Add to that the global recession, which leveled many retailers and led to further restructuring in the printing and publishing industries, and it is no wonder that the publishing field is in a serious period of reflection.
Consolidation is a huge issue in the printing field. R.R. Donnelley & Sons, the largest publication printer in the world, has made a large number of significant acquisitions in recent years (Bowne & Co., Inc., a provider of financial, marketing and business communications services around the world, was the latest acquisition in 2010).
The biggest news, of course, was the acquisition of World Color Press, formerly Quebecor World, by Quad Graphics in 2010. This formed the second-largest commercial printer in North America, and a major player in the publication gravure and heatset markets.
Quad Graphics also has its own ink division, Chemical Research/ Technology (CR/T), which supplies most of the inks for the company.
For ink manufacturers, there are even more problems, as raw material prices are skyrocketing while supply issues are a concern. With ink prices on the rise and paper costs also going up, publication printers are finding themselves in a tough spot.
Dennis Sweet, vice president, product management, publication inks for Sun Chemical, noted that the publication printing market worldwide continued its struggle in 2010.
“The recent economic downturn has resulted in the decline of print advertising revenues,” Mr. Sweet said. “This decline includes a shift of print advertisers moving to take advantage of other media, such as online advertising and social networks. We have seen publications, some with long histories in the marketplace, be discontinued; and those publications that have survived, we have seen a decrease in the number of printed pages.
“We continue our focus on customers by being a partner who helps them grow their businesses and succeed,” he added. “That means working for our customers and improving performance on the essentials of quality, service and innovation.”
Challenges are found throughout the print processes, with heatset and publication gravure both affected.
“The past year has proved to be most challenging for the publication heatset printing and ink market,” Mr. Sweet said. “The continued cost increases of key raw materials, such as distillates, solvents, resins and pigment, have also added to the challenges.
“2010 was equally a challenging business year for the publication gravure printing industry,” Mr. Sweet added. “The economic downturn, combined with struggling publications and the poor health of many retailers, have all contributed to the challenges we have experienced over the past few years. We expect these challenges to continue in 2010.”
Raw Materials And Price Increases
For ink manufacturers, raw materials have become the major issue throughout the market. Supplies of diverse key materials such as feedstocks, gum rosin, naphthenic oils, solvents and pigments are volatile at best, and are reflected in pricing.
In response, ink manufacturers have issued their own price increases.
In May, Flint Group announced €0.30/kg price increase for publication gravure inks in Europe, as well as increases in heatset inks (€0.25/kg); coldset black (€0.15/kg); coldset colors (€0.25/kg) and conventional sheetfed inks (5% to 8%).
In early June, Sun Chemical Europe announced that prices of its products in the publications marketplace will increase between 10% and 20%, and in North America,Sun Chemical announced a 6% price increase for heatset and directory inks.
In mid-June, Flint Group announced 6% price increases on heatset and directory products sold in the U.S. and Canada.
In late October, Sun Chemical Europe announced that a price increase will be implemented for its products in the coldset market with immediate effect. The price increase of €0.40 in coldset color inks and €0.30 for coldset black inks has become necessary due to a serious shortage in raw materials that are essential to coldset products – notably rosin resin and most pigments.
In making the announcement, Sun Chemical officials noted that rosin resin has already increased 75% this year and prices are up 300% compared to the price this time last year, and is expected to remain volatile.
“The increasing costs of distillates, solvents, resins and pigment raw materials are key factors that contributed to Sun Chemical needing to raise heatset ink prices earlier this year,” Mr. Sweet said. “However, we are continuously working to control our costs closely with our supply chain partners and to improve the efficiency of our internal operations. We will continue to work on controlling our own costs closely with our supply chain partners, improve our internal operations, and develop new value-oriented products and services that can help improve customer productivity and grow their business.”
Despite the challenges facing their industry, ink companies are working on innovative products. Mr. Sweet noted that Sun Chemical’s R&D teams are developing new technologies.
“Sun Chemical’s SunMag Synergy System combines our publication heatset inks with a specific fountain solution for printing on lightweight (LWC) and medium-weight (MWC) coated paper,” Mr. Sweet said. “Working together with customers, we have seen SunMag Synergy System reduce the total number of wasted impressions – both when impressions come to color at press start-up and return to color after using blanket washes – leading to lower pressroom costs and improved paper savings.”
Expectations for The Coming Year
All in all, it is unlikely that the publication market will significantly improve in the coming year, but if the market stabilizes, that will be seen as a huge positive.
“We don’t expect a turnaround in any of the publication sectors, but we are hopeful for a stabilization in this market,” Mr. Sweet concluded. “The challenges of newspapers and other publications and the poor health of many retailers because of the economic downturn seem likely to continue in 2011. Sun Chemical, however, will continue to work for our customers everyday to further improve our performance on the essentials of our business to ensure we are part of their future delivering quality, service and innovation.”