In recent years, the sheetfed printing market has undergone a major transformation, as consolidation
Photo courtesy of Sun Chemical.
For the most part, sheetfed ink companies and their customers enjoyed a slight rebound in 2007. However, while there are plenty of concerns going forward and certain regions are facing more difficult times than others, ink manufactures are cautiously optimistic about the market for 2008.
Sheetfed Market in 2007
The sheetfed market is broken down into the commercial and packaging segments. In general, packaging inks have fared better in recent years, and sheetfed is no exception. Meanwhile, the commercial market continues to face its own challenges.
“The conventional commercial sheetfed market dropped 1 to 2 percent, primarily due to continued cannibalization by digital printing and use of electronic media in lieu of printing,” said Doug Labertew, vice president/general manager, Sheetfed Division, North America at Flint Group. “In packaging, sheetfed grew about 1 percent.”
“The commercial sheetfed printing market has declined slightly over the past year,” said Jim Bishop, product manager – sheetfed technology, Kohl & Madden, Sun Chemical. “Certain regions of the country remain strong, but there is some shrinkage and consolidation of printing facilities. Sun Chemical continues to be focused on helping our customers remain competitive, grow their businesses and succeed.”
“The folding carton segment of the sheetfed market has been flat, and is experiencing many of the cost and price pressures shared by other segments of the packaging industry,” added Michelle Hearn, director of marketing, Sun Chemical North American Packaging.
“I think the market as a whole is down, both in commercial and packaging,” said Bryan Gobbell, president of Bowers Ink. “A lot of packaging has moved overseas or converted to water-based flexo. For example, toy manufacturers make their toys overseas, and it makes sense to do their packaging there as well.”
“The commercial and packaging sheetfed market ink market showed minimal growth in 2007,” said Joerg-O. Seeger, president and CEO of Hostmann-Steinberg, USA Inc. “Generally, commercial sheetfed ink consumption in 2007 was less than 2006 on an individual customer basis as more and more traditional sheetfed printers enhanced their service capabilities by investing in the digital print area. As a result, new business opportunities are a top priority of our sales, marketing and product development teams to increase market share in the sheetfed ink market.”
John Copeland, president and CEO of Toyo Ink America, LLC, reported that Toyo Ink had an excellent year in both commercial and packaging sheetfed markets. “As the demand for higher performance packaging rises, so does the demand for high performance inks,” Mr. Copeland said. “Toyo inks are designed to meet the most demanding print needs.”
Regional ink manufacturers face challenges in their marketplaces. In Southern California, for example, ink manufacturers described the market as showing little growth.
“It’s been a little weak,” said Jim Baker, Kramer Ink’s vice president of sales. “The market doesn’t look like it is growing, and there doesn’t seem to be a lot of new equipment being put in. Even consolidation has slowed down. UV seems to be growing. We’re holding steady.”
“It’s generally been slow the past two quarters on the West Coast,” said Steve Miller, vice president of Ink Makers. “I don’t think there’s the same volume of jobs to be printed, and there doesn’t seem to be a backlog of work. Four-color process has become a commodity, and there’s not a whole lot of profit.”
“The sheetfed market is holding steady, and there’s been some consolidation,” said Giovanni Medina, Tokyo Printing Ink USA’s western U.S., Mexico and Canadian technical sales representative. “There’s not a lot of equipment going in. We’re actually doing pretty well.”
The Midwest is also facing difficulties due to economic pressures.
“The economy is tough, especially in Michigan,” said John Toigo, president of Grand Rapids Printing Ink. “There have been a lot of plant closings in Detroit, and mergers and acquisitions means there are fewer customers. No one has it easy up here. However, we have had good growth in Ohio. We’ve been very fortunate, and we’re working hard.”
Barney Lenhart, president of JKM Ink, said that the declining housing market is impacting Florida. “While business has been very good for us, the market in Florida has been soft due to the housing market,” Mr. Lenhart said. “More people are moving out of Florida than moving in, and we’re seeing a lot of foreclosures.”
