis. They are looking for overall price, service and location, and the approach is very successful.”
In a similar vein to that of the buying groups formed by smaller printers, Mr. Brice believes there may be a place for ink manufacturers to try the same approach.
“Small ink companies have smaller overhead, are more local in nature and can control costs,” Mr. Brice said. “They don’t have the leverage in purchasing, and maybe they should consider joint purchasing agreements.”
Printers are looking at buying more presses with UV capabilities, which fits in with what Mr. Brice is seeing in the UV and hybrid segments, which are two growth areas for ink manufacturers.
“We’re doing much better in UV,” said Mr. Brice. “Many new sheetfed presses manufactured today have UV capabilities. I think UV and EB curing will become larger, as will hybrid UV. There is a tremendous advantage for printers, who can run conventional or hybrid inks without changing rollers, blankets or fountain solutions.”
Pricing
As a result of the dramatic increases in raw material and oil prices as well as health care and transportation costs, Flint Ink and Kohl & Madden have announced price increases in recent weeks. Flint Ink raised its commercial ink prices by 6 percent, and Kohl & Madden announced increases ranging from 4 percent to 8 percent.
Mr. Bergey said that while Kohl & Madden announced a price increase late in 2004, which should help recover some of these increased costs, cost pressures are likely to continue as shortages in some key materials such as carbon black, organic pigments, acrylic acid and acrylate resins will continue. Some suppliers of these materials have stopped production or are selling their products in more lucrative markets than ink.
“Ink companies are realizing that they have to pass along costs to their customers,” Mr. Brice said. “There are fewer companies to purchase raw materials from.”
“Pricing will increase slightly this coming year as pigment prices are expected to increase in 2005,” Mr. Sagert said.
Still, these price increases don’t fully recover the ink manufacturers’ costs.
“Pricing is down, and even recently-announced price increases will not regain margins lost over the past 12 to 16 months,” Mr. D’Angelo said. “This is particularly challenging since the sheetfed volume that exists is short run, meaning high service.”
Mr. Koppelman said that ink pricing remains challenging.
“Ink price erosion hasn’t stopped,” Mr. Koppelman said. “Just like any other mature business, there is a fairly static demand in our industry for similar products, and that scenario introduces competitive pricing pressure. It is difficult not to play ‘follow the leader,’ but the lines between losing the customer due to pricing and losing money through customer retention are becoming frightening close.”
“There is still an overcapacity of ink suppliers for the level of ink demand,” Mr. Leitch said. “This lends itself to a very competitive pricing model. However, with the upward pressures we are seeing in terms of raw materials, ink companies will have to increase prices in order to stay even. We still need to remember that ink as a percentage of print sales is only 2 percent. There is a tremendous amount of technology and service in that 2 percent.”
Meeting the Needs of Printers
Service is essential in the sheetfed printing segment, and ink manufacturers emphasize this.
“Service and quality are still the keys, but it comes back to service, as sheetfed is more hands-on,” Mr. Toigo said. “ A printer’s schedule is changing so quickly, and a sheetfed shop needs to know that it can count on service in a hurry, as their lead times are shorter now. They have to have the trust that they can get what they need in a matter of hours.”
“Quality, consistency and service are essential,” Mr. Lenhart added.
The use of in-plants is also growing. “In-plant operations are growing, and we are also using partial in-plants with traveling technical people,” Mr. Brice said.
Productivity gains are essential for printers.
“Sheetfed printers want the same things as other kinds of printers: shorter make-readies, faster press speeds, less waste. In other words, they want greater productivity,” Mr. D’Angelo said.
Mr. O’Haru noted that printers are seeking higher productivity and less cost per sheet, and ultimately are seeking greater value.
“Eventually, all people should have the most consistent product and process with flexible work flow to stay competitive,” Mr. O’Haru said.
Color management is one area where ink companies can help printers improve their bottom line.
“Sheetfed printers are seeking a more coordinated approach to color management from the vendors they are dealing with,” Mr. Leitch said. “Also, they are looking for ways to improve their bottom line. It is our goal to convince them that an improved bottom line can come from better products and services and not just from lower ink prices.”
According to Mr. Bergey, sheetfed printers are seeking high performance from inks to improve quality and productivity. They want more versatile inks that can be used for a variety of applications while saving make ready time and gaining improved throughput. In addition, he said, more printers are asking for improved coatings for inline and offline application.
|
(Photo courtesy of INX International Ink Company. |
The Future
The sheetfed printing industry is undergoing major changes, and what the future holds remains to be seen.
