Much like its neighbors in the U.S., the Canadian printing ink market has seen tremendous changes in recent years.
More major international printing ink companies have opened up operations in Canada, aiming to get a share of the ink market, which is estimated between $400 million to $450 million in Canadian dollars, which translates to approximately $320 million to $360 million U.S. As a result, some longtime companies have bowed out. Today, as is the case with the U.S. printing industry, there is a mix of large international leaders and Canadian-based regional and local ink companies.
“The predominant ink companies are international, with a number of Canadian players, and the printing industry is much the same, with some considerably-sized local printers and converters,” said Brian Collict, vice president and general manager for Sun Chemical Ltd. “There continues to be consolidation and change of ownership in ink and printing.”
Regardless of their size, though, Canadian ink manufacturers have to contend with the difference between the Canadian and U.S. dollar, which leading ink executives term a “double-edged sword.”
The Canadian Ink Market
As has happened in the U.S. and worldwide, consolidation has taken its toll on the smaller independents.
Players in the Canadian ink industry include multinationals such as Sun Chemical, Flint Ink, Hostmann-Steinberg, INX International Ink, SICPA and, most recently Color Converting, as well as independents led by Rieger Printing Ink, Colmar Inks, Rycoline and Frontier Printing Ink. Other independents such as Canadian Fine Color (acquired by Sun Chemical), Lester Printing Ink (Flint Ink) and Kromacorp (SICPA) have long since been acquired, leaving fewer Canadian-owned ink companies.
When Winfried Gleue, Hostmann-Steinberg’s president and CEO, came to Hostmann-Steinberg Canada in 1980, the company was the smallest ink manufacturer in Canada. Today, it is the industry leader in sheetfed, and is one of the three largest ink companies.
“The Canadian industry has changed tremendously,” Mr. Gleue said. “There have been big, big changes. Because of consolidation and even some bankruptcies, so many of the once big names have gone.”
“The ink market is very mature,” said Jean Menard, national account manager for Flint Ink, who has been in the Canadian ink business for more than 20 years. “There has been a lot of consolidation.”
In terms of markets, on the publication/commercial ink side, companies such as Sun Chemical, Flint Ink and Hostmann-Steinberg have leading positions, with Ontario-based Rieger Ink joining Sun Chemical and Flint Ink as a news ink leader.
Sun Chemical also is the overall market leader in packaging inks, with Flint Ink, Rieger and Ontario-based Colmar strong on the water-based side. On the solvent-based side, Ontario-based Frontier Printing Inks, INX and SICPA are among the leading ink manufacturers.
With its strength in metal deco and water-based inks, INX International Ink Company has had operations in the Montreal area for more than a decade. In the last three years, the company has expanded its operations, and is scheduled to open a new facility in the greater Toronto area later this year.
“We are putting a push on the liquid ink side,” said Ron Deegan, Canadian national sales manager for INX International Ink Company. “The majority of our business is in metal deco, and we are making significant gains in the solvent-based lamination and water-based flexo ink markets.”
Mr. Deegan is a 14-year veteran of the Canadian ink industry, having worked at Kromacorp before joining INX International Ink nearly three years ago. “It has become a very competitive market, and we are poised to grow in the future,” Mr. Deegan said.
“There were 30 different ink companies when I came into the business in 1958, and now we are the largest solely-owned Canadian ink company,” said Chester Dec, vice president, operations for Rieger Printing Ink.
“The ink market has been impacted by a combination of consolidation and larger U.S. companies establishing themselves through branches,” said Martin Hambrock, president of Frontier Printing Inks, a Concord, Ontario-based flexo and gravure ink manufacturer. “What you have is a very competitive marketplace between a shrinking number of Canadian-based players and larger U.S. and international players.”
“It’s been the same as the states – lots of mergers and acquisitions,” said Ralph Marshall, president of Colmar, a specialist in water-based flexo and sheetfed inks.
This is not to say that there is no room for independents. In fact, quite a few companies are thriving.
“There will likely be more consolidations, but there is still room for smaller companies to make a living,” Mr. Marshall said.
“There are only a few small independents left, and I’m not sure if that helps or hurts us,” said Peter Welfare, R&D manager for Rycoline, a Vaughan, Ontario-based sheetfed ink specialist. “We still rely on service and quality, and we work with small regional printers who value that service.”
“We are very specialized,” said Clarisse Ganho, CEO of Ganho Inks, Concord, Ontario, whose products range from sheetfed, coldset and scratch-off inks to inks for non-porous substrates. “It is a niche that we have built.”
Ms. Ganho said that there is more just-in-time delivery expected by printers.
“We find that more and more, when a printer gets a job, they need the ink now,” Ms. Ganho said. “Printers are under pressure – if they can’t turn a job around, someone else will do it, and that is why service and quality are so important.”
Mr. Marshall believes there are still opportunities for small companies that deliver quality and service.
“There’s always room for an entrepreneur,” Mr. Marshall added. “There are printers who appreciate quality and service. We fill a lot of orders same day, made to order. We need to keep providing great quality and service to the local market.”
The Canadian Printing Industry
The Canadian printing industry is diverse, ranging from international leaders such as Quebecor World and Transcontinental to many smaller niche companies.
“Besides large volume, the Canadian market is particularly strong in specific niche markets where they excel for short runs,” Mr. Menard said. “For the major printers, their growth is built on a niche-base strategy both as a printer and publisher. The printed products they offer are constantly evolving to integrate value-added services that satisfy customers’ new needs.”
On the publication/commercial side, Quebecor and Transcontinental are multi-billion dollar companies, with Toronto-based St. Joseph Print Group, a $300 million company, the third largest, followed by Donnelly/Moore.
Rieger Printing Ink's manufacturing facility in Burlington, Ontario
“The packaging industry continues to be innovative in terms of printing methodology and graphic designs, which leads to value differentiation for the converters and the ink companies,” Mr. Collict said. “The speed, the range of substrates and graphics are amazing.”
In terms of the narrow web market, the Toronto area is one of the largest in North America, with companies such as Labelad, CCL, MetroLabel and A1 Label among the leaders. As is the case in other segments, narrow web printers have been impacted by the strong Canadian dollar.
“We rank the Toronto/southern Ontario market as one of the top five narrow web markets in North America,” said Dave Lenarduzzi, SICPA’s Canadian regional manager. “Right now, printers are down because of the Canadian dollar’s strength and its impact on exports, but they are recovering. Business is definitely picking up here.”
In terms of geography, approximately 75 percent of Canada’s printing comes from Ontario and Quebec, followed by British Colombia.
“Ontario is the strongest printing market, followed by Quebec and British Columbia,” said Mr. Dec. “The leading areas are newspaper, heatset and magazines, and flexo is also big market.”
“Canada is becoming a regional printing market as an extension to the U.S. markets. It is geographically large from the East Coast to the West Coast, which represents additional challenges to supply and service the customer base,” Mr. Hambrock said.
Having a presence throughout Canada is important when working with the major international printers.
“In the case of large commercial and corrugated printers, it is definitely hard to compete without having a presence throughout the country,” Mr. Collict said. “The fact that we can service the entire platform is certainly a strategic advantage.”
“Printing is centered in the greater Toronto area, followed by the greater Montreal area, and then the islands of industry and printing in Vancouver, Winnipeg, Edmonton and Calgary,” said Mr. Gleue. “We have six branch locations, and we have labs and production facilities in each of them.”
Many Canadian printers have benefited from the North American Free Trade Agreement (NAFTA).
“Quite a few Canadian printers realized the advantages of NAFTA and got in,” Mr. Gleue said. “However, that business has been hurt by the recent exchange rate development between Canadian and U.S. dollar and its impact on pricing and margins. Quite a bit of the export business has been lost.”
The business climate in the Canadian printing and, consequently also the printing ink industry, is and has been rather different from the U.S. in recent years. The Canadian industry recuperated fairly quickly following 9/11 and actually experienced growth. Right now though, with the climate in the U.S. being somewhat improved, the Canadian printing ink market is stagnating at best, and in some segments is even on a noticeable decline on a year over year basis.
Pricing and the Canadian Dollar
Another major factor is the currency exchange rate, which impacts everything from printers’ business to raw material prices to printers, which, in turn, affects the bottom line.
Hostmann-Steinberg's headquarters in Brampton, Ontario
“Most of the raw materials are purchased from the U.S., with some pigments from the Far East,” Mr. Dec said. “It definitely impacts us when our dollar is high, especially when we have to pay in U.S. dollars.”
“The Canadian dollar is strengthening, and that is being reflected in rising export costs due to the strong Canadian dollar and increased raw material costs,” Mr. Hambrock said. “It makes business challenging.”
Pricing pressures are much the same as they are in the U.S.
“Raw material prices have really gone up, which chops away some of your profits,” Ms. Ganho said.
“Raw material costs are going up, and we are facing pressure from our printers and their customers to keep prices down,” Mr. Lenarduzzi said. “That has led to erosion of our margins, but the situation has to change due to the price increases from commodities such as acrylic acid.”
The market remains highly competitive, and even with raw material costs rising, pricing pressure remains intense. “I haven’t seen any price increases, and I’d like to see some,” Mr. Marshall said.
Currency certainly has had an impact in the Canadian ink industry.
“The exchange rate is a double-edged sword,” Mr. Collict said. “We buy a portion of our raw materials in U.S. dollars, so this has been a benefit. However, many Canadian printers that do significant business in the U.S. have been severely impacted by the serious reduction or elimination of the competitive advantage Canadian currency has provided for some time. For example, two years ago, a $10,000 job in Canadian dollars would cost $6,500 U.S. to a print buyer. Today, that same job would cost $8,000 U.S. This specific challenge is being experienced in most if not all manufacturing businesses in Canada. Finally, all ink manufacturers have been crushed by raw material cost increases related to soaring oil and petrochemical prices and supply. These increases have come fast and furious and there is no relief in sight. As a result, any benefit from the stronger Canadian dollar has been completely eliminated.
“It’s important that people get a balanced idea on the impact of the exchange rates. The perception is that when the Canadian dollar goes up, it’s all gravy train, but there is pain as well,” Mr. Collict said.
“There is a lot of capacity in the commercial printing market, which is leading to lower prices, and printers are looking to suppliers to keep prices lower,” Mr. Welfare concluded. “While we have been helped a lot in terms of buying raw materials by the higher Canadian dollar, printers are suffering, and that’s never good.”