NAPIM’s State of the Industry Report Shows Ink Industry’s Challenges
The past few years have been difficult for the printing ink industry. Skyrocketing raw material prices, created primarily by higher crude oil costs and a changing pigment market, have caused tremendous problems for ink manufacturers and their suppliers.
Meanwhile, the ink industry has also faced challenges from its customers, as the printing industry, most notably the publication and commercial side, is battling to maintain growth in the face of increased competition from outside sources. Ink manufacturers have basically been forced to prepare for the worst.
The global recession that began in the latter part of 2008 has made business conditions even more difficult for the ink industry, its customers and suppliers. According to the Printing Industries of America, print sales declined 1 to 2 percent in 2008, and those figures might be generous.
Just a quick glance at the newspaper industry in the U.S., where major dailies are declaring bankruptcy and even shutting their doors in favor of going online, tells an even more serious story. The fact that printing giants such as Quebecor World and Smurfit-Stone have likewise filed for bankruptcy protection in the past year and a half is an ominous sign.
The U.S.-based National Association of Printing Ink Manufacturers (NAPIM) recently released its 2009 State of the Industry Report, and the numbers from the survey of ink manufacturers and suppliers confirm these concerns. NAPIM reported that the volume of U.S. printing ink sold in 2008 declined 6.1 percent, with sales falling by 1.8 percent.
According to NAPIM, offset ink volume declined 6.7 percent overall in 2008. Specifically, NAPIM reported that coldset inks, used primarily for the news industry, declined 17.4 percent. Flexo ink volume shrank by 4.2 percent in 2008, although solvent-based flexo ink was a bright spot, with volume increasing 3.6 percent.
Profitability wasn’t much better, with ink manufacturers showing a 3 percent earnings before interest and taxes (EBIT). Return on net assets (RONA) dropped to a paltry 5.1 percent. However, that figure rose to 10.8 percent for ink companies with sales below $50 million.
Now, nearly five months into 2009, the global recession is ongoing, and indications are that the printing industry still remains mired in a slump. Ink manufacturers have to hope that they have prepared themselves as best they can to overcome the challenges ahead.