Many economists are predicting the U.S. economy to slow slightly in 2005, and this could negatively affect sheetfed markets, Mr. Bergey said. Another potential crisis looms in early 2006, when large postal rate increases of up to 18 percent are likely. The PIA/GATF says 47 percent of all printed materials in the U.S. are delivered by the postal service, and Mr. Bergey said that could have a major impact on the market, along with increased competition from the new electronic media.
Still, ink industry leaders are hopeful that there will be growth in the coming years.
“2005 could see double digit increases in sales,” Mr. Sagert said. “Many large national commercial printers have budgeted double digit increases in 2005. I’m doubtful that trend will continue beyond 2006.”
“I believe the sheetfed market will strengthen further in 2005 with slight growth, somewhere between 2 percent to 4 percent,” Mr. Leitch said. “In terms of a longer term look, I hope that the advertising and promotion work that PIA and the Print Council are planning will generate a new enthusiasm for the printed word versus other mediums. The printed word is still the best way to get your message across.”
Overall, Mr. Brice is hopeful for sheetfed ink manufacturers, although immediate help may not yet be on the way.
“I’m not totally optimistic or pessimistic, but the industry needs relief from raw material pricing and competition,” Mr. Brice said. “I’d like to see the revival of the ink industry in terms of profitability, but I think that will take another year. I still think that service and value have their place in our industry, and it’s a part of the cost of ink. I think that recognition will come back.”
New Products for the Sheetfed Market
|
Sheetfed printers have been working to improve their quality and efficiency in order to meet the challenges from other printing processes, and to meet the needs of their customers, ink manufacturers have designed a wide variety of new products and services.
In terms of new inks for the sheetfed market, ink manufacturers were very active.
Kohl & Madden recently introduced three new inks and display new tools that will make color management easier in both the ink room and pressroom. Among K&M's newest offerings is XX-Treme a sheetfed ink system formulated to produce outstanding results with the use of stochastic screening.
"As the use of stochastic or frequency modulated (FM) screening grows, printers are finding they can dramatically improve results when they use products like K&M's XX-Treme inks, combined with Rycoline's SF One-Step or two-part fountain solutions and the new Sun Graphic Stochastic Ultra Dot blankets to optimize FM printing," said Mr. Bergey.
Kohl & Madden also began offering K&M Brite, a second-generation hybrid ink that offers the best characteristics of UV and conventional offset for outstanding sheetfed results. In addition, K&M continues its roll-out of World Series, a vegetable oil-based system which was introduced at Drupa 2004 as the industry's first universal ink system designed for global use on virtually all sheetfed applications.
Flint Ink introduced its Arrowstar series. "We launched our Arrowstar line of premium sheetfed inks into North America in June and have been gratified at the enthusiastic reception they've gotten," Mr. D'Angelo said.
INX International Ink Co., launched its EcoPure HP, which allows for the fastest set times, good press stability, sharp printing characteristics and excellent print quality on all sheetfed presses, including high-speed presses. EcoPure HP was designed for ease of use and helps minimize waste by allowing the pressman to achieve optimum color quickly on press. Because of its increased flexibility and expanded operating window, printers can run on a variety of substrates with improved total production efficiency.
Braden Sutphin Ink was also active. "Ever Fresh is our newest stay open 4/c ink which has been well received. In addition, we have ensured that certain 4/c series meet the ISO 2846 Color Standard," Mr. Leitch said.
Toyo Ink launched its environmental friendly HyPlus 100, which is a VOC-free sheetfed ink that offers extremely good printability.
New products were not limited to ink. At Graph Expo, INX International introduced its new OPL Paste Ink Dispenser, a self-contained, advanced technology system that eliminates costly traditional-system pumps, complex installation and huge space requirements. The OPL (offset paste lithographic) series systems offer speed and accuracy benefits that, until now, were available only to liquid ink users, or for paste inks, only with traditional dispensing systems that were too costly for all but the largest, high-volume printing operations.
In 2004, Sun Chemical acquired the Rycoline Inc. group of companies, which produce a range of well-known products under the Rycoline, Sun Graphic and Rogersol® brands, including a complete line of fountain solutions, blanket and roller washes, silicone and silicone replacement products, overprint coatings, printing blankets and a complete line of miscellaneous products from aerosols to anti-static products.
|
|
|