“Sheetfed’s a little soft right now,” said Rick Redwine, president of A/R Ink & Supply, located in Denver, CO. “We see a lot of consolidation here, as well as small printers hanging on, while others are expanding into digital.”
UV remains a bright spot for sheetfed printing.
“UV sheetfed seems like it is growing,” said Pat Carlisle, president, Joules Angstrom U.V. Printing Ink. “We are seeing more and more sheetfed printers converting a few units to run UV, mostly for synthetic substrates due to the improved adhesion.”
“The sheetfed market has hit a plateau,” said Marlon Touche, vice president of sales for Pertech Printing Inks. “The UV segment shows the fastest growth.”
“We are seeing more printers interested in using UV, hybrid and long perfecting presses in an effort to reduce operating costs and improve production efficiency,” Mr. Bishop noted.
High-speed presses and anilox inking systems are drawing interest.
“One of the more interesting new press technologies is the use of anilox inking systems in offset applications,” Mr. Labertew said. “We are currently actively involved in developing inks that are optimized for this new technology and sharing our knowledge with printers. In addition, we expect that inks recently developed for new high-speed, wide-format conventional presses will be widely discussed at trade shows in 2008.”
“Higher press speeds are becoming more prevalent,” Mr. Bishop noted. “All of this helps sheetfed printers compete with the half web side of the business. Based upon these evolving needs, Sun Chemical is finding that the use of chemically matched inks and fountain solutions is helping printers advance faster.”
“We also offer conventional sheetfed inks that work well on high speed perfecting presses,” Mr. Bishop added. “All of these products provide faster ink setting or cure times to help printers finish jobs faster. At the same time, volatile organic compounds (VOCs) of inks continue drop to support global sustainability efforts.”
“We’ve seen increased interest in our strikethrough technology for glossy and matte contrast,” Mr. Copeland noted. “Demand for perfecting presses for printers seeking cost savings and operating efficiencies continues to grow as does printing presses with inline hot foil stamping capability. Such machines require a certain high level of performance from the inks they run. Toyo Ink works with our customers to develop multipurpose inks they need for increased functionality, quality and value.”
Consolidation has had an obvious impact on the sheetfed printing industry.
“Consolidation in the commercial sheetfed market has not affected Hostmann-Steinberg to a great extent due to our valued relationships with the countries top consolidating companies,” Mr. Seeger noted. “Hostmann-Steinberg does anticipate consolidation in the commercial sheetfed market to escalate over the next two to three years; with this in mind we are making every effort to broaden our customer base and strengthen our relationships with companies we have identified as having a long term stake in the global sheetfed market.”
“Local commercial printers continue to operate and serve their existing customer base,” Mr. Labertew noted. “While a few large companies continue to consolidate commercial printers, the impact is more focused on administrative or purchasing functions. Recently one large global company actually spun off their commercial printing operations, reversing previous consolidation. Consolidation is greater in the packaging and that is continuing.”
“Many companies that consolidate are doing so to help expand their ancillary services,” Mr. Bishop reported. “This helps them compete on a different level within their respective territories, because all printing, off-line coating, laminating, laser imaging, binding, direct mail and fulfillment can be done under one roof. Total job costs go down, helping improve both profits and providing a competitive edge. Very large consolidations have helped companies share work between their various locations across the country. In some cases, this has helped printers become more competitive from a job cost standpoint.”
Raw Material Costs
And Price Increases
Raw material prices are rising, practically across the board, and ink companies have announced price increases to help meet these higher costs.
“Sun Chemical implemented a price increase affecting commercial sheetfed customers effective Oct. 1, 2007, and will implement a price increase affecting packaging inks effective Jan. 1, 2008,” said Brad Schrader, chief marketing officer, Sun Chemical. “We are continuing to work to control our own costs closely with our supply chain partners, to improve our internal operations and to develop new value oriented products that can help customers grow their business. We will continue to invest in those areas that provide our customers with innovative products and services allowing them to be more competitive and present the best value propositions in the market.”
“Generally, customers have accepted price increases directly supported by raw material data and market conditions,” Mr. Labertew said. “Even so, margins as a percent of sales have dropped, which is an ongoing concern.”
“Ink manufacturers are under extreme pressure to absorb the increase in raw material costs,” Mr. Copeland said. “To keep prices to customers to an absolute minimum, we’ve had to double efforts to improve efficiencies in the way we purchase, ship and receive raw materials and inks. To this end, we’re constantly looking at new ways to boost efficiency across all aspects of our operations.”
“We are extremely sensitive to today’s competitive climate and work closely with our customers to meet our mutually beneficial objectives and profitability targets,” Mr. Seeger noted. “Hostmann-Steinberg has been successful in securing price increases in the commercial sheetfed market in 2007. We feel that our value-added product offering together with our customer focused service have assisted us in this critical endeavor.”
Aside from raw material costs, higher gas prices are creating cost pressures of their own. “Fuel bills for deliveries are killers right now for small independent ink companies such as ourselves, who run trucks from 6 a.m. to 11 p.m.,” said Bob Arzilli, vice president of manufacturing and technical for Three-Dimensional Chemical.
Outlook for the Future
Overall, ink makers are somewhat optimistic about the coming year.
“The sheetfed market will remain fairly healthy, but consolidation will continue,” Mr. Bishop said. “Sustainability will continue to expand, requiring paper companies, ink suppliers, graphic arts materials producers and printers to stay focused and work together on this global initiative.”
“We see the market demanding even more from its ink systems, and we are ready to support our customers,” Ms. Hearn said. “Sun Chemical North American Packaging will continually work to bring to market higher performing energy-cured lithographic inks which will deliver improved press performance at higher operating speeds. These inks offer wider, more controlled water windows, eliminating concerns about ink scumming or wash out. They create less piling, have low dot gain and allow for fast and easy clean up—all of which help Sun Chemical customers operate more efficiently and deliver a better quality product.”
“We’re optimistic that Sun Chemical’s investments in innovation and commitment to sustainability will help our customers succeed,” Mr. Schrader said. “In the current challenging market conditions, our solutions are designed to help customers operate more efficiently without sacrificing quality or service to their customers. We’re also making it easier for customers to improve environmental performance. That positions the industry – and Sun Chemical – well for 2008. Sun Chemical wants to be the long-term trusted supplier – the company that truly works for its customers. To be able to achieve this, our customers have to know that we are here to help them with their problems. We want to sell more than just ink; we want to offer our customers the full package of hardware, software, consumables and service.”
“We see the packaging market continuing to grow at 1 to 2 percent per year,” Mr. Labertew said. “There is significant competition between paperboard and flexible packaging today. We see the migration to flexibles slowing. As paperboard designs have become more creative, folding carton printing is often preferred both for appearance and environmental reasons. The paperboard is seen as being ‘greener’ than the films used in most flexible packaging. Commercial printing will likely continue to decline as the digital market grows, and as alternative media reduce demand. We estimate 2 to 3 percent annual reductions in conventional commercial print.”
“Hostmann-Steinberg and our parent company the hubergroup are encouraged about the future of the sheetfed market,” Mr. Seeger said. “The great majority of our customers and prospects are astutely in-tune with the implications of the global economy, making them global printers. We strongly feel, as a closely tied global ink manufacturer, that we have a huge advantage to be able to immediately react to the changing demands and requirements of the global printer. The coming years will see expected and unexpected challenges to the sheetfed market, Hostmann-Steinberg is confident we will be able to react in a timely and economical manner.”
“The sheetfed market will continue to be stable,” Mr. Copeland said. “We see many opportunities for packaging and specialty markets in the future. Food packaging will continue to grow as the population does. End users are driving sheetfed demand with special visual effects and features that enhance shelf-appeal, as corporations try to set their products apart from others. Demand is still strong for inks that are capable of creating unique ‘look, touch and feel’ that evoke strong appeal.”