The printing ink industry is facing plenty of challenges, most notably on the raw material side, but another major concern is how the industry can best serve its customers’ needs.
In order to help in those two areas, the National Association of Printing Ink Manufacturers (NAPIM) chose “Adapt & Grow in Challenging Times” as the theme of its 95th Annual Convention, held recently at the Doral Resort & Spa in Miami, FL.
In particular, two panels of printers and print buyers gave NAPIM Convention attendees a clear look at how the printing industry is faring.
“Commercial & Publication Printing – Adapting to Challenge,” moderated by Alan Kalmikoff of Keim-Additec Surface USA, featured Joe Duncan of Leo Burnett, Phil Harris of National Print Group, Ken Field of Continental Web and John Dreisbach of Evergreen Printing.
Diane Parisi, fifth from right, vice president supply chain management at Flint Group and the 2011 Ault Award recipient, is congratulated by previous Ault Award honorees, from left, Rick Clendenning, Mike Murphy, James Sutphin, Jim Coleman, Jeff Koppelman, Urban Hirsch III and Mike Gettis.
“Packaging Industry – An Overview,” led by Rich Bradley of Lubrizol Advanced Materials, featured Byron Spanjer of Rock-Tenn, Rick Rosenberger of Solo Cup Company and Tim Burns of Cranial Capital.
Raw material issues were also addressed during the convention, both in the State of the Industry Report presented by Rick Krause of BASF and Rick Gray of Color Resolutions International, as well as an in-depth presentation by Jan van der Velde, Flint Group’s senior vice president, procurement, in which Mr. van der Velde outlined some of the root causes as well as the near future outlook of the present raw material cost and availability problems.
The other key highlight was the annual Ault Award Dinner, in which NAPIM presents its prestigious Ault Award and Printing Ink Pioneer Awards to industry leaders.
Diane Parisi,vice president supply chain management for Flint Group, was deservedly selected to receive the Ault Award, the highest honor in the North American ink industry.
In addition, this year’s convention marked a changing of the guard, as long-time NAPIM executive director James Coleman, retired after 14 years at NAPIM. Brad Bergey, a 27-year ink industry veteran, is the new executive director.
The State of The Industry Report
The 2011 Printing Ink Pioneer Award recipients are, from left, John Edelbrock, vice president of operations for Color Resolutions International; Matt McClure, technical director and vice president at Apollo Colors; Dr. Kotaro Morita, chairman of INX International Ink Company; and John Copeland, division president, printing ink division at Toyo Ink America.
Overall, NAPIM reported that there was slight growth in printing ink sales, with dollar value up 1.2 percent according to the members surveyed. Volume, meanwhile, increased 1.9 percent.
As expected, most of the growth was found in the packaging side of the ink industry. Offset ink sales remained virtually flat in 2010, while flexo ink sales increased approximately 2 percent. The strongest growth was seen in the flexo solvent market.
In terms of profitability, NAPIM reported that earnings before interest and taxes (EBIT) held steady at 3 percent, while return on net assets (RONA) was 11.2 percent, a drop from 12.4 percent in 2009.
Higher raw material costs are a key to profitability, and they are rising as a percentage of operating expenses. Whereas raw materials averaged 55.4 cents per every dollar of ink sold from 2000-2008, that figure rose to 60 cents on the dollar in 2010.
“Not only have raw materials costs increased, but they have also become volatile,” Mr. Krause said. “For every dollar of ink sold, 60 cents go to raw materials. It is much less predictable.”
“The ink industry is competing with other industries and regions for resources,” Mr. Gray added.
“Overall, it is good that the market has recovered, but there still is a lot of concerns over raw material pricing and availability,” Mr. Krause concluded.
Raw Materials And the Ink Industry
Along the lines of the State of the Industry Report, Mr. van derVelde gave attendees a thorough reading of what is actually occurring in the raw material markets.
Mr. van der Velde did not sugar-coat the situation in his presentation, “The Raw Material Market Developments 2009-2011: Reality – Risk and Opportunities.” He analyzed pigments, TiO2, carbon black, acrylics, nitrocellulose, resins, solvents, feedstocks and more key ingredients.
“Crude oil is only one of the key drivers,” Mr. van der Velde said. “China will have a lot of internal growth, which will have an impact as the country needs raw materials domestically.”
Mr. van der Velde expects further challenges ahead.
“The worst is not over yet. It is clear that the ink industry is not the favorite industry to supply to any more,” Mr. van der Velde said. “For example, when it comes to carbon black, it is not difficult to decide between Michelin and the entire ink industry. It is very clear we are in the midst of an upside of the chemical cycle, and these chemical companies are making better margins.
“Q2 and Q3 will be quite serious, key raw materials for the ink business will be short and market prices will continue to increase. We have a responsibility to explain to our customers and their customers what is happening,” Mr. van der Velde concluded.
Photos Gallery from NAPIM
Meanwhile, the two printing panels offered insights into what is occurring on the printing end, and the panelists offered significant insight and advice to attendees.
“It is very important to understand where your business is going,” Mr. Duncan said.
Mr. Spanjer of Rock-Tenn spent part of his career in the ink industry, working as a formulator at Inmont. He noted that some commercial printers are looking to make a move into the packaging segment, but it isn’t as easy as it might appear at first glance.
“I’ve seen a number of printers trying to go into packaging,” Mr. Spanjer said. “It is important to understand what the coating surface is and make sure the ink will print right.”
Brand is critical to consumer product groups, and ink plays an important role.
“Packaging is the face of a product, and it is extremely important for us as printers to protect that brand,” Mr. Rosenberg said. “We need consistency in our base colors.”
Mr. Dreisbach said that while he understands that ink prices need to go up, that doesn’t necessarily make his customers happy.
“We can give our customers all the reasons in the world why our prices are going up, but that doesn’t mean that they will accept it,” Mr. Dreibach noted.
The Ault Award
NAPIM concluded its Annual Convention with the Ault Award dinner, honoring leaders for their years of service to their companies and the industry. Ms. Parisi, the Ault Award honoree, has been a longstanding leader at both Flint Group and in NAPIM.
“This is a great honor,” Ms. Parisi said. “I am thrilled.”
In addition, NAPIM presented four Printing Ink Pioneer Awards this year. The recipients are:
• John Copeland, division president, printing ink division for Toyo Ink America.
• John Edelbrock, vice president of operations, Color Resolutions International.
• Matt McClure, technical director and vice president, Apollo Colors.
• Kotaro Morita, chairman, INX International Ink Co.
Also at the dinner, NAPIM’s new leaders took office. George Sickinger, president and CEO of Color Resolutions International, is the new president. John Copeland, division president, Toyo Ink America, is vice president; and Pat Carlisle, president of Joules Angstrom U.V. Printing Inks, is the new treasurer.
Overall, NAPIM leaders felt the convention was very successful.
“I thought the convention was excellent,” said Rick Clendenning, president and CEO of INX International Ink Company and outgoing NAPIM president. “We had a great program, and we have received a lot of comments from our attendees on how good the program was. We had three printers participating in our program, and they added a lot to our sessions.”
“The conference went very well,” Mr. Coleman said. “The program focused on the ink industry’s customers, and their insights added richness to the overall convention.”
Next year’s convention will be held at March 25-28 at Hyatt Grand Champions, Indian Wells, CA. For more information, contact NAPIM at (732) 855-1525, or check NAPIM’s website at www.napim.